IT and Cloud Computing in BRAZIL: Public Policies

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1 IT and Cloud Computing in BRAZIL: Public Policies Rafael H. R. Moreira General Coordinator for Software and IT Services Secretary for Information Technology Policy Ministry of Science, Technology and Innovation, Brazil CloudConf LATAM 2012 August 2012, São Paulo, BR

2 AGENDA Panorama of IT and Computing in Brazil Cloud computing: An Overview Cloud computing in Brazil

3 Strategic National Plan for SOFTWARE AND IT SERVICES

4 SECTOR SCAN IT-BPO services market in the world US$ Bi CAGR 8% Brazil IT Internal market 2010 US$ 85 Bi e 2013e 2014e 2020e Source: BRASSCOM IT In-house 46% 39,1 Bi HW 23% 19,5 Bi Services 16% - 13,6 Bi Exp. 3% 2,5Bi SW - 6% 5,5Bi BPO - 6% 4,9Bi Source: BRASSCOM

5 SECTOR SCAN Software Market in Brazil and World 2010 (US$ Mi) World Brazil US$ 235 bi US$ 5,5 bi 2,3% world market share BIG-SIZE COMPANIES + R$ 500 mi 0,90% MEDIUM-SIZE COMPANIES Up to R$ 500 mi 4,70% Brazilian Software Sector s Projection in ,04 Bi SMALL COMPANIES Up to R$ 20 mi 57,60% 400% MICRO COMPANIES Up to R$ 2 mi 36,07% 5,51 Bi Source: ABES (Brazilian Association of Software Companies) Software TOP Source: ABES (Brazilian Assocation of Software Comapnies) Software TOP 100

6 Brazil, the market of the PRESENT and the FUTURE... 1,2 million of capable professionals 34 Brazilian companies ranked in the Global Fortune ,9 million of broadband access 2,4% of the IT world market share 3rd ranked in the world PC market 49,6% share in Latin America 218 million of mobiles 7th biggest internal market of TIC 5th world mobile market 81,5 million of Internet users 37 Mi of Facebook users 3rd 33,3 Mi of Twitter users 2nd 4 million on Flickr - 2 million on LinkedIn 29 million on Orkut - 5 million on Skype Sources: ABINEE, ABES, BRASSCOM, IBGE, 2010.

7 ... Being strategically for the economic development 1 Health and Education Tech Revolution. 2 Security and Defense The war has become cybernetic 3 Energy Green tech! 4 Oil and Gas Innovation is essential. Infrastructure Sports events 5 Technology and Services 6 Success basis 7 Media and Communication New business model 8 Banking New solutions. Mining Agro business 9 10 Cutting edge technology. Agritech

8 2012 KEY IT TRENDS 1 MOBILE 2 SECURITY 3 NICHE APPLICATIONS 4 WEB, ARCHITECTURE, LEGACY SYSTEMS INTEGRATION, MIDDLEWARE 5 OUTSOURCING AND REMOTE MANAGEMENT 6 INFRASTRUCTURE AND CLOUD COMPUTING 7 ERP-BI-CRM 8 OPEN SOURCE 9 EMBEDDED SOLUTIONS 10 EDUCATION AND KNOWLEDGE MANAGEMENT

9 WHAT IS STRATEGIC FOR BRAZIL? Future bearing areas: Biotechnology and Nanotechnology Biofuels, electric energy, hydrogen and renewable energies Information and Communication Technologies Oil, gas and coal Inputs for the Health Sector Agribusiness IT is a critical infrastructure: Cloud computing is a key technology for the future Biodiversity and natural resources Development of the Amazon and of the Semi-Arid region Meteorology and climate change Space Program Nuclear Program National Defense and Public Security

10 SECRETARIAT FOR INFORMATION TECHNOLOGY POLICIES Governamental Programs for Supporting IT R&D Mechanisms and policies to enhance competitiveness of IT and software industry and strengthens the IT base in Brazil 1) Federal incentives for R&D IT Law (Lei de Informática) Law 8.248, de 1991 (for ICT manufacturers) Law do Bem Law , 2005 Incentives and Grants for R&D PADIS - Law , 2007 (semicondutores and displays R&D included) Software Law: payroll tax exemption, ) Funding for R,D&I BNDES (Brazilian Development Bank) FINEP Private funds (Venture Capital) 3) Fellowships for R,D&I CNPq

11

12 A WORKING DEFINITION OF CLOUD COMPUTING Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models.

13 ESSENTIAL CLOUD CHARACTERISTICS

14 CLOUD SERVICE MODELS SOFTWARE AS A SERVICE (SaaS) Use provider s applications over a network PLATFORM AS A SERVICE (PaaS) Deploy customer-created applications to a cloud INFRASTRUCTURE AS A SERVICE(SaaS) Rent processing, storage, network capacity, and other fundamental computing resources

15 CLOUD DEPLOYMENT MODELS 1 PRIVATE CLOUD Enterprise owned or leased COMMUNITY CLOUD Shared infrastructure for specific community PUBLIC CLOUD Sold to the public, mega-scale infrastructure HYBRID CLOUD Composition of two or more clouds

