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Easing Latin America Into the Cloud

Paul Rainford
8/17/2011
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Cloud computing presents a real opportunity for operators to "rise up the value chain" in Latin America, according to new report from Pyramid Research .

The latest edition of Latin America Telecom Insider, "Why Cloud Computing Services Are Good for Operators and SMEs in Latin America," examines what the advent of cloud-based services means for both operators and their potential clients in the region -- whether large companies or small businesses.

The report's author, Senior Analyst Jose Mercado, asserts that far from being an obstacle to the growth of cloud computing, the downlink speeds currently endured by the vast majority of smaller firms, which at less than 2 Mbit/s are quite low, actually present an opportunity for operators to bundle cloud services with better broadband offerings.

The report makes it clear, however, that there are still major cultural barriers to overcome before SMEs in the region take the cloud to their hearts. Data security was cited as a particular concern for smaller corporate customers by the three fixed-line Mexican operators featured in the study.

"In Mexico, there is a lack of knowledge about what cloud computing is and how it can support their operations," says Mercado. "And it's not clear to them if they will save money or not once they decide to migrate from their existing operational model.

"Many companies are not very confident about leaving all their data and IT management to another company," he says. "This loss of control over their IT infrastructure and security concerns are major issues for all companies, whatever their size."

Axtel S.A.B. , one of the featured operators, identified IT knowledge as a major stumbling block for SMEs, as many of these smaller companies did not have access to the advice that would help them spot the particular aspects of their business that would benefit from the cloud.

Teléfonos de México (Telmex) , also featured in the study, acknowledged that the cloud option might not always be the cheapest in the short term, though long-term cloud adoption reduces capex. The report states: "Telmex mentioned that a virtual desktop could be more expensive today than a traditional PC, but in the long run, and taking into consideration all the applications and updates, the total cost of ownership will be lower."

Mercado points out, however, that whatever cultural barriers they might face, the operators he interviewed all felt they had a competitive advantage over their services rivals in one important respect. "They [the three operators] mentioned that because they own 'everything' -- the access point, the network, the data centers and the apps -- they can provide a true point-to-point SLA [service-level agreement] without compromising on the quality of the service.

"All three expressed how important cloud services are and will be for their business, and because they have had a long-term relationship with most of their clients, and a well proven billing system, they are confident that most of them will decide to stay with them."

But before all that happens, the operators in Latin America with cloud-services dollars in their sights clearly have an education job to do.

— Paul Rainford, Assistant Editor, Europe, Light Reading

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