Clouds and countries: national cloud market features

    Cloud computing applications and platforms are being used today by an increasing number of enterprises. Acting as an IT infrastructure that drives digital transformation, the global cloud services market is driving the emergence of new business models.

    Numerous persuasive business cases demonstrate the use of cloud platforms as a catalyst for business growth. Low initial investment, rental model, quick and easy start make companies evaluate the applicability of cloud solutions in their specific situation. Companies of different profiles due to the use of clouds expect to reduce costs, while increasing the efficiency of their activities.

    Growth forecast for public cloud services in the world, billion dollars (source: Gartner, September 2018).

    Three leaders

    According to Gartner, by 2020 the turnover of the global cloud services market will reach $ 411 billion. The fastest growing direction will be IaaS. Crossing $ 40 billion in 2018, this segment could reach $ 83.5 billion by 2021. At the same time, the cloud services market continues to concentrate around three main players that will occupy 70% of the IaaS market: Google, Amazon and Microsoft.

    Annual revenue forecast of the largest cloud providers (billion dollars), 2018 Source: RightScale 2018 State of the Cloud Report .

    Trends and revenue growth forecast for Top 3 cloud service providers over a five-year period.

    Change in market share of Top 3 cloud service providers over a five year period.

    Over the past year, the cloud of leading providers has grown by the number of customers using them to run corporate applications by 5% -15%. Source: RightScale.

    According to RightScale, at present, the quarterly volume of the global market for corporate SaaS services is $ 20 billion and is growing at 32% per year. Microsoft leads with a market share of over 17% and is the leading provider of SaaS due to its position as a fast-growing segment of collaborative applications.

    Like whose clouds do corporate clients use?

    While some experts argue that the cloud services market has no national specificity, others hold a different point of view. For example, in the West, Amazon and Microsoft cover dozens of cloud services for almost all the needs of corporate customers. In China, the Alibaba Cloud local market is almost completely monopolized. In Russia, to a lesser extent than in other countries, there are global public providers like Amazon.

    How companies use public clouds from different providers: dark blue — used for business applications; blue - experimenting with cloudy environments; blue - make plans. Source: RightScale.

    Growing use of public clouds in the world according to a survey of enterprises in 2017 and 2018. Source: RightScale.

    In the world, 81% of large enterprises choose a multi-cloud strategy. Source: RightScale.

    According to a survey of representatives of about 1000 companies from different countries, conducted by RightScale in 2018, 66% of cloud service users plan to increase their costs for clouds by at least 20%, and 17% - by 50% -100%.

    For most cloud users, the most important thing is cost optimization and load transfer to the cloud environment. Source: RightScale.

    As for the priority cloud initiatives, for 58% of cloud users, the most important thing is to reduce costs by optimizing work with existing cloud services. This is followed by moving to the cloud of additional workloads, improving the quality of financial reporting, optimizing policies for effective management, implementing the cloud-first strategy (targeting computing in the cloud), wider use of containers, implementing the CI / CD approach (continuous integration and deployment). Software), expanding the use of public clouds and using a broker to work with multi-clouds.

    Cloud Market in Russia

    Not only companies of the SMB segment, but also representatives of financial and government organizations are increasingly thinking about the cloud model. As practice shows, with the help of clouds, domestic companies seek to reduce the cost of data processing and IT cost of ownership, accelerate decision-making and improve the quality of customer service. Cloud services are increasingly used to improve the efficiency of civil servants.

    The offer of cloud services and the number of solutions is growing, related services are developing on the Russian market. Advanced cloud technologies are becoming more accessible. In Russia, virtually all industries are interested in cloud services today. There is an active digital transformation in retail, in the industrial sector, in telecom, in the banking sector. Companies are looking for ways to optimize costs and are aware of the benefits of clouds.

