Analysis of the Brazilian Cloud Computing Market

Current Scenario and Future Outlook on Cloud Computing in Brazil

Executive Summary

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February 2014

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Q&A

Guilherme K Campos, Industry Analyst

Frost & Sullivan

guilherme.campos@frost.com

Connect with me on social media:

@GuiKatzor

http://br.linkedin.com/in/guilhermekcampos/

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Contents

Section Slide Numbers

Executive Summary 4

Market Overview 6

Total Cloud Computing Market

• External Challenges: Drivers and Restraints 8

• Forecasts and Trends 12

• Market Share and Competitive Analysis 15

The Last Word 20

The Frost & Sullivan Story 23

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Executive Summary

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Executive Summary

• Revenue for the Brazilian cloud computing market in 2012 is $217.2 million in 2012. Revenue is expected to reach $1.11 billion by 2017 at a 38.7% compound annual growth rate (CAGR).

• Cloud computing solutions, such as infrastructure as a service and software as a service, will show great growth over the next years in terms of revenue, because companies already know what they are used for. Platform as a service will also have a growth but its participation in the overall market will remain low, because clients are still learning what the service is for.

• The aspects that are driving cloud computing adoption in Brazil are cost reduction, turning capital expenditure (CAPEX) into operational expenditure (OPEX) , the flexible environment giving options to increase or decrease the infrastructure according to the companies' needs, and the fact that the information will be available everywhere and be accessed anytime.

• The aspects that are restraining cloud computing in Brazil are security, CIOs' fear of having information stolen or accessed by 3rd parties, connectivity, which is crucial for cloud computing, poor quality, and the fact that Brazilian companies are still not aware of the cloud computing concept.

Source: Frost & Sullivan

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Market Overview

• Although the Brazilian economy has not grown as quickly as expected in the last few years, especially in 2012, when the Brazilian GDP grew only 0.9% from 2011, IT services grew 9.9% in 2012 compared to 2011, reaching $ 6.45 billion.

• Due to the weakened Brazilian economy, companies are looking for cost reductions and trying to outsource what is not their core business. Cloud is becoming an alternative for companies once it is no longer necessary to invest in CAPEX, since billing is based on usage.

• The Brazilian cloud computing market is becoming more mature in terms of adoption by companies for cost reduction, agility in having access to information, and a focus on the core business. There are big demands for IaaS and SaaS. The market is now starting to demand some PaaS solutions.

Source: Frost & Sullivan

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Drivers and Restraints

Total Cloud Computing Market: Key Market Drivers and Restraints, Brazil, 2013–2017

Security H M M

Connectivity H M M

Lack of knowledge M L L

1–2 years 3–4 years 5th year

Cost reduction H H H

Flexible environment H H H

Information available anywhere H H H

Impact: H High M Medium L Low Note: Drivers & Restraints are ranked in order of impact. Source: Frost & Sullivan

Mar

ket

Dri

vers

Mar

ket

Res

trai

nts

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Cloud Computing Assumptions

• Revenue for the Brazilian cloud computing market in 2012 is $217.2 million in 2012. Revenue is expected to reach $1.11 billion by 2017 at a 38.7% CAGR.

• The Brazilian SaaS market reached a total of $126.0 million in 2012 and, by 2017, is expected to reach $584.3 million at a 35.9% CAGR.

• The Brazilian IaaS market reached a total of $84.0 million in 2012; in 2017, it is expected to reach $489.9 million at a 42.3% CAGR.

• The Brazilian PaaS market reached a total of $7.2 million in 2012; for 2017, revenue is expected to reach $39.0 million at a 40.2% CAGR.

Source: Frost & Sullivan

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Cloud Market Still has Great OpportunitiesWith a CAGR of over 30% until 2017, companies need to be aware of the adoption trends to monetize on the opportunities.

Source: Frost & Sullivan analysis.

Possibility to have access to information anywhere, anytime through any device connect to the internet.Email, CRM and ERP are the most demanding services.

Companies will build new datacenters locally and price reduction will drive most companies strategy.Web site hosting, storage and intranet hosting are the most demanding services

Still not very used in Latin America, companies need to increase the awareness for this cloud service.Collaboration, Application Test and Applications development are the most demanding services.

SaaS

IaaS

PaaS

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The Last Word—3 Big Predictions

2SaaS will remain the biggest market in cloud computing, reaching $584.3 million by 2017.

3Telecom operators will have a stronger presence in cloud computing due to important factors such as billing, customer support, infrastructure, and connectivity.

1Cloud computing is still a nascent market in the Brazilian landscape; in the future, it will become better known among enterprises as the concept spreads throughout the market.

Source: Frost & Sullivan

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The Frost & Sullivan Story

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