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The market of IaaS services provided by Russian service providers to corporate clients

December 2016

Analytical Report (full version)

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Analytical Report (full version)

The market of IaaS services provided by Russian service providers to corporate clients
The market of IaaS services provided by  Russian service providers to corporate clients
December 2016

The market of IaaS services provided by Russian service providers to corporate clients

December 2016

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J'son & Partners Consulting presents some brief results of their research of the Russian market of cloud IaaS solutions offered to corporate clients by Russian providers, which have their own infrastructure on the territory of the Russian Federation.

 

 

Some development results of the Russian market of IaaS services in 2015

 

By the term “market of IaaS(Infrastructure-as-a-Service)” the research authors mean services of provision virtual servers in a cloud service. The cost of cloud storage and additional services offered by service providers (including package deals) are not considered in this report. Also the authors did not consider consumption by individual users (B2C) and IaaS services provided on the basis of the infrastructure outside Russia.

 

According to J’son & Partners Consulting, the estimated volume of the IaaS market in 2015 in monetary terms amounted to RUB 3.4 bln, 31% more than over the same period in 2014.

 

According to J’son & Partners Consulting, the estimated volume of the IaaS market in 2015 in monetary terms amounted to RUB 3.4 bln, 31% more than over the same period in 2014. 

 

 

According to J'son & Partners Consulting, about 28 thousand companies used IaaS services from the Russian providers in 2015.

 

 

Drivers and barriers

 

Commercial data processing centers (DPC) observe a continuingly increasing share of cloud services, including IaaS. Despite the difficult situation in the Russian economy affecting the dynamics of most economic areas, the cloud services segment maintains its positive movement. New providers also enter the market.

 

One of the main drivers of the market is the growing demand for processing of corporate data due to the fact of increasing of their volume under the influence of processes of consolidation associated with virtualization of workplaces and applications. The number of fully digital transactions also goes up, which requires a constant increase of both computing power and data storage systems.

 

The use of DBMSs is also beneficial for the industry development as they allow you to dynamically connect external cloud computing resources.

 

Most customers are now shrinking their budgets for IT (in relation to the dollar) which stimulates the public IaaS market development as well. Many companies consider public clouds as a real alternative to investing in the development of their own infrastructure.

 

Among other notable factors, considered in the study, it should be also mentioned the following: the development of hybrid infrastructures and the telecommunications segment, the foreign offers (foreign DPC assets), the position of suppliers of the equipment and software for IaaS deployment, as well as changes in the regulatory framework.

 

 

 

The IaaS market development prospects

 

According to J'son & Partners Consulting, the segment of public IaaS in Russia in 2015-2020 in ruble terms will grow with a CAGR amounting to 22%.

 

According to the baseline forecast, the segment of public IaaS in Russia in 2015-2020 in ruble terms will grow with a CAGR amounting to 22%. However, it should be noted that under the influence of a number of factors, primarily associated with the macroeconomic situation and regulation in the industry, the dynamics can change in any direction. The analysis of all possible development scenarios is presented in the full version of the report.

 

 

Views of the industry representatives

 

 

The cloud market to date is already quite mature, so I would not talk about any barriers to its development. There is a huge number of providers on the market, and each provider takes a differentiated approach to the provision of its services: some focus on services for SMB, other companies such as "KROK" work in the enterprise segment. Some barriers in perception of cloud services are the customers who still prefer to build their own infrastructure, rather than rent it. But every year the number of such customers will be less and the crisis will push them to reconsider the value of cloud services.

 

 

 

The cloud helps to save some money at the early stages of the project including IT budgets of the company, as it can be used only in accordance with its needs. Moreover, literally every second of our customers notes that the main advantage of the cloud is the possibility to remove the management infrastructure and to focus on solving important business problems.

 

 

The ruble has significantly weakened in recent years. This means that the purchase cost of equipment and licenses increased 2-2,5 times in the ruble equivalent. In the end, the service providers, tied to the decisions of their western vendors, have to increase their monthly payments, because infrastructure software, being a part of the cloud platforms is often paid monthly. Hardware is not eternal either and requires periodic upgrading, which is now more expensive. However, the infrastructure efficiency and implementation of new technologies can significantly reduce the costs.

 

 

 

Customers faced reduced IT budgets, but the task of modernizing the IT infrastructure is still here, because the equipment purchased at the peak of demand, is not always able to provide the necessary modern business reliability and scalability.

 

 

 

The open-source segment significantly impact the cloud market. This is due to the lower, compared to proprietary solutions, cost of ownership, vendor independence and flexibility. Note also the increasing quality and maturity of solutions in open source software: activity of communities of professional developers, active participants of which are among the others Russian programmers, it becomes more structured, large companies show their interest in these products. So, in 2016, "Servioniсa" was among the most active contributors of the cloud platform OpenStack, and one of its key projects, Watcher, will develop according to our proposed strategy.

 

 

 

One more benefit of the cloud is its pricing model, the ability to clearly define the responsibility of the provider, generate the SLA, by other words it is easy and clear "rules of the game". The cloud model benefits on which we rely when forming proposals for customers is, firstly, bringing new products and services to the market, secondly it is the opportunity to test and simulate a range of scenarios for IT infrastructure, needs for resources, different approaches to data protection and the provision of corporate services.