    When this occurs, the following changes in the structure of demand:

    • Increased demand for cloud and other virtual services while maintaining a high proportion of collocation. The desire of companies to optimize IT costs contributes to the growth of interest in the lease of virtual resources. Although there remain data centers that are fully oriented to collocation (for example, DataSpace and IXcellerate), such sites are used to deploy cloud platforms by other providers.
    • Commercial data centers and clouds are becoming more popular than corporate sites. In the coming years, the growth in the number of corporate data centers throughout the world will be significantly lower than the growth rates of commercial data centers and data centers used to provide cloud services.
    • Higher and more personalized requirements for IT infrastructure data centers. Growing requirements for services, level of professionalism and knowledge of data center service providers, safety, quality, regulatory compliance.
    • Demand for certified sites with the required level of security due to stricter legal requirements for working with personal data and GIS placement.
    • Increased demand for provision of additional services by providers of the "one-stop" principle, including support services, IP administration. Demand for consulting services due to the increasing complexity of products and solutions, the rapid development of services.

    There is a transition to integrated services. This involves a combination of both traditional equipment placement services and services to protect access to customer equipment, equipment support services, rental of resources and software.

    The range of services and offer packages is extended, including IaaS, SaaS, PaaS, “virtual data center”, backup services, protection from DDoS attacks, etc.

    Another trend is the growth in demand for certified virtual and physical data centers for the placement of GIS and SPDs. Such sites must meet the regulatory requirements of the laws of Russia, FSTEC and the FSB, as well as the best practices for providing information security, as evidenced by the certificate of compliance of the data center and information systems with the security requirements.

    Russian clouds and safety

    Digital transformation extends unauthorized access to corporate networks, so companies increase their investments in secure clouds. On their basis, end-user services and complex IT solutions are implemented. Most cloud projects in the Russian Federation are implemented with regard to security. Leading providers are actively increasing their cybersecurity competencies. The demand for cloud IS services is determined by government requirements for the protection of users' personal data and critical IT infrastructure. Most of the projects on information security are implemented for companies bound by regulatory requirements of market regulators, in particular, personal data protection.

    In the segment of cloud information security services, the number of players increases annually. This is not only IT companies involved in providing information security in cloud environments, but also the largest players in related markets, primarily from the telecom and financial industry.

    Experts predict an increase in the number of requests for cloud infrastructure protected according to the requirements of №187-ФЗ “On the security of the critical information infrastructure of the Russian Federation” And the presence of a provider certified for 152-FZ segment reduces the time and financial costs of implementing solutions in a secure cloud.

    In addition to the requirements of the regulatory authorities of the Russian Federation for many domestic companies relevant international safety standards, in particular, compliance with European standards for storing user data (GDPR). This applies to companies providing cloud services not only in Russia but also abroad.

    Problems of security and compliance with the law - the main obstacles for those who are thinking about the introduction of cloud technologies. As in other countries, the specifics of the Russian cloud market is also associated with the peculiarities of the legislation. The entry into force of the 152-FZ gave rise to concerns about the impossibility of using public clouds, and some customers began to transfer their systems from foreign data centers to the Russian Federation, despite the absence of a ban on cross-border data transmission in the law.

    However, many services after placing personal data of users on the territory of the Russian Federation continue to use foreign clouds to support their infrastructure. According to Jaon & Partners Consulting’s IaaS estimate, the total turnover of Russian providers in the IaaS segment is approximately equal to the amount that Russian companies pay for Western services.

    On the other hand, in 2018, foreign companies began to actively purchase services from Russian cloud providers, mainly to meet the requirements of local regulators. In addition to Google, Chinese providers, including Alibaba and Huawei, are increasing their presence in Russia. True, Alibaba is only preparing to enter the Russian market. The growth of activity of international giants is manifested in the increase in the partner base and the strengthening of their teams in the Russian Federation.

    Huawei, in partnership with the Russian data center operator 3data, will offer Huawei 3Data Cloud public cloud services. In China, it provides many cloud services, of which only 20 are still available in Russia, but their number is planned to be increased to 50. These are mainly infrastructure services, such as the Elastic Cloud Server or Elastic Volume Storage. Huawei believes that the company has advantages over both the world's major and Russian providers. Competitors are either not present in Russia, or do not have such powerful resources. Huawei is going to attract developers to create new services, plans to create a cloud services and applications store.

