Cloud Computing Has a Bright Future in Emerging Economies
It is certainly no secret that a growing number of organizations are turning to cloud computing for new efficiencies or to realize significant operational cost savings. But for some organizations, the cloud holds the potential to truly revolutionize business processes and enable smart companies to leapfrog multiple technology steps in their digital transformation.
Nowhere is that more the case than in emerging economies. Strategic organizations are able to use the cloud to overcome a host of shortcomings in local infrastructure support, a shortage of qualified tech workers in the local job market, or a lack of entrepreneurs to drive innovation.
Consider the findings of a recent study by The Economist Intelligence Unit (EIU), which looked at cloud computing trends in developed versus developing economies. The differences in how organizations in each category viewed opportunities in the cloud were often dramatic.
“In developed economies technology is driving disruption, or challenging and displacing traditional firms with new digital business models,” the study noted. “In developing economies, there appears to be a pattern of leapfrogging, in which technology-driven businesses bypass the physical infrastructure and go straight to sophisticated, digital-based models.”
Cloud Love Affair in Developing Economies
For the purposes of this study, developing included economies in Australia, Brazil, China, India, Japan, Russia, Saudi Arabia, and South Africa. Developed economies included France, Germany, the United Kingdom, and the United States. A panel of 360 executives were surveyed, equally split between developed and developing economies, from organizations across five key industries: banking, education, healthcare, manufacturing, and retail. The pace of cloud adoption certainly varied by industry, but perhaps surprisingly, the pace of cloud adoption overall was considerably higher in developing economies.
Further, 80 percent of organizations in developing economies say the enabling infrastructure in their country supports a reasonable or a high level of cloud computing, compared to only 62 percent of organizations in developed economies. Another insight drawn from the study is that organizations in developing economies place more stock in the role of entrepreneurs to drive innovation in the cloud and are less convinced of a significant role for government in advancing cloud usage.
The Perfect Rx for Healthcare Advancement
As noted, views on the role of cloud computing to advance digital transformation in developed economies versus developing economies differ significantly by industry. The cloud has a much greater presence in healthcare in developing economies, for example.
There are two other significant findings regarding the use of the cloud in healthcare between the two types of economies. Healthcare providers in developed economies are much more likely to view the cloud as very important for both treating remote patients and supporting a preventive healthcare approach.
The Cloud as Class Act in Education
The cloud has been a bit slower to catch on in education, with a small number of organizations saying the cloud currently has a pervasive presence in either type of economy. Educational organizations in developing economies, however, believe that in the next one to five years, the cloud will be a major factor in education.
It is interesting to note that the cloud plays a significant role in advancing higher education in developed economies, while its greatest impact is seen in public education—especially for very young children—in developing economies.
The Sky’s the Limit for the Cloud in Retail
The sky’s the limit for the cloud in the retail sector in developing economies. Three-quarters of retail organizations already say the cloud has a strong presence in developing economies. Most impressively, 80 percent of organizations in developing economies say the cloud will be a major factor for retail overall in their country.
Cloud gazing is no mere spectator sport here. The expectation is that cloud investments by retailers will increase five-fold as more organizations recognize its ability to help them increase access to and by customers. Some analysts also point to the cloud’s potential to help retailers expand markets and launch new businesses, lower prices, and reduce costs to consumers.
Manufacturing Looks for a Digital Makeover
As with the education sector, manufacturing organizations in both developed and developing economies say the cloud has a significant presence now. Cloud computing is being used to reduce supply chain costs, connect suppliers globally, and to support partnerships between customers and suppliers.
But the challenges for manufacturers to work in the cloud are not insignificant. Embedding cloud into a factory requires the design of new sensors, ensuring common standards across machines, communications protocols—and a host of other cyber-physical challenges to be met.
But just wait. Firms are currently investing billions to overcome these hurdles. The EIU study forecasts an extremely rapid penetration of cloud into manufacturing—with over 90 percent projecting cloud will be a significant factor in only three years’ time.
The greatest gain will be in the accessing of software to support manufacturing processes, according to a majority of organizations in all economies. For example, traditional manufacturing processes have used a time-consuming process of design–test–fail, which is repeated until a desired result is obtained. Cloud-based design, combined with advanced analytics, can significantly shorten the design phase of a product. This will in turn help to reduce production costs, shorten time to market, and better enable customization.
Our Money’s on the Cloud in Banking Services
One industry where the cloud will truly enable organizations to leapfrog in their technology adoption is in banking. The impact of the cloud will be felt on the banking industry overall, but particularly in enabling customers to make digital payments.
When you break down the numbers on where the cloud will have the greatest impact in banking, it is by far in developed economies. Organizations in developed economies say the cloud will help create new ways of banking and saving, lower the cost of banking, and bring banking services to remote and poorer populations.
Opportunities Abound, but Challenges Remain
Finally, the EIU study further confirms the findings of previous studies on the cloud: security concerns remain the No. 1 obstacle to adoption—for both developed and developing economies—among those organizations that are slow, or unwilling, to embrace application development or data management in the cloud.
Other top challenges to higher usage of the cloud were poor supporting infrastructure, the availability of qualified personnel, the willingness of consumers to buy digital services, and strong foreign competition.
Stay tuned on Radius for a continued dive into the EIU cloud computing research, including a deeper look at the cloud’s impact on the manufacturing industry.