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By Sasha Banks-Louie
Companies in Brazil, one of the world’s largest services economies, are turning to cloud computing not only to cut costs and simplify their IT infrastructures, but also to adopt a model that jibes with how they go to market, according to keynote speakers at Oracle OpenWorld Latin America, held in São Paulo last week.
Despite standing on the brink of recession, Brazil’s private sector is spending on cloud technology. Some 41 percent of Brazilian companies already have invested in the cloud and another 42 percent will do so by the end of this year, according to a recent Frost & Sullivan survey of 313 companies in the country. Oracle CEO Mark Hurd said during his Oracle OpenWorld keynote address that Oracle’s cloud business throughout the Latin America region grew 19.7 percent in Q4 FY2015.
Percentage of Brazilian companies that have invested in the cloud
Percentage of Brazilian companies that plan to invest in the cloud in 2015
Amount of Oracle cloud business growth throughout Latin America
Hurd also announced that Oracle plans to bring a new data center online in Campinas, São Paulo, in August of this year. The data center will support growing demand in the region for Oracle’s comprehensive cloud offerings.
As the Brazilian economy softens—first-quarter GDP declined 0.2 percent after growing in the previous two quarters—its companies are turning to cloud computing to reduce costs, says Frost & Sullivan analyst Guilherme Campos. “By replacing their traditional capital expenditure model with an operating expenditure model, customers will only need to pay for what they use," Campos says.
With the cloud, service businesses are able to sell experiences and outcomes in ways that just weren't possible with only on-premises solutions.
—Ray Wang, CEO of Constellation Research
But cost reduction isn’t the only reason Brazilian businesses are moving to the cloud. With the service sector constituting nearly 70 percent of the country’s GDP, the cloud helps those companies reorient how they design, market, sell, and deliver services, said Constellation Research CEO Ray Wang during his keynote address.
“With the cloud, service businesses are able to sell experiences and outcomes in ways that just weren’t possible with only on-premises solutions,” he said.
One trend involves companies moving to a unit-cost pricing model to sell small service increments, Wang said. He gave an example. “The largest share of profits for medical device companies isn’t from selling imaging systems anymore,” he said. “It’s coming from a vast array of services, from maintenance and support to upgrades and availability.”
In that scenario, Wang said, the cloud gives medical device companies an “always-on” service delivery platform to help hospitals increase their daily revenue per patient—their top performance metric for driving profitable growth. Particularly in Brazil, where rising incomes and standards of living are driving growth of “on-demand” healthcare, “medical device manufacturers can now sell incremental services at a premium price to help hospitals deliver uninterrupted service to their patients,” he said.
The primary obstacle to cloud uptake in Brazil remains data confidentiality and overall security.
“Culturally, Brazilian companies prefer centralized control,” the Frost & Sullivan survey states. “As a result, many IT executives equate the use of cloud computing with a loss of control. These companies do not realize that it will be hard for them to be as well-equipped as service providers to fend off advanced threats.”
Also speaking at Oracle OpenWorld Latin America, John Fowler, Oracle executive vice president of systems, acknowledged that “information security is the number one problem in the modern, connected internet world.”
Oracle is currently the only cloud provider that can prevent or stop unauthorized in-memory access without compromising performance.
—John Fowler, Oracle Executive Vice President of Systems
In an effort to quell those concerns, Fowler described the security attributes of Oracle’s Software in Silicon Cloud, which lets developers install, test, and improve their code in a highly secure cloud platform powered by the Software in Silicon technology available in Oracle’s SPARC M7 processor. Software in Silicon technology secures applications and databases at the memory level in the hardware.
Oracle is currently the only cloud provider that can prevent or stop unauthorized in-memory access without compromising performance, Fowler said. “This is critical for operating in the cloud,” he said.
Fowler said other obstacles to cloud adoption include enterprise concerns about whether modern cloud services will integrate well with legacy on-premises software—a concern that Oracle Executive Chairman and CTO Larry Ellison addressed June 22, when the company announced 24 new cloud platform and infrastructure services.
Ellison emphasized at the June 22 product announcement that the technology Oracle offers in the cloud is “the same exact” technology it sells for on-premises use, letting enterprises move all of their applications—not just Oracle applications—from the data center to the cloud and back again “with a push of a button.” Ellison referred to the “coming decade of coexistence between on-premises data processing and cloud data processing.”