    Rapid growth with adverse economic background

    The volume of the Russian cloud market is still small. According to IDC estimates, it is less than 1% of the corresponding segment of the global market. According to various sources, the average annual growth dynamics of the Russian cloud services market is 20% -25%. Thus, according to a joint study by SAP and Forrester, with an annual average growth of 21%, its volume could reach 48 billion rubles by 2020. In Forrester believe that by 2020, the share of SaaS will only increase and reach 62.4%, while the share of IaaS, on the contrary, will decrease to 32.3%.

    Growth forecast of the Russian cloud services market to 2020 (billion rubles). Source: SAP, February 2017.

    According to iKS-Consulting, the Russian cloud services market grew by 25% in 2018 compared to 2017 and reached 68.4 billion rubles, with the SaaS segment reaching 70%. It will grow by about 23% per year and by the end of 2022 it can reach 155 billion rubles.

    It is noted that Russia has already become an exporter of cloud services: the share of foreign companies from domestic cloud providers accounts for 5.1%, or 2.4 billion rubles, in the SaaS segment, and in the segment - 2.2%, or 380 million. rub.

    As a rule, companies that only create IT infrastructure, domestic small and medium businesses are interested in IaaS, DraaS (Disaster Recovery as a Service) services, private cloud services. Large companies are more likely to use private clouds in the form of services or IaaS projects, SMB representatives prefer ready-made SaaS services. Improving the reliability and reducing the cost of service access channels has led to an increase in such services.

    At the same time, there are fewer public cloud services in the Russian market than in the foreign market, and most of the SaaS services are focused on financial, sales (ERP, CRM) and production management. There is a problem with the quality of related services: object data stores, load balancers, DNS cloud services, and so on. Few providers offer them.

    In general, the development of the cloud market in Russia keeps pace with world trends, albeit with some lag. To its differences can be attributed a slight delay in the formation of proposals and the lagging dynamics of the distribution of cloud services. In addition, Russia has specific IT legislation.

    International problems and sanctions risks, the activities of Roskomnadzor on blocking IP addresses create certain difficulties when using foreign cloud services in Russia. So in the spring of 2018, blocking led to millions of customer losses, and against this background, the demand for services of Russian cloud providers grew by 30% -60%.

    Growth forecast of the Russian cloud services market (billion rubles) according to IKS Consulting.

    This situation to a certain extent spurs the development of the domestic cloud services market, promotes the use of open cloud solutions like OpenStack. In addition, this corresponds to the course on import substitution, although it is still difficult to speak about its impact on the cloud market of the Russian Federation.

    Clouds and Open Source

    The capabilities of cloud technologies and Open Source are considered as one of the important incentives for the growth of the industry. An open approach is characterized by economic efficiency and scalability. Open architectures reduce the cost of creating a data center.

    The policy of import substitution and preferences to domestic software developers in public procurement stimulates the transition from foreign solutions to domestic products for data centers. In particular, there is an increase in interest in cloud platforms of Russian developers based on OpenStack.

    Many cloud providers offer customers both proprietary cloud platforms and Open Source technologies. Thus, the use of OpenStack technology gives customers a new degree of freedom in developing their services. This trend is increasing all over the world.

    Trust but check

    In Russia, the development of cloud services is ahead of the overall growth of the IT market. However, some Russian customers are still somewhat doubtful and distrustful of the clouds. Large businesses and government customers already have a developed IT infrastructure, and they are also more strongly influenced by local legislation. Many companies intend to rely on hybrid cloud models, if necessary, transfer part of their business processes to public clouds. An important stimulus for the introduction of cloud models is the need to support the activities of companies with a geographically distributed branch structure.

    Now customers want to get end-to-end SLA for the entire complete solution - from communication channels and client systems to business applications themselves. In an effort to win customers' trust, Russian cloud providers often offer more stringent conditions for the level of service, and sometimes, having gained a price advantage as a result of the ruble depreciation, more attractive rates than foreign services. However, over the past year, tariffs for services of domestic service providers have not changed. At the same time, large Western players operating in a highly competitive market have reduced their prices by 20% -50%. The advantages of global players are “economies of scale” and low costs, extensive experience. However, local providers are ready to take into account local specifics, they are closer to customers.

    The main tasks that companies solve using cloud services. Source: Oracle, 2017.

