2012 Cloud Readiness Index

China’s investment in cloud computing is fairly advanced, with a number of cloud-ready townships and government-supported initiatives being announced in various provinces. Cloud computing pilots, backed by state funds, are already underway.

However, many potential constraints on growth remain, including the application of China’s own technical standards, incentives that favour local firms, investment rules that may limit foreign participation in infrastructure, and opaque information regarding security and cross- border data laws.

Recommendation: We strongly recommend the application of international standards for cloud-related technologies and for clarity around security, cross-border data laws and the role of foreign investors in cloud hardware and services.

Hong Kong fell one position but still ranked as one of the region’s cloud leaders, achieving 
top score for data centre risk, equal 2nd for broadband quality and 3rd for data sovereignty
 and IP protection. Its lowest score was in power grid and green policy: it has excellent energy infrastructure but has neither targets nor policies for more sustainable power consumption. However, the HK government has actively supported cloud computing and has driven the use of cloud in the public sector as a means of cutting costs and improving efficiency.

Recommendation: Take a much more aggressive approach to IT power consumption and the use of renewable energy sources by setting specific targets and encouraging the use of world-best practice for data centre energy efficiency.

India is making some progress in its readiness for cloud services. It scores relatively well in international connectivity because of the number of subsea cables that connect it to the rest of the world, but its broadband and electricity infrastructure polled poorly. Broadband access is available to just 1% of the population. The government has promised to massively expand this but has provided little detail on how.

Recommendation: India must remove the uncertainty around its mobile licensing, where 2G licenses have been cancelled and 3G license coverage rights are poorly defined. A second recommendation is to improve the quality and sustainability of electricity power generation.

While scoring on the lower tier of the Index, Indonesia’s economy is still recording healthy growth and the government continues to prioritise the knowledge economy. ICT is one of 22 areas targeted for economic growth under the MP3EI Master Plan. But Indonesia ranks equal last for broadband quality and second last for data sovereignty. The legal framework for cloud services is also unclear; current regulations require any company providing a ‘public service’ to establish an onshore data centre.

Recommendation: Key priorities need to be a substantial improvement in broadband quality and the strengthening of laws and regulations concerning data sovereignty and data centre risk.

Japan once again tops the Index, ranking 1st in connectivity and business sophistication and equal 1st in data privacy and freedom of information. Its lowest scores were in data sovereignty and data centre risk, coming in 7th in both parameters.

In aggregate Japan is well-prepared for cloud computing. Even the power shortages that have followed since the March 2011 earthquake have been managed well by the data centre industry. We believe Japan has the optimum mix of policies, business and infrastructure to continue and drive growth and adoption of cloud computing.

Recommendation: Japan could improve its rating further by providing clearer direction around data sovereignty.

Malaysia maintained its position in the middle tier of the Index. While it made progress
in some areas, such as its nationwide Cloud On-boarding Programme for SMEs, it ranked well behind the leaders in broadband and international connectivity, despite achieving the targeted penetration rate set in the National Broadband Initiative and extending regional connectivity with new cables to Indonesia and Japan.

Recommendation: Malaysia’s priorities should be in IP protection and data centre risk, both areas where it scored poorly. It also needs to introduce the Personal Data Protection Act 2010, which has not yet been brought into force.

Despite its relatively small size, New Zealand continues to offer an attractive environment for cloud computing. It ranks not far behind the region’s heavyweights, held back mainly by the low offshore bandwidth score, where it is placed last. Cloud investments are going into Auckland, Wellington and Hamilton and, in what appears to be a world first, the industry is developing a voluntary code of practice.

Recommendation: No.1 priority is to expand the available international bandwidth. A number of new trans-Pacific cables are being proposed – the government and the cloud industry can help by lending support to at least one of these.

The Philippines remains at the lower tier of the Index. It scores relatively well in the freedom of information access parameter but poorly in other parameters. It ranks last in data privacy (although it has since passed the Data Privacy Act), second last in IP protection and third last in broadband quality.

Recommendation: We believe the Philippines cloud sector would benefit by upgrading the ICT office of the DoST to a separate department to replace the now-defunct Commission on Information and Communications. We also recommend strengthening of intellectual property protection regulations also be treated as a priority to boost confidence of service cloud providers.

Singapore topped the Index in e-government and ICT prioritisation, ICT prioritisation, and in IP protection. Infrastructure development has long been viewed as an enabler of the knowledge economy, and it is no wonder that we see Singapore ranking 2nd in international connectivity and 4th in broadband quality. The only shortcomings seem to be in the areas of data privacy and power grid/green policy.

Recommendation: Since the completion of this Index, the Singapore Parliament has passed the Personal Data Protection Act, removing one of the significant shortcomings in Singapore’s cloud policy regime. Despite this development, the law will only come into effect in 2014, and we would urge the government of Singapore to accelerate its implementation.

Korea’s impressive cloud résumé includes the world fastest nationwide Internet connections (average speed 17.5 Mbps), comprehensive privacy legislation, a power grid well-protected from natural disasters, and affordable electricity rates. The government, which has also invested heavily in the cloud, is determined to ensure Korea stays at the forefront: its target is to halve IT infrastructure op-ex in the public sector by 2015 and to capture 10% of the global cloud market by 2014.

Recommendation: Korea is ranked 2nd in the Index, but if it wishes to achieve its goal of becoming an important regional centre for cloud services it will need to consider regulatory and tax regimes that can attract major providers and customers.

Taiwan has maintained its 5th position in the Index. It ranked 3rd for government services and ICT leadership, and 5th for broadband quality. The new Personal Data Protection Act, which became effective on October 1, removed criminal liability for the misuse of personal data unless done so for profit – a potential threat and disincentive to cloud innovation.

However, reflecting its uncertain geopolitical status, Taiwan once again ranked relatively low in the global risk and data sovereignty categories.

Recommendation: One way to reduce political risk could be to peer clouds in Taiwan with neutral countries, ensuring that critical business systems are not threatened by sovereignty issues.

Should be doing much better. The political situation may have settled somewhat, but the Index has shown up its deficiencies in infrastructure, in particular international connectivity, broadband quality and power grid stability. While it scored relatively well in business sophistication and freedom of access to information, it ranked last in data sovereignty.

Recommendation: Apart from the urgent need to improve the infrastructure, we also recommend the re-examination of data privacy and sovereignty laws, two of its lowest- scoring indices.

Vietnam’s rapidly-growing economy needs a good deal of focus to reap the benefits of the cloud. It ranks second last in power grid and fourth last in international connectivity. While its telecom policies emphasise universal access it is equal last in broadband quality. On the governance side, it is last in intellectual property protection and freedom of information access.

Recommendation: The key priorities for Vietnam should be to: 1) build faster and better broadband access and expanded offshore connectivity, and 2) implement effective protection of intellectual property.