1. Cloud Computing Landscape in Key Emerging Markets
November 2010
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2. Global IT spending is springing back after a decline last year with a strong push from BRICSS 1
markets
IT Spend Growth Trend by Regions/ Countries, 2010, In Constant Currency
25.0%
21.0%
20.0%
17.0%
15.0% 14.0%
13.0%
10.0% 8.0%
6.0% 6.6%
5.0%
5.0% 3.0%
0.5%
0.0%
Worldwide United Western Japan China Russia Brazil India South South
States Europe Africa Korea
• Emerging markets such as Brazil, Russia, India, China, South Africa & South Korea (BRICSS) have
shown tremendous growth in the IT investments over the last 12 months
• BRIC countries have been growing faster compared to others for the last few years primarily
owing to faster growth of user industries in these markets
Zinnov
Source: Zinnov Research Confidential

3. BRICSS nations contribute significantly towards the IT spend globally 2
Split of IT Investments by Category, US$ Billion in 2010E
$100
IT Spend Contribution by BRICSS Countries, 2010E $86.8
$90
$80
$18.4
$70
ROW $11.3
$60
89%
$50
$40
$30 $57.1 $21.8 $21.3
$15.4 $15.4
BRICSS $20
$9.4 $8.9 $9.4
11% $6.4 $3.9
$10 $2.9 $3.8 $3.2
$5.7 $3.5
$9.5 $8.6 $8.3 $1.8
$0 $3.3 $4.1
China India Brazil South Russia South
Korea Africa
Worldwide IT Spend (2010E) = US$ 1.51 Trillion
IT Equipment/ Hardware Software Products IT Services
Zinnov
Source: World Bank, Zinnov Research Confidential

4. Characteristics of the BRICSS nations are unique and mandate an altogether different approach 3
1 Highly Demanding Market 2 Rapidly Changing Market
• Most value for least price is expected • Variance in needs based on demography/ location
• Product should enable revenue generation • Need for localization - tailor product to market needs
• No need of advanced features – work should get done • Attach to local brands/ channels for market acceptance
• Education about consumption – user friendly
3 Diversity 4 Limited Income/ Revenue
• Large base of SMBs; fast growing enterprises • Revenues lesser than counterparts in developed nations
• Young generation make 50% of the population • Smaller/ compact models with variants preferred
• Huge market for “cool” product, entertainment & • Pay per use models thrive in emerging markets
communication devices • Products for community/ group succeed for cost reason
4 Poor Infrastructure 6 Weak Distribution Network
• Limitations of climate, infrastructure and resources • Lack of strong supply & distribution network
such as power • Lack of financing options – Microfinance required
• Need to build infrastructure to support the business • Position smaller stores, telcos and other channels for reach
• Need to use existing infrastructure creatively
Zinnov
Source: Zinnov Research Confidential

5. CIO organizations’ top business and technology priorities, clearly spell out a future in cloud for 4
the market constituents
Top Business Priorities for CIOs in 2010 Top Technology Priorities for CIOs in 2010
Business Process Improvement 1 Virtualization
Reducing Enterprise Costs 2 Cloud Computing
Increasing Use of Information/ Analytics 3 Web 2.0
Improving Enterprise Workforce Effectiveness 4 Networking, Voice & Data Communications
Attracting & Retaining New Customers 5 Business Intelligence
Managing Change Initiatives 6 Mobile Technologies
While IT budgets increase at a fast pace, storage demand is growing at 20-30% and bandwidth
demand is increasing at a fast pace of 30-50% in BRICSS nations, clearly mandating need for
higher cost control from the IT departments within the enterprises – cloud is the way forward
Zinnov
Source: Zinnov analysis of interactions with CIOs of multiple Global & local companies Confidential

