Emerging markets: Is the cloud truly global?

As we evolve to a hybrid of internal and external IT Services, companies on developed markets have invested significantly on infrastructure, so they are not rushing to outsource operations.

Emerging markets have lower data center investments…Are they more fit to consume cloud services? Can we use the same tactics to reach them?

Over the last 18 months I’ve been working on enabling the "cloud software services” transformation for Microsoft Latin America. The journey has been harder than expected:

• Customers. As in any other region of the world, you will find early adopters, late majority and skeptics. Academic institutions are leveraging free e-mail offers faster than any other segment, but when provided to them as cost reduction only. The collaboration market for consumer is there, but for enterprises still focused on the interior.
• Latency. Most governments require that at least their data is kept in-Country… if you target private organizations, most US data centers can effectively cover Mexico, Central America and the Caribbean. For all South America you will need to invest on a hoster partner to effectively deliver services. Be prepared to extremely low upload speeds.
• Local billing is simply not there. “Software services” can generate tax issues that make it a lot more expensive. Billing is a complex issue for small and medium size organizations that do not use international credit cards. They are also bad for SaaS providers, impacting 15-25% of the total “per user” cost.
• Marketing. The Social media is just starting to develop on emerging markets, you will need to promote using traditional media and existing partners or might not reach critical mass. Expect promotion cost to be higher than expected, because targeting is still limited.
• Partners. Business is conducted on different ways on each Country. Most customers are not ready to buy direct. This is a huge challenge because intermediaries expect to make a significant “traditional” margin. If your service is free then the problem you face is volume.
• Do you plan to use online support? Sorry, Latin America organizations demand phone support… The lower costs of HR make it possible and desirable.
• Internal Incubation. Most software organizations cannot afford the incubation process required to initiate the motion of software services sale, they rely on their existing workforces.

For Microsoft, 2007-2009 was a period to establish hundreds of partnerships that will make it possible to offer the choices to customers: internal, partner or vendor hosted mixed services. The vertical and horizontal application still need the “multi-headed” treatment so that they can be consumed by a smart client, browser or a mobile device.

The vision of getting access to your information from any device and on any place – including emerging markets – is becoming real, but will take at least 5-10 more years before it becomes truly global.