Contrary to adoption trend, financial services, telecoms aren't first clients of cloud

- Wednesday, August 17, 2011

Contrary to adoption trend, financial services, telecoms aren't first clients of cloud

While financial services and telecommunications are traditionally the earliest adopters of technology, in the case of cloud computing other industries such as manufacturing, services and heavy industries like mining and oil and gas have been faster in Latin America, partly because they are more lightly regulated, Ricardo Villate, VP for research and consulting at IDC, told BNamericas.

In the financial services industry, the physical whereabouts of financial data storage is a very sensitive issue and often tightly monitored.

The financial services and telecommunications sectors "are in the higher end of the average of cloud adoption, but they aren't the highest," Villate said. The fastest growing segments of manufacturing, commerce, services and mining and oil "have fewer regulatory restrictions and are not so affected by latency of the network."

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The types of services that have been the first to go to the cloud in the region are CRM, web application services, backup and storage, and collaboration like web conferences.

As regards countries, Brazil has been the earliest adopter, followed by Chile, Colombia and Argentina, and to a lesser extent Mexico and Peru.

The current obstacles for cloud adoption in Latin America include security concerns and the speed of broadband networks. New obstacles will emerge over time such as a lack of knowledge on how to contract cloud solutions, especially among SMEs, and greater demand for best practices from providers.

According to the IDC executive, the future incentive to go to the cloud will not have so much to do with the financial savings on infrastructure, but rather with the flexibility it gives and speed of response.

"When they think about cloud, the majority of companies don't necessarily think about lowering costs as the first factor, but rather increasing the flexibility of services in their organization and allowing faster response times," Villate said.

An IDC study published at the beginning of the year found that some 14.5% of Latin American companies are either adopting some sort of cloud solution or looking at doing so - a significant increase compared to 3% a year ago.

The study also predicted that cloud service adoption will grow 69% over the next five years, and from a value of US$170mn to US$1bn in 2015.

According to Villate, it is unlikely that all companies will implement cloud services, as some industries are less inclined to do so for security reasons.