China in Pole Position for Cloud Computing Opportunities

Although cloud computing has been slow to take off in much of APAC, this is starting to change as more geographies become ‘cloud ready’. Most interest in cloud computing adoption in APAC, is, of course, directed at the region’s largest economy, China.

This can be explained by the strongly held view that China will offer the greatest cloud computing opportunities in the world within the next five years. China does not have the legacy infrastructure of the more mature economies and is investing huge amounts into new infrastructure that will enable the provision of cloud computing services and make the adoption of these services very attractive.

In mature economies, large organizations have typically invested millions of dollars in on-premise infrastructure. In order to see a return on their investments, these organizations are often reluctant to move into a world where most infrastructure, applications and content reside off-site. Strong vested interests also impede the adoption of cloud computing. A shift to using cloud services at the expense of on premise infrastructure, challenges the role of IT departments. Hence, many within IT departments are reluctant to propose cloud computing options. Similarly, suppliers of hardware and software to large organizations may view cloud computing as a threat to strong revenue streams from their legacy businesses. These organizations are unlikely to propose options to their clients that reduce the size of a deal.

Organizations in China and in some other geographies in the APAC region such as India, Thailand, Indonesia and Vietnam don’t face these challenges. The biggest challenge that they face is infrastructure and the impact of this infrastructure (or lack of it) on the performance and availability of cloud computing. However, this is changing rapidly, particularly within China.

In China, cities such as Shanghai, Shenzhen, Guangzhou and Ordos now have infrastructure that lends itself to the extremely rapid takeup of cloud computing services. Massive data centers are being built such as the data center in Langfang, Hebei province (being built by IBM and Range Technology) to meet demand for cloud services, in particular IaaS.

China’s strong position is compounded by the readiness of large telecommunications vendors such as China Telecom and China Mobile to offer cloud computing services, and the growth in local Chinese suppliers of cloud computing services. Indeed, Microsoft is now working with China Mobile to develop and deliver cloud services while SAP is doing the same with China Telecom. Both global software companies, clearly recognize the importance of establishing themselves in the Chinese cloud computing market. Examples of Chinese suppliers of cloud services are Kingdee and Ufida. Both companies have a heritage in the provision of on –premise software. Both are now making strategic moves to ensure that they are major suppliers of software as a service in China.

In summary, it has become clear only in the last few months that parts of China now have the infrastructure to enable the provision of cloud computing services; the suppliers positioned to deliver these services; and demand for these services. They do not have the same brake on cloud computing adoption, namely legacy business and investments, which exists in mature economies. Key regions within China are now poised to offer some of the most significant cloud computing opportunities in the world.