I’ve been thinking about penning this post for awhile. Amazon’s new South American cloud region spurred me to finally sit down and write it.
The basic theme is this: The trend we saw with world-wide mobile phone adoption is about to repeat for global enterprise IT.
In the 1980’s the United States led mass mobile telephone adoption with the roll out of analog service across the country. Long forgotten providers like Cellular One, McCaw Cellular and others invested billions building networks of towers connected by back-haul data lines. Motorola sold analog phone sets (remember the “bag phone”?) to use with these new analog networks. The rest of the world experimented and watched the US roll out.
In the mid-1990’s Europe and Japan began implementing widespread mobile telephone network infrastructure. But instead of using analog technology, they leaped directly to digital. They didn’t have a legacy of analog investment to amortize, and instead were able to take advantage of new digital features like texting and multi-media messaging on “day one” of their new cell phone services.
The US endured a protracted digital roll out because there was so much invested in the prior generation’s technology. For many years US mobile handsets were tri-mode so they could roam to analog networks while the digital networks matured. This is a classic example of the “fast follower” leaping over “the pioneer.”
The same scenario is playing out with “enterprise IT.” For the past 30 years, US, Japan, and Europe have led the world with an evolution of enterprise IT systems. Mainframe, mini, PC, LAN, WAN, Internet, Web, SaaS and now cloud. Every budget cycle organizations made the decision to use what they already had or adopt incrementally newer technologies. On average, there was no radical change, but there were 4 “mini-leaps” forward approximately every decade. The first leap was mainframe & mini to PC. The second was PC to Internet. The third Internet to SaaS and the fourth SaaS to cloud.
Fast growing emerging economies such as Brazil, Russia, India and China (BRIC), that don’t have the baggage of three decades of prior investment to amortize, will not implement the enterprise IT technologies of the past and instead will “Go Directly to Cloud IT.” (Collect your $200 Rupees from the banker.)
Analyst firms like Gartner and Forrester predict the BRIC countries and their flourishing “business class” will not roll out client-server, Windows-centric IT infrastructures. Instead, the technical implementations will be mobile, tablet, netbook, open source, SaaS and cloud. These technologies work well when data comm lines are getting cheaper and more reliable every quarter. The dominant vendors will be the ones that offer a fresh web approach and not re-written old-style applications.
I’m convinced the BRIC economies (who’s next? Africa?) will leap over the US, Europe, and Asia/PAC with pure cloud IT models. Us original enterprise IT “pioneers” will live through a prolonged shift from traditional enterprise IT to cloud IT much slower than BRIC companies.
So what could work against this scenario really occurring? The BRIC economies are stabilizing after many decades of volatility. Political stability is first, and then economic stability comes second.
The cloud infrastructures need to keep coming online in each country. Amazon launching a cloud region in Brazil (how ironic) is a first step. But will other South American countries trust the political and economic stability of Brazil? We need to see more regions to serve local countries. The majority of IT clouds are based in the US, and despite the Patriot Act, the world looks to the US as a very stable location to host their data. Will the same be said for Brazil, Russia, India and China? Of these four, Brazil and India stand out because the political climate is more favorable to free enterprise growth. Russia and China have their own issues, and the Central Government will have much more influence over the private sectors buying decisions.
A real sign of progress for Russia and China will be evident when a company like Amazon opens a cloud region in one of those countries.
It’s exciting to watch “Cloud IT” emerge in BRIC. US enterprise IT technology companies need to take heed and understand these buyers will not be looking for whats “on the truck today.” Amazon, Salesforce.com, Google and a few others are well positioned. Symantec, HP, IBM, Microsoft not so much.
