1

What Do “Clouds” Look Like in China?

Current situation

After having lived in China since May 2012, I’ve been fortunate to have met with the leaders of most multinational software companies, leaders of local firms as well as industry analysts. My inspiration for this blog is based on a conversation I had with a senior leader at a leading “cloud” provider. What’s real in China? Infrastructure as a Service (IaaS). Based on the Central Government’s 12th Five-Year Plan, heavy investments have been made in data centers by local governments and State Owned Enterprises (government-owned companies). Their primary use is by Internet-based companies for the consumer internet.  However, in most cases, these facilities remain highly underutilized. There are no known stats as to the level of underutilization.

Other forms of Cloud for the enterprise, Software as a Service (SaaS) as well as Platform as a Service (PaaS), are barely used. I must emphasize that this is for the enterprise, not for consumers. In China, consumer applications such as Sina and Wiebo are widely used. The analog for North America would be Facebook and Twitter.

China and U.S. Differences

Based on my experience, the adoption of the Cloud in the U.S. is opposite to that in China. In the U.S., SaaS is most widely adopted, followed by IaaS and then PaaS. Rather than focus on the U.S., I’d like to describe Chinese hesitancy with SaaS – all related to risk aversion.

  • Risk – In most cases, taking business risk in China isn’t valued. There’s more downside than upside with risk. I’ve seen posters in U.S. offices that say “move fast and break things,” or “fail fast.” These do not culturally translate. Often times, SaaS is perceived as risky.
  • Data Concerns – I’ve spoken with many executives in China who are uncomfortable with data leaving the four walls of their enterprise.
  • No Reference Points – There isn’t a dominant SaaS player in China with demonstrated success in the enterprise.

Conclusions

What I’ve learned is that you cannot compare and contrast U.S./Chinese cultures. They are different and the differences must be respected. The U.S. market is very different from China. The U.S. is highly competitive and risk is rewarded. In the U.S., companies are constantly looking for a competitive advantage. In the U.S., cost drivers and investment models are different.

In China, most organizations operate domestically with limited competition. For example the top three telecom providers are all State Owned Enterprises. Unlike AT&T, T-Mobile, Verzion, etc., the Chinese telecom providers don’t fight to win share against the competition.

In my opinion, Cloud for the enterprise will be slow to adopt in China.

  • IaaS will grow at a slow pace
  • You will not see any material growth in SaaS, even less so in PaaS over the coming years.
FacebookTwitterLinkedInEmailPrintShare
This entry was posted in CIO, Cloud Computing and tagged , , , , , , , , , , , , , . Bookmark the permalink.

One Response to What Do “Clouds” Look Like in China?

  1. zhiwei says:

    Really?
    There are many friends talking about ‘Cloud’ around my ears.
    And also they try to learn and apply it.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>