Do emerging markets have an advantage over developed markets when adopting cloud computing infrastructure faster? Will emerging markets leap-frog developed markets by relying more on cloud computing, instead of acquiring expensive, maintenance heavy, proprietary (hard and software), as is the case in developed markets? This question implies many layers and sparks discussion. So, to better understand emerging markets leap-frogging developed markets into the cloud, I wish to share some of my views on these markets, cloud computing and their intersection.
Companies and governments in developed markets are burdened by an aging IT infrastructure legacy consisting of servers, networks and data centers on which they run applications ranging from databases, ERP-packages, email-systems and design tools. When asking IT managers what challenges this legacy poses, most complain about the costs of maintenance. On average it can take up to ¾ of the IT budget to maintain this infrastructure. Ask IBM why they went into services and this is the answer. That leaves ¼ of the budget to support ‘new’ applications and the infrastructure to run them on. At the same time, companies need their IT to support new processes for innovation, growth and/or improving efficiency. So how do you balance tighter IT budgets with higher demand for IT services?
By contrast, emerging markets companies don’t have an archaic (IT) infrastructure, so theoretically they could benefit from adopting cloud models when designing their future IT infrastructure. They could wonder if it is really necessary to buy and own all this technology? Or are there services that can supply the same value, without the future cost of maintenance, upgrading and redundancy? In other words, could a Telco company in Vietnam benefit more from adopting cloud infrastructure, remaining unburdened by budget-crippling dated systems, as opposed to a Telco in Sweden?
The IT industry moves fast. A seven year old machine or piece of software is perceived as ancient. Running applications virtualized – some in private clouds because of data sensitivity, others in federated external clouds because of a certain service is commoditized – releases IT capacity to support new business process. At the same time keeping the cost of ownership under control. This cloud approach frees up IT time and resources to support a company’s business growth. But replacing sprawling IT systems is as easy as replacing a city’s airport, railroads and highways all at the same time. The cloud benefits could clearly lie there where there are less ancient systems to replace in emerging markets.
There are many facets to this topic. Will China’s Huawei deliver cloud services to a Canadian bank, and will the bank run te risk of Huawei behaving like Google or Apple, and collect and analyze customer information? And what about strange new applications, like putting sensors in cows ears that collect 200mb of data per year, monitoring cows’ health and when they need to be milked . Will the modern farmer in Brazil open his iPad in the morning to check the health of his cows on an application called iCow? And will the farmer manage his own IT infrastructure? Or run iCow as a service called FarmCloud?
Stay tuned as I unravel all of these topics and more. Your candid feedback, spectacular ideas or philosophical thoughts are more than welcome.