6. The cloud market in BRICSS nation is slowly starting to come out of the nascent stages 5
Evolution of Public Cloud Spending (US$ Country Wise Share of Public Cloud
Million) in BRICSS Nations 2008-2011E Spending in 2010
$800
$688.0
$700
$106.2 India
$600 $457.4
South 16%
$500 $128.8
Korea
$310.8
$400 $69.4 29%
Brazil
$85.8
$300 13%
$44.5
$58.8 $453.0
$200
$302.1 Russia
$100 $207.4 4%
China
$0 36%
2008 2009 2010E South
Africa
SaaS PaaS IaaS 3%
SaaS
• Small and medium businesses are a key focus area for majority of the players looking to scale in BRICSS
• The key SaaS adopting verticals in BRICSS are Telecom, Financial services, Government, Manufacturing, etc.
PaaS
• The PaaS/ Platform ecosystem in BRICSS is still in its early stages with very less local company participation
• Most of the local developers leverage global platform providers such as Force.com, Google, Azure etc in the current landscape
IaaS
• The IaaS & Hosting ecosystem in BRICSS is very nascent. The hosting market is completely dominated by the state run telecom
companies and has very few small or mid-sized hosting providers
Zinnov
Source: Zinnov interactions with stakeholders across the cloud computing stack across geographies Confidential

7. While BFSI, Telecom & Government are the priority verticals in BRICSS, other verticals are also 6
fast catching up
Key Vertical Focus for Cloud Solutions in BRICSS Countries
India China S. Korea S. Africa Brazil Russia
BFSI
Telecom
Government
IT-ITeS
Healthcare
Education
Manufacturing
Oil & Gas
Focus
Low High
Zinnov
Source: Confidential

8. The future of cloud market in BRICSS countries is very strong with growth rates well over 25% 7
for the next 5 years
Growth of Public Cloud Spending in BRICSS
Nations 2010-2015E
$4,000
$3,480.8
$3,500 • Current cloud budget of enterprises in
BRICSS countries is less than 50% of the
$727.0 budget of developed nations such as
$3,000
US & Western European countries
$2,500 CAGR = • More than 50% of enterprises/ SMBs in
$675.1
38.3% India & China are looking to increase
$2,000 the IT investments over the next year
$1,500 • Private cloud opportunity in the
immediate future to be significantly
larger because of concerns around
$1,000 $688.0 $2,078.7
SLAs, data security and latency
$106.2
$500 $128.8 • Cloud vendors across the stack would
$453.0 be investing heavily to address some of
$0 the challenges on demand side
2010E 2015E
SaaS PaaS IaaS
Zinnov
Source: Confidential

9. BRICSS ICT ecosystem is continuously improving on multiple fronts which is enabling increased 8
adoption of cloud services
Governments in BRICSS are extremely active participants in the Cloud ecosystem
1 • The government is actively promoting cloud computing through construction of various testbeds and
the launch of multiple cloud service initiatives such as e-governance, cloud grids etc.
Telecom Service Providers are aggressively focusing on the cloud opportunity
2 • With fast growing subscriber base and declining Average Revenue Per User (ARPU), the Telecom
Service Providers (TSPs) are looking at targeting the cloud computing opportunity
Internet Infrastructure is increasingly gaining traction in BRICSS
3 • The penetration of broadband and 3G is building a promising opportunity for cloud solutions in the
BRICSS nations
Large base of cost sensitive small & medium enterprises looking for IT adoption
4 • A large base of SMBs (closed to 100 million in BRICSS nations alone) are looking to enhance
the global competitiveness by increasing use of IT
Zinnov
Source: Zinnov Analysis Confidential

10. Governments in BRICSS are aggressively promoting cloud computing through multiple policies 9
and partnerships (1/2)
• Huge investments in e-governance initiatives in India; administrators in India are
trying to implement cloud computing in e-governance
• Government is making headway into the cloud computing space by conducting
India various awareness programs for its IT departments
• UID Authority is creating a platform (identify, authentication and payment) onto
which they would like to get solution providers and startups
• Stimulus package of US$ 39 Bn to positively impact the IT spending of various
industry verticals
China
• Specific focus on cloud computing in the 12th five year plan
• E-governance spending on a fast pace in China with a strong focus on cloud; 12
large golden shine projects towards e-governance initiatives
• The Korean government plans to invest about US$ 540 Mn till 2014 to stimulate
the domestic cloud computing market
South Korea • Key goals of the government are to globally increase the Korean cloud market
share to 10% and reduce cost of public ICT infrastructure by 50%
• Initiatives across public sector IaaS, cloud computing test beds, facilitating private
sector services, and policy regulations/ standards implementation
Zinnov
Source: Zinnov analysis of Government’s Policy Updates; Official press releases by Ministry of IT Confidential

