Regional Public Cloud as a New Business Vertical: Opportunities Vs Risks

Data centres, telecommunication companies, and internet service providers, are a few businesses with rich technology expertise, strong local networks and robust existing infrastructure which is essential to venture into new business verticals. They already possess the key assets required to get there quickly. Expansion into the public cloud business is an extension to their current strengths and will enhance customer value proposition by catering to their unique requirements. Moreover, it will create fresh revenue streams for the business too. Although, expanding into a new vertical may seem tough in the beginning, but in the long run it’s a viable path to increasing revenues and to achieve business growth.

How to determine if this new vertical expansion is right for your business?

The one thing that challenges and drives businesses to expand into new business verticals is growth. In the pursuit of new growth, businesses are keen on evaluating innovative ways to expand into new ventures either regionally or in new geographies. But when is the right time to take this decision and what are the primary considerations? The right time depends on a number of factors.

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To start with, it’s essential to evaluate the opportunities and weigh the risks. ISPs, data centres or telcos, already have an established market and a successful business model and this makes it possible to mitigate at least a few of the risks as compared to anyone starting new. Expansion into the cloud business gives the opportunity to boost their existing service offerings, help in diversification and strengthen the overall company positioning. It’s an opportunity to leverage the past experience and core strengths to build a new vertical with minimum investment and timeframe.

Once there is clarity on whether this opportunity is right, move on to determine whether there’s a good, quantifiable reason that can justify resources, time, effort and ROI.

Assessing the risks and opportunities

It is imperative to know the exact opportunities and risks lie ahead before entering into a new vertical like regional public cloud service, especially for service providers like ISPs, telecoms and data centres. Assessing these gives a fair idea of whether the cloud business is the right next step:

Here are a few questions to consider before taking the leap:

• What is the size of the market and what is the growth rate?
• What is the revenue and market share potential?
• What resources will you need?
• Are there alternative providers for the same business?
• Does your offering have unique points of differentiation?

A little more research brings us to some of the interesting points on “opportunity vs risks” involved with launching a regional public cloud.

Exploring Opportunities

Here are the opportunities that make domestic public cloud business a lucrative enterprise business vertical for service providers.

• COVID-19 has accelerated digital transformation and cloud adoption

COVID-19 has transformed the way businesses operate and remote working is becoming more mainstream. As enterprises and businesses adapt to the new normal, many are planning a migration of applications and critical workloads to the cloud so that they are readily available and easily accessible. Regional public cloud providers have a distinct advantage to cater to this surging demand.

• Strict data localisation norms in your country

Data localisation compliances are becoming more and more strict. This is one of the main drivers for businesses to seek in-country or regional public cloud services. They can avoid wrangling with data laws and keep their data safely within localised boundaries. Regional public clouds are best suited to solve this pressing concern.

• Banking, healthcare, government & SaaS are among the top enterprises demanding local cloud services

Banking and healthcare sectors especially are increasing their emphasis on data localisation as there is always an apprehension around availing public cloud services from the global providers. Government institutions also realise that moving to the cloud provides effective access to data and applications. In the past, there was a hesitation about hosting these applications in a multi-tenanted environment, but with the security measures offered by cloud providers, this perception is changing too. The government sector decision makers are now looking at in-country public clouds due to the data localisation and sovereignty they offer along with improved agility and the ability to scale operations as needed. The demand for data localisation compliant clouds is on the rise in the banking, government and healthcare sectors.

• High demand for local currency billing of cloud resources

Usually, the hyperscale cloud providers bill in dollars and this creates problems with working capital management for larger transactions. The demand for cloud services offering local currency billing has hence increased. With this, customers can avoid foreign exchange shocks and manage operating expenses better.

• Enterprise’s tech teams demanding for low latency services for better end-user experience

Low latency requirements are essential for organisations that have large amounts of data that is frequently accessed. Technology enterprises are among the top sectors looking for cloud services with almost on-premise performance. This is one of the main reasons that localised cloud services will be the solution that enterprises seek. Extreme agility and accessibility along with the ability to keep operating costs low, make it an appealing option as compared to owning the infrastructure. Software and technology enterprises are among the early adopters for cloud services.

• The growing importance of 5G for telcos

Telcos are increasingly placing more emphasis on 5G. With ultra low latency, more reliability, massive network capacity and increased availability, telcos have the ability to supercharge all network pathways and turn them into blazing fast data highways. This will enable then to handle workloads that require heavy processing (e.g. AI, ML, IoT, blockchain, OTT, syndication etc.) on the edge and will no longer be bound by constraints of distances, latencies and network loads.

Mitigating Risks

While running successful operations as an ISP, telco or a data centre, it is natural to have some apprehension around the risks involved in setting up a new business vertical that includes cloud services. The first thought is about the capital and operational expenses.  There’s also the concern about the turnaround time to set up, go to market and returns on investments. We’ve worked with data centres and ISPs in the past and helped launch in-country public cloud for services across multiple locations. We’ve come up with a few ways to mitigate the risks of setting up a domestic public cloud:

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• Our solution based on open source and hardware-agnostic technology to ensure lowest possible capex
• Taking advantage of the start small and scale high solution, we ensure a low-risk start to the business
• Quick turnaround time – we help deploy and live in 4-5 weeks
• Option to reuse existing or spare hardware, thus eliminating upfront hardware costs altogether
• Mitigating loss on hardware costs as no specialised hardware required

How will you go about making the move?

After thorough understanding of the opportunities and risks, it will become clear whether a cloud business is the right plan for you. But, effectively competing in a mature market or an emerging market relies largely on the technology partner you choose and the marketing strategy you use. Who is the ideal target customer? What is the value proposition that’s tailored to those customer’s needs? How will you acquire customers? How will you build awareness and credibility in the market?

We believe that to build a cloud business profitably, providers need technical, service and market excellence. At IndiQus, we have helped regional service providers to launch and operate an in-country cloud business. And with our domain knowledge combined with your market knowledge, we can, together, build a world-class public cloud for your region too. You can read more about how we successfully designed and deployed an extremely scalable, 100% automated and cost effective regional public cloud for one of India’s largest data centre services providers in Mumbai, India. Understand how this data centre built a diverse portfolio of services for its subscribers.

If you are a data centre, ISP or a telecom company and would like to understand the opportunity in detail, you can book a free consultation with our cloud experts. Drop us a line to get more details.