Cloud: Lots to overcome before price is differentiator
By Enterprise Innovation editors 10-Apr-2012
Amazon's reduced rates will not help to resolved business concerns Asian CIOs have about using the public cloud, said Errol Rasit, principal analyst, Gartner Research.
"But competition is always good for customers. Amazon's updated rates will force its competitors to prove service differentiation, which could manifest into much lower cost services for more customers or more high quality services. Both ways are good," he said.
He noted that Asia providers are not competing on such levels of scale yet.
"It is a tricky balance for any provider to compete on cost. It forces a race to the bottom as providers need to reduce operating costs to attract customers whilst maintaining service quality. Many providers in Asia are focusing on quality of service," he said.
Data security, performance and availability are still the top three concerns Asian businesses have about using the public cloud, said Rasit.
Data transmission, data sovereighty
He observed that transmission of data and data sovereignty are gating factors for enterprises to enter into the cloud.
Adequate levels of performance and the ability to write and read quickly from cloud storage worries Asian CIOs too, he said.
Regional IT leaders are concerned about availability issues as well. The fundamental premise of the public cloud has to be service availability to businesses when necessary.
"[Asian CIOs need to be assured that they will have] access to their data at appropriate time frames when the business units are requesting for them," he said.
To him, it is really down to Asia CIOs understanding what their businesses need. With that understanding, they can then evaluate the appropriate cloud services.
"The conversation can only start when cloud operators offer compelling services," he said.
Asian CIOs have a few more sleepless nights than their counterparts in North America, said Rasit.
He explained that in North America, federal laws often apply to data storage. On the other hand, a Thai customer wanting to use cloud services may have to consider the laws applicable in different Asian countries that the data could be residing in.
"Latency issues between countries are an issue, too. Hong Kong and Singapore are popular hubs, due to high speed fiber connectivity," he said.
Language barriers are another item for consideration in Asia. International cloud service providers, said Rasit, may face issues with language localization, but domestic providers are typically more localized and face less language issues in their domestic markets.
He noted that many large cloud providers have already invested in Asia, but domestic service providers are still looking at expanding their cloud footprint.
"On top of the cloud infrastructure, there are also orchestration and management tools to implement," he said.
One thing for sure: Amazon's reduced rates will put the focus on cost much more so than before, said Rasit.
He observed that the biggest challenge for Asian enterprises today is to understand cost of providing the services in-house compared to the external singular cost of cloud computing.
"Often, CIOs do not take into account the cost of facilities and maintenance into the cost of delivering internal services," he said.
With Amazon's announcement, Rasit expects to see Asian enterprises more prepared to experiment with cloud services and to trial different technology capabilities.
He noted that business intelligence and analytics are more popular with Asian businesses this year.
"That would help IT departments improve their visibility to IT usage among their users and provide a way to charge back the business," he said.
In order to prove its value, IT today needs to right-size its services, stressed Rasit. Thus, IT organizations need to understand the greater visibility.
"To be relevant, IT departments need to demonstrate that they are better cost of service [compared with alternative solutions], deliver better quality of service, or master the governance of cloud providers where they cannot."