11. Governments in BRICSS are aggressively promoting cloud computing through multiple policies 10
and partnerships (2/2)
• Starting to consider projects involving cloud computing technology by hosting
services online. IT is moving from paper-based ledgers to state-of-the-art systems
• Advanced public service agencies such as SARS are running cloud based
South Africa technologies in their environments
• The Department of Home Affairs (DHA) has announced that it will spend more than
SAR500 Mn on IT projects in the current financial year
• Government is trying to diversify the Russian economy by reducing its dependence
on oil and gas exports. It has made developing hi-tech sectors and encouraging
Russia research the focal point of the economic agenda
• Expansive projects like "Electronic Russia" and "Electronic Government“
• Government is currently developing a modern center for R&D near Moscow and
the first innovation project is a cloud computing based project worth US$29 million
• Huge investments in the national broadband plan to triple access to broadband
services by 2014
Brazil • Similar to India’s UID project, the government of Brazil has a civil digital
identification project with projected investments of approximately US$800mn
• As a part of its ongoing Growth Acceleration Plan – 2, the government plans to
spend US$23 billion on science and technology with a focus on cloud computing
Zinnov
Source: Zinnov analysis of Government’s Policy Updates; Official press releases by Ministry of IT Confidential

12. From the demand perspective – Security and Integration are the top concerns with using public 11
cloud services
Public Cloud Service Concerns of CIOs, 2010
Data security and reliability
• The CIO organizations are more cautious about data confidentiality & security
• There is a strong skepticism around business continuity for cloud deployments
Integration with existing systems and loss of control
• The seamless integration is crucial for leveraging cloud technology to the maximum. In the current scenario, the
compatibility issues hinder the integration
• The loss of control on the business processes is another concern which slows down the cloud adoption
Lack of maturity and service level agreements
• The cloud computing market is in nascent stage. The ecosystem of academia, enterprises and government is
essential to facilitate the cloud adoption
• There is lack of service level agreements and guarantees by the providers which adds to the user skepticism
Legal or regulatory ambiguity
• The regulations and policies are not very well defined. Also, the industry lacks standardization frameworks
• More clear regulations are needed to increase service providers’ accountability to gain consumer trust
Compliance with legal, regulatory and auditing requirements
• The government poses stringent regulations and auditing requirements in some of the BRICSS countries. This makes
the potential customers hesitant and inhibits the cloud adoption
Zinnov
Source: Zinnov analysis of Interviews with multiple senior stakeholders from the cloud ecosystem Confidential

13. Cloud service providers have adopted unique and differentiating approaches to succeed in 12
some of these fast growth BRICSS countries
1 Go Local – Language & Pricing localization for better market penetration – SuccessFactors, Salesforce.com
2 Local Infrastructure Presence – To showcase market commitment & remove latency issues – Salesforce.com, Amazon AWS
3 Local R&D Presence – For better market understanding & acceptance – IBM, Dell, HP, Microsoft, SuccessFactors
4 Aligning Strategy to Government Policy – For better revenue realization – IBM
5 SMEs Penetration – Extremely critical for scaling in the market – HP, Microsoft, Salesforce.com
6 High Touch, Local Field Sales Team Essential – For better market reach – Microsoft, Salesforce.com
7 Special Economic Zones/ IT Parks – To enable conducting business easier & market acceptance – Joyent, IBM, Google
8 University Partnerships – For local product innovation & ecosystem development – Google, EMC, IBM
9 Telecom Service Providers – For gaining immediate market foothold– Leading Telecom Providers in BRICSS
10 Increasing Private Cloud Adoption – To leverage legacy investments & mitigate security risk – Dell, IBM, HP
11 Alliances – Critical to operate in the market & reach out to potential customers – IBM, Dell, Oracle, Microsoft
Zinnov
Source: Zinnov analysis of Interviews with multiple senior stakeholders from the cloud ecosystem Confidential

14. In a market with close to 3 billion population, partnerships – both strategic and operational, are 13
extremely critical
1 2 3 4
Re-Branding & Direct Customer/
SMB Access Vertical Access
Localization Channel Access
Operational Partnerships
Strategic Partnerships
5 6
Complimenting
Government
Capabilities
Zinnov
Source: Zinnov analysis of Interviews with multiple senior stakeholders from the cloud ecosystem Confidential

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