Analysis of the Colombian Cloud Computing Market

 Government Action and Service Provider Presence Inspire

Confidence

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February 2014

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Q&A

Guilherme K Campos, Industry Analyst

Frost & Sullivan

guilherme.campos@frost.com

Connect with me on social media:

@GuiKatzor

http://br.linkedin.com/in/guilhermekcampos/

@Frost_Latam

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Executive Summary

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Executive Summary

• Revenue for the Colombian cloud computing market was $31.6 million in 2012. Revenue is expected to reach $196.5 million by 2017 at a 44.1% compound annual growth rate (CAGR).

• Infrastructure as a service (IaaS), software as a service (SaaS), and platform as a service (PaaS) will show aggressive growth in the next 4 to 5 years.

• The Colombian market is most willing to invest in SaaS that currently represents 57% of the cloud computing market revenue, followed by IaaS with 41%. PaaS still has minimal market representation due to companies not understanding its potential uses.

• Security is currently Colombian companies’ biggest concern, restraining them from sending their information to the cloud. Law 1581, which took effect July 2013, established data protection norms that must be followed by all providers.

• These actions will create a better sense of security among buyers. Vendors are also investing in local data centers.

• The main aspect driving Colombian companies to cloud computing is cost reduction, changing investments from capital expenditure (CAPEX) to operational expenditure (OPEX). The option to increase or decrease services according to company needs is another important driver for buyers, especially chief financial officers (CFOs).

Source: Frost & Sullivan

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Drivers and Restraints

Total Cloud Computing Market: Key Market Drivers and Restraints, Colombia, 2013–2017

Security H M M

Lack of local data centers prepared for cloud computing M M L

Lack of knowledge M L L

1–2 years 3–4 years 5th year

Cost reductionH H H

Flexible environment H H H

Information available anywhere H H H

Impact: H=High M=Medium L=Low Note: Drivers & Restraints are ranked in order of impact. Source: Frost & Sullivan

Mar

ket

Dri

vers

Mar

ket

Res

trai

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Drivers Explained

Cost Reduction

Cloud computing is directly related to the business strategy of turning CAPEX into OPEX,

which is a great way to reduce costs. Instead of investing money in expanding capacity

and having to manage and control it, companies are willing to invest in cloud services.

Flexible Environment

The option to increase or decrease infrastructure according to the company’s needs is an

attractive driver, especially for CFOs.

Information Available Anywhere

The business model of cloud computing, together with mobility, enables companies to

have access to their information anywhere, anytime, and accessed by any device with an

Internet connection.

Source: Frost & Sullivan

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Restraints Explained

Security

The main restraint to adoption of cloud computing is security regarding data protection.

With the increase of market knowledge about cloud computing and with changes within the

vendor offers regarding Law 1581, the impact of this restraint will decrease.

Lack of Local Data Centers Prepared for Cloud Computing

Most vendors do not have a data center in Colombia that offers cloud computing, but

usually purchase the service from Brazil or Miami. In 2013, vendors announced investments

in Colombia due to higher regional demand and to lower costs when compared to those in

Brazil.

Lack of Knowledge

Although much of the market already understands the concept of cloud computing, several

Colombian companies still do not know who the cloud providers are and what solutions or

services they offer.  

Source: Frost & Sullivan

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