Expert opinion

Overview: Cloud Services 2019

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10 minutes

Without clouds, digitalization will be lengthy and expensive

Last year, CROC spinned off its cloud business into a dedicated business unit. Maxim Berezin, Business Development Director of CROC Cloud Services, spoke about what this brought to CROC, what other important events occurred in the market, and why businesses in Russia are reluctant to move from local hardware to clouds.

CNews: What were the most important events in the Russian cloud market over the past year?

Maxim Berezin: The year of 2018 featured several significant events. For example, players from adjacent IT areas started offering their cloud services. Such players include major search services, media companies, and telecom operators. They consolidated with preexisting cloud providers, which led to agglomeration in the market. Today's trend is to provide specialized, narrow-profile services, depending on the target audiences: large businesses, SMB or individuals.

CNews: How did these events influence the market shares? Did the positions of key players change?

Maxim Berezin: They have not influenced the market positions so far and probably will not influence for at least the next year. The fact is that even merging with or acquiring a specialist company may not give a new cloud service provider necessary skills and expertise. This, as well as building a team core, requires time: at least one year, according to our estimate.

CNews: Which clouds – private or public – do Russian customers choose? How does this choice depend on the business size?

Maxim Berezin: It is difficult for us to judge how the choice of a resource consumption model depends on a company size, since CROC has been always dealing mainly with large businesses, and majority of CROC Cloud Services customers are large enterprises. Meanwhile, medium-sized companies also use our services, since the public cloud is, in essence, a universal tool, which can be equally useful for large and small organizations. In this context, we'd rather talk about legislative restrictions. Government and healthcare institutions are more tightly regulated by law than commercial companies, and therefore prefer private clouds to public ones.

CNews: Many experts talk about the trend of business transition from Western to Russian suppliers. Are such statements true, in your opinion? What is the reason for this trend?

Maxim Berezin: The trend of switching to Russian providers was first noted several years ago. Then, it was caused by the effective legislation on Personal Data storage in Russia. However, that last-year story with Telegram and “blanket” blocking of other companies’ IP addresses shocked the market so much that migrations from foreign public clouds to Russian ones became massive. Since the beginning of that blocking, we have received several dozen requests to migrate to CROC Cloud.

CNews: How have CROC's approaches to cloud business changed?

Maxim Berezin: As part of the last year reorganization, CROC's cloud business became a spin-off called CROC Cloud Services with a dedicated team of engineers, customer managers and marketers. We have gained more independence allowing us to win more and more customers, including those from segments which are not traditional for CROC, and respond faster to incoming customer requests.

In general, our cloud business used to be somewhat different from the other ones: we did not (and do not) perform traditional project activities, and a cloud project lifecycle is ideally not limited by timeframes. The spinning off allowed us to focus on continuous service level improvement and the creation of trust relationships with cloud service users who consider CROC Cloud Services a peer partner rather than just a provider.

In addition, we revised our positioning in order to offer products that satisfy the needs of customers from various industries. This product approach together with the strengthening of consulting expertise and the expansion of our managed service portfolio are what we will rely upon in the short- and medium-term perspective.

CNews: What cloud migration obstacles do your customers talk about? Is there any distrust among businesses?

Maxim Berezin: Technical base of major Russian providers is well-developed and adequately protected, but if you are nevertheless afraid of losing your data when migrating to and working in a public cloud, we advise you to backup your infrastructure. This will guarantee almost 100% fault tolerance of hosted critical services.

Most CROC Cloud Services customers understand this, so there is no reason to speak of any distrust in the clouds. However, the refusal from a cloud does not always indicate skepticism about just the infrastructure reliability. The cloud is associated with a reduction of capital expenses, which is hardly acceptable to companies going to IPO. Therefore, they prefer building their own data centers rather than renting resources.

CNews: Do you think that full-featured digitalization is possible without moving to the cloud?

Maxim Berezin: Yes, it is possible, but it will take longer and cost more. To launch a new service, you need equipment (purchasing it takes some time), resource allocation flexibility, which physical equipment lacks, and availability of both on-staff developers and administrators supporting the systems. Moreover, development processes themselves have clear periodical nature. After having tested the functionality, companies cease using test environments. If using a cloud when developing digital services, you can simply turn off unnecessary VMs after the testing. If you use your own local infrastructure, this no-longer-needed equipment will most likely be idle. In other words, the cloud is a cost-effective and optimal option for implementing digital products.

CNews: What major projects did you complete in 2018?

Maxim Berezin: In 2018, we started several large cloud projects. The most high-profile ones are the migration of the University 2035 digital education platform to the cloud and the launch of cloud-based Staffjet service – a new digital service of ANCOR multinational staffing company. In addition, we migrated the entire Qlean core business and several business-critical systems of SK Operations multinational company to the cloud. Cloud projects for a large international FMCG holding and a foreign retailer are also worth noting.

CNews: For what industries going cloud is a must to conduct full-fledged business?

Maxim Berezin: Of course, clouds are mainly needed by the companies that have adopted digitalization and by those using variable load services. For them, going cloud ensures significant IT savings. Clouds are also essential for IT solution developers and all CustDev organizations, which typically need flexible piloting platforms to understand how efficiently and error-free a new product works before launch.

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