Adoption of Public Cloud in China

Public Cloud Adoption in China

Cloud strategy is defined as a business plan to adopt cloud technologies into the organization. Cloud is an integral part of the IT transformation in most enterprises and having a plan is essential to guide the organization through the transition and migration to the cloud. The focus is mainly on the business plan, the investment into the digitalization and modernization of IT applications, and ultimately business applications.

Planning and adopting a cloud strategy correctly is one of the biggest concerns for businesses today. Good strategy and execution can shape the present and future of a company. It is very important to understand what are the benefits and the risks of the cloud and accordingly create a plan that fits your business.

Cloud strategy doesn’t mean moving everything to the cloud, it may mean moving a subset of applications to the cloud, but if your organization has not developed a cloud strategy for China yet, you are probably a step behind your competitors.
As you may probably know, China is the biggest country in the world, in terms of population and internet users. We are talking about 900 million internet users. In China you should not be afraid to fail a business, you should be afraid to succeed. And your organization will definitely need to develop an accordingly cloud strategy for that.

Alignment

Cloud has become the foundation that enables businesses to transform, differentiate, and gain advantage over competitors. Many organizations are focused on cloud strategies to advance the use of cloud services and applications across the business. Therefore, aligning your business needs with your cloud strategy to accordingly create a business plan is really key to success. The business decision-makers have to define the desired outcomes of the cloud strategy, which are different for each company. For some companies, reducing time to market and increasing innovation could be a reasonable outcome; for others, increased agility and integrating DevOps might be the main driver behind cloud adoption.
The decision to adopt a cloud strategy is a business strategy, not an IT strategy.

Target

Cloud offers a great opportunity for an exponential increase in agility, productivity, and competitiveness. It also offers multiple ways to grow your business, develop new products, use of services and tools, and much more. This, added to an emerging market, in constant growth, with a giant potential, and many opportunities, as is the Chinese market, is not trivial. You need to have a clear strategy and a defined plan to take advantage of its full potential and achieve your goals.
These decisions need to be based on business intelligence and a clear plan of how the new infrastructure will improve the business operations and deliver value to the organization. Communicating changes clearly, in advance, and directly with the responsible teams will help the company to adopt the cloud. Both, IT and business units will need to understand the business value of cloud-based services.

Benefits

If your organization is going to move forward with the cloud, you should understand what the benefits are:

Skills

It is recommended to establish a cloud expert team or a cloud center of excellence that is responsible for the infrastructure. This team should engage with application teams and deliver the landing zone and integration support. Most enterprises are already familiar with cloud landing zones as they already have experience with cloud infrastructure. Landing zones become even more important when the enterprise runs the application components in a hybrid model, where on-premise or external connections can pose serious security risks if not managed and secured properly.

These experts must be trained and empowered to be champions of your cloud strategy-spreading the word about best practices, accelerating user adoption, and relieving pressure on your IT team.

Identifying what needs to be moved to the cloud

Cloud strategy doesn’t mean move everything to the cloud, it may mean moving a subset of applications to the cloud. The big question in today’s Cloud adoption is how much of the traditional infrastructure should be modernized and brought to the Cloud and how much should stay on-premises. Essentially, you have to identify which applications, services, or infrastructure need to be moved to the cloud-based on a strategy that could be cost savings, improved operational efficiency, improved agility, or other factors.

Choosing the right cloud deployment model

You should decide whether to have a public, a private, or a hybrid cloud environment. There are multiple factors to consider when choosing one strategy over the other, and in my opinion, you should evaluate all three. However, each organization must evaluate cloud offerings for itself and decide based on the requirements and the needs of the business.

Choosing the right cloud service provider

When entering the Chinese cloud market, one of the first decisions is to choose the cloud service provider. There are several cloud service providers that are functional in China such as Alibaba Cloud, Tencent Cloud, Huawei Cloud, AWS China, Microsft Azure China, Baidu, and others. Alibaba Cloud and Tencent Cloud are the leaders with over 60% of the cloud market share in China. The US cloud service providers, Amazon Web Services (AWS) and Microsoft Azure are as well present in the Chinese cloud market. However, both are operated by local service providers. AWS and Azure have collaborations with Chinese companies according to accomplish China’s regulatory and legal requirements.

Each cloud service provider has its pros and cons, and before choosing one you should evaluate all of them. It is also very important to understand that depending on your use case there are providers that suit you better than others. If your organization is already used to work and skilled with AWS or Azure, then it probably makes sense to continue using them in China. However, you should take into account, that these platforms have limited services as well as other limitations such as connectivity. On the other hand, the local providers such as Alibaba Cloud and Tencent Cloud, are the best-positioned players. Alibaba Cloud is China’s number one cloud service provider, followed by Tencent Cloud. Tencent is China’s number one gaming and social media company, being the operator of WeChat.

Some key factors to consider when choosing the cloud provider:

Common issues in China

There are three very common issues in China you should consider: performance, security and regulations.
China, as many of you may already know, has the Great Firewall in place. So the network in and out of China is not as smooth as what you normally get from other countries. Obviously, there are ways to overcome this, but is something you should always keep in mind. This Firewall slows down cross-border internet traffic and therefore we always recommend to our customers that want to grow their business in China to adopt a cloud strategy within China. This helps significantly to improve the performance. Another argument on this behalf is that China is a mobile-centric market, so it is particularly vital to minimize the latency and provide high availability websites, apps, and services.

You should not forget about the operational requirements in China. The cloud providers must make it possible that the users provide valid identity information during the verification process to get access to the cloud services. The identity verification includes real name, valid contact information, company name, and business license. If the company does not have any legal unit within China, a cloud service provider could provide support by acquiring the service and fulfill the verification mechanism on behalf of the customer. In this regard, Chinese law is very clear that the individual can’t get access to the cloud services if the client fails to obtain an operating license. Furthermore, in accordance with the China Ministry of Industry and Information Technology, the internet content providers must take permit through their hosting providers. The domain would not be functional without an ICP license and ICP filling.

In China, there is a clear law and regulation for migrating and managing cloud technologies for business purposes. The data centers are not directly connected internationally. In short, China doesn’t allow foreign cloud service providers to operate their data in China. According to Chinese laws and regulations, foreigners can only operate the data in China. They need to obtain a value-added telecom permit and foreign entrepreneurs need a separate user account to get access to their business personal in China.

Implementing your cloud strategy

Once the decision-makers have all these details in hand, the last step is to assess when to start with the implementation, which are the work-streams, and what are the key decisions that need to be taken for this transition to be smooth. It is crucial to define a clear roadmap for the cloud transformation in order to keep the focus and the priorities – what are the milestones, who is responsible for what, when should it be finished, etc.