Maximizing Opportunities, Minimizing Risks: The Reality of Data Sovereignty & Cloud Computing for CSPs

Since the inception of cloud computing in the mid-2000s, leading companies in tech, finance, as well as large MNCs (multi-national companies) have led the adoption of cloud, reaped huge benefits and proved the value of its wide adoption in the industrialized economies. While many organizations around the world, especially in emerging economies, are just starting on the journey. It is also noteworthy that global top clouds only cover a small portion of economies, e.g. global top 4 cloud providers cover under 20% of UN member states, meaning in many parts of the world, it’s still a struggle to gain access to modern cloud services locally.

On the other hand, we’ve witnessed a surge in beyond connectivity initiatives from Communications Service Providers (CSPs) around the world, compounded by data sovereignty legislation and budding demand from especially public sectors, a re-evaluation of cloud strategy in CSPs is long overdue. In the article, we are going to dive into the common challenges and opportunities in local cloud business and help CSPs make informed strategic decisions.

Tackling the challenges of data sovereignty & cloud computing

The adoption of cloud in CSPs’ internal business has been slow, despite some having deployed mission-critical applications on virtualized environments decades ago. The evolution from virtualized computing to cloud computing has resulted in limited exposure to and adoption in CSPs. This is due to the fact that most CSPs are yet to understand and realize the potential and value of fully managed, fully automated cloud-native services. Instead, they continue to rely on legacy technology to get by. However, with large deployment of 5G-enabled smart applications and advanced AI capabilities like ChatGPT, cloud has gradually evolved into a necessity, rather than a luxury for those who wish to stay relevant in future telecom markets.

The supply of cloud computing technology has been subject to a de facto monopoly, with only a few large companies controlling resources and technical know-how to build and run cloud businesses. Unfortunately, few, if any, CSPs can be found on this elite list of companies. This technology monopoly has prevented many potential CSPs from entering this high-growth and high-margin business, and further widened the technical and operational gap. This lack of supply diversity of cloud services will hinder further adoption in emerging markets and results in higher commercial, economic and even political prices for all across the spectrum. Nonetheless, there are also opportunities for local CSPs to launch their own cloud business.

A path to opportunities
According to a study by DLA PIPER, the majority of economies, to varying degrees, have established legislation on data sovereignty and personal data protection. This favorable regulatory environment should provide enough boost of confidence for CSPs to consider getting into this market.

We’ve seen in selected regions that leading CSPs have attempted to launch their own cloud business. Despite facing constraints such as limited automation and functionality, these locally sourced cloud services are well received, particularly among local public sectors, financial institutions and technology sectors. If we capitalize on this momentum, and continue to redefine and improve our offering, it is highly probable that local cloud services will unlock an even bigger portion of the market, which would otherwise have been lost to foreign competition.

Cloud is a heavy-asset business. Even with carefully curated technology and equipment, it’ll take years to break even financially. To many’s surprise, the top cost items in operating cloud business are the IDC and transmission. This is also the area many CSPs have an innate cost advantage as they own these heavy assets outright and operating expenses for CSPs own cloud business are greatly minimized. With large cost items under control, CSPs are guaranteed to have a greater ROI from their cloud business.

Cloud computing also happens to be an integral part of future businesses. The combination of cloud and connectivity will serve the enterprises’ hunger for on-demand modern digital infrastructure and secure long-term relationships between the enterprises and CSPs. As consumer business starts to plateau and enterprise segment competition intensifies, the combination of cloud and connectivity offer will be the key differentiator for future telecom business.

Moreover, local CSPs have inherited a solid enterprise customer base and existing enterprise business teams that specialize in enterprise sales and delivery, which could convert into cloud business leads. Local CSPs also have the advantage of years of hands-on experience and understanding of local enterprise’s demands & requirements, working along with proven local ISV solutions and service partners, to cover IaaS/PaaS/SaaS and MSP service needs.

Choosing the right partner
As interest in the cloud increases, more CSPs will contemplate moving beyond connectivity and launch own cloud business. There will be technology and operational gaps to fill, and the lack of resources and qualified suppliers will slow down the pace of business innovation in the respective markets.

A search for vendors and technology-neutral approaches for launching a cloud business can start with Whale Cloud’s Local Public Cloud solution. With a proven record in emerging markets and featuring complete control over data sovereignty, Local Public Cloud can help CSPs break the cloud technology monopoly, unlock the full potential of the latest cloud technology and be the catalyst for the local digital economy, uncover new revenue source and make cloud the backbone of future service offering. Get in touch now and revolutionize your cloud business.

This article was written by Zhouxi Wu – Head of Cloud Solutions, Whale Cloud