 

 

Customers are interested in the quick and predictable return of the investments, as well as in the clear effectiveness of IT projects. In this situation, we can see the advantages of the outsourcing model: the capital cost decrease, quality guarantees, the ability to launch the necessary projects in a short time. And the growing interest in cloud technologies is also a manifestation of this trend. By the end of 2015, the segment of IT outsourcing has been 6 times ahead of the rest segments.

 

 

 

For the Russian cloud market so far things are going quite well: this direction of IT services remains one of the fastest growing.

 

 

 

The main driver for using cloud services is to optimize IT costs by transforming capital expenditures into operating and flexible management of the resources employed in accordance with the current needs of the business.

 

 

 

Another important advantage of cloud services is their speed of scaling, the ability to almost instantly increase or reduce the resource pool.

 

 

 

The main problem for cloud providers is still continuing weakening of the ruble. The cost of services in rubles increased slightly, while the cost of equipment and licenses in the dollar/Euro has increased markedly. This inevitably leads to a fall in margins for the market players. In such circumstances, not all of them can increase their own capacity and maintain strong demand from business.

 

 

 

We plan to expand the number of technology platforms, so that each customer can choose the optimal price and technical characteristics of the solution.

 

 

The demand for cloud services is becoming more mature and skilled: the majority of our customers are well versed in the capabilities and characteristics of different platforms and more and more often come to us with a clear understanding of what the solution is optimal for them. More and more companies use clouds to host complex and critical business information systems requiring the development of customized architectural solutions and a specific migration plan.

 

 

 

At the end of 2014, companies that paid cloud services in foreign currency, faced the IT infrastructure cost increase in connection with the ruble devaluation.

 

 

 

Currency risks impacted also those who built their IT infrastructure, purchasing any equipment independently. In 2015, the acquisition of sharply risen in price equipment became unprofitable, and agreed in 2014 IT budgets did not meet the needs of the companies. They were forced to look for alternatives, and found them in the cloud segment. A growing number of companies started switching from physical to cloud infrastructure in 2015, but we expect this process to continue in 2016 and 2017 as well, as the equipment life averages three to five years.

 

 

The crisis was not the only driver of the domestic IaaS market development. The role of IT components in traditional sectors, such as finance or retail has also repeatedly increased. Continuous development and improvement of technologies complicate the task of predicting the corporate needs for IT resources. This uncertainty creates a danger of increasing IT expenditures, and any business, regardless of its size and scope of activity, is trying to completely get rid of this risk or, at least to minimize it. Cloud services get scaled much easier and faster and thus the risk of lack of IT resources is significantly reduced. Therefore, companies prefer to develop new dynamic and sometimes even high-risk projects in the cloud, saturating the IaaS sector with money more and more.

 

 

 

 

Detailed results of the study presented in the full report:

 

«Assessment of the current IaaS market in Russia: the end of 2015 and the development forecast until 2020»

 

 

 

Сontents:

 

 

 

Summary

 

1. Analysis of the trends in the global IaaS markets

 

1.1. Demand for services

 

1.2. The main user segments of the services

 

1.3. Factors and barriers for the market development

 

 

 

2. The Russian market of public IaaS

 

2.1. Revenue

 

2.2. Number of customers

 

2.3. The Russian IaaS market. Verticals.

 

2.4. Assessment of share of foreign IaaS providers on the Russian market

 

2.5. Factors of the market development

 

2.6. Promising segments of the Russian IaaS market by 2020

 

 

 

3. Comparison of business models of Russian operators of cloud services

 

3.1. Tariffed service settings

 

3.2. Comparison of tariffs of cloud providers to competing services

 

3.3. Profiles of major players

 

 

 

4. The Russian market of IaaS public services: estimate “from above” and the development forecast for 2016-2020 in natural and monetary terms

 

 

 

5. Key factors that determine the market development

 

 

 

6. Activity of Telecom operators in the segment of public IaaS

 

 

 

List of abbreviations

 

 

 

List of figures

 

Fig. 1. The global IaaS market in monetary terms, billion USD, 2014-2020

 

Fig. 2. The Russian IaaS market structure by revenue, mln RUB, 2015

 

Fig. 3. The Russian IaaS market structure by number of users, thousand companies, 2015

 

Fig. 4. Evaluation of attractiveness of different models and competing services (12 points maximum).

 

Fig. 5. The Russian IaaS market volume in natural terms, customers (thousand), 2014-2020

 

Fig. 6. The Russian IaaS market volume in monetary terms, billion rubles, 2014-2020

 

Fig. 7. The structure of AT&T cloud platforms.

 

Fig. 8. The structure of AT&T cloud services

 

 

 

 

 

This information note is prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material.

 

 

 

 

 

J'son & Partners Consulting presents some brief results of their research of the Russian market of cloud IaaS solutions offered to corporate clients by Russian providers, which have their own infrastructure on the territory of the Russian Federation.