    The Russian market is also characterized by relatively low awareness of the possibilities of cloud services, fears of “losing control” when transferring functions to external contractors, unwillingness of IT managers to lose their influence in the company. Do not encourage companies to move to the cloud inherited, previously acquired IT infrastructure and its own data center. Often, the lack of information about the migration process itself keeps from going to the clouds.

    Meanwhile, an important incentive is not so much cost reduction, as obtaining benefits for the business itself, for example, in the form of accelerating the delivery of new services or products to the market, flexibility (when resources can be quickly increased or reduced their consumption), productivity and reliability (guaranteed by agreements SLA), the lack of significant initial investment.

    Local players may be preferable for Russian companies, since all personal data of users is stored in Russia, the cost of services is in rubles, data centers are located closer to users, and with technical support you can communicate in Russian. An important difference between Russian services is the localization of interfaces, and this is a requirement necessary for participation in most tenders.

    The expertise and reputation of Russian cloud service providers are growing, as well as customer confidence in them. In the coming years, we can expect automation and “intellectualization” of cloud security. Solutions are already emerging with processing and real-time analytics of big data, machine learning, artificial intelligence, and behavioral analysis systems (UEBA).

    Who needs clouds?

    In the first place, clouds are of interest for companies with a regional branch structure interested in mobility of employees and operational efficiency. This, in particular, such industries as telecom, insurance, retail and banking sector. There is a growing interest in the clouds in the public sector.

    SMB segment companies are increasingly using public cloud services, large and state-owned companies are creating private clouds, using hybrid models. The development of various types of electronic services is a significant incentive for the promotion of cloud services in Russia.

    Business goes to the clouds. Source: IKS Consulting, 2018. The

    demand for cloud models is growing due to an increase in the volume of corporate data, new laws and government initiatives. One of the growth drivers is the state program for the development of the digital economy, since it involves the automation of enterprises. In the world market of cloud services by 2023 the share of the Russian Federation may reach 3%.

    However, for a significant increase in the share of Russia in the global cloud market need public incentives to domestic providers. They are also able to compete at the expense of the product itself, the cost of its creation. Meanwhile, large foreign suppliers of cloud solutions are actively developing the development in the Russian Federation.

    In general, to date, there have been qualitative changes in the use of clouds, their practical application. Clouds have become one of the fastest growing areas of the IT market. The cloud market in the Russian Federation is already quite developed and segmented, the demand among customers is growing, the complexity of projects is increasing, there are proven technologies and tools, and industry experience has been gained. And there is no doubt about the prospects of the clouds.

    At the end of 2017, the leading position in the ranking of Russian IaaS service providers compiled by CNews Analytics with an indicator of 1.6 billion rubles. took Rostelecom. Among other major suppliers, which were noted for the first time in the rating, analysts single out Selectel (sales of IaaS in 2017 reached 1,046 billion rubles, 4th place in the rating) and IBS (666 million rubles, 9th place). Also in the ranking for the first time participated # CloudMS (360 million rubles., 12th place), Mail.Ru Cloud Solutions (228 million rubles., 14th place) and RuVDS (64 million rubles., 19th place). The highest growth rates were in # CloudMS (+ 287%), RuVDS (+ 182%), Oxygen (+ 107%), Sofline (+ 100%) and M1cloud (+ 85%). Among the reasons for the rapid growth is the introduction of new cloud services to the market, as well as the implementation of the requirements of 152-FZ. There was a significant increase in requests for secure cloud infrastructure in accordance with 152-ФЗ,

    The most popular SaaS products. Source: CNews Analytics.

    Most participants in the SaaS rating also showed a positive trend. The growth leaders in 2017 were Softline (+ 117%), amoCRM (+ 90%, Artsofte (+ 78%) and Mindbox (+ 72%). The

    rates and directions of development of cloud services in Russia as a whole coincide with the world ones: infrastructure services are complemented by business-oriented ones.However, the actual dynamics of migration to the clouds turned out to be lower than it appeared a few years ago.The Russian market is now entering the period of maturity of public clouds, trust in providers is growing, but the process of its formation is still in progress consolidating the market.

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