16 PaaS TAXONOMY Servers as a Service PaaS for the Inquiring Developer PaaS as an Application Framework Virtual Servers Virtual Servers Virtual Servers Virtual Servers Virtual Servers Python App Server UI as a Service Logic as a Service Integration as a Service Database as a Service Database as a Service Database as a Service Infrastructure as a Service Infrastructure as a Service Infrastructure as a Service ~Familiar Developer Model Rapid Scalability Offering Innovative Technology Supports Large-Scale SaaS Deep-Dyed Multitenancy

17 CLOUD DEFINITION FRAMEWORK Deployment Models Service Models On Demand Self-Service Essential Characteristics Broad Network Access Resource Pooling Rapid Elasticity Measured Service Common Characteristics Massive Scale Homogeneity Virtualization Low Cost Software Resilient Computing Geographic Distribution Service Orientation Advanced Security

18 COMMON CLOUD CHARACTERISTICS Cloud computing often leverages: Massive scale Homogeneity Virtualization Resilient computing Low cost software Geographic distribution Service orientation Advanced security technologies And INNOVATION

19 CLOUD COMPUTING: SOME FIGURES Source: Accenture, Institute for High Performance 2010

20 CLOUD COMPUTING: SOME NUMBERS Source: Accenture, Institute for High Performance 2010

21 Simple Complex AEROSPACE AUTOMOBILE COMPUTER AND ELECTRONICS WHOLESALES OTHER MANUFACTURES FOOD AND BEVERAGES PETROCHEMICAL BIOTECHNOLOGY / PHARMACEUTICALS FINANCE & INSURANCE HEATLH & SOCIAL ADMINISTRATION TELECOMMUNICATIONS GOVERNMENT RETAIL TRANSPORTATION UTILITIES OTHER SERVER FARMS, HUBs, ASPs START-UPs ISPs Clients needs affect data center s complexity Types of businesses DISCRETE MANUFACTURING PROCESS SERVICES e-business Solutions Complex corporate solutions Large MIS / DSS Large ERP Large CRM Segment 1a Complex, large solutions Segment 4 Software development Scientific / Engineering Segment 1b Specific High Performance Applications Real-time systems and critical mission Segment 1c Real-time and critical mission e-business players Department solutions Small ERP Small CRM Small MIS / DSS Segment 2 Medium-sized Department Solutions Office and collaboration Intranet / Knowledge mgt Office + file / print Segment 3 Collaboration and office

22 POSSIBLE EFFECTS OF CLOUD COMPUTING Small enterprises use public SaaS and public clouds and minimize growth of data centers Large enterprise data centers may evolve to act as private clouds Large enterprises may use hybrid cloud infrastructure software to leverage both internal and public clouds Public clouds may adopt standards in order to run workloads from competing hybrid cloud infrastructures

23 CLOUD STANDARDS MISSION Discuss guidance to industry and government for the creation and management of relevant cloud computing standards allowing all parties to gain the maximum value from cloud computing Propose roadmaps for needed standards Act as catalysts to help industry formulate their own standards Create opportunities for service, software, and hardware providers Promote government and industry adoption of cloud standards

24 OPPORTUNITIES: CLOUD STANDARDS ROADMAP Shifting from asset ownership to service provisioning Agree on minimal standards: Enable secure cloud integration, application portability, and data portability Avoid over specification that will inhibit innovation Separately addresses different cloud models

25 Why we need more research? Risks of the digital world

26

27 CLOUD COMPUTING IN BRAZIL: CHALLENGES Brazil is a key geo-location for Latin America cloud infrastructure Strategic infrastructure for new services for the Brazilian Broadband Plan (PNBL) - If you don t have the pipe, you can t get onto the cloud. VERY LARGE DATACENTERS SERVICE PROVIDERS UOL, Globo, IG LARGE BANKS Caixa (>160k computers) Banco do Brasil STATE COMPANIES Dataprev (Social Security) Serpro OTHER COMPANIES Petrobras Oi Telecom BRAZILIAN RESEARCH COMPANY (RNP)

28 OPPORTUNITIES FOR BRAZIL ON CLOUD COMPUTING IN LATIN AMERICA Data Center Market on Latin America New momentum for Latin American market growth due to low impact of 2008 crisis. Local economic growth boosts businesses. Higher profesional standards of TI services lead to higher reliability Easy-to-use, cost reduced IT technology for remote operations on cloud computing. Significant raise on demand of data center services Currently limited area for new datacenters, leading to data centers building on Sao Paulo, Bogota, Monterrey, Santiago de Chile, Lima and Panama: more than 200 data centers in the region. Most LA countries face important challenges: Infrastructure constraints Lack of specialized human resources Excessive taxes and bureaucracy. Opportunities for Brazil Growth perspective for local market Unique capacity-building of human resources Increase of personal use computers Convergence of cellphones as technology devices (e.g. means of payment, ID register, credit card) High industry investment on data center building New services arise as cloud computing with strong growth perspective within near future. Threats for Brazil Current data center capacity is insufficient Increasing R$/US$ rates elevate competitive costs of data center services. High operating costs: energy, equipment, cooling Excessive tax rates on equipment imports New services and technologies as cloud computing allow services to be provided from any part of the world at reasonable cost.

29 EXTENDED DATA CENTER VALUE CHAIN Transport / Infrastructure Value-added network Hosting / Security / Service development Creation of content and applications System and applications integration Interface with clients NSP Network Service Providers IT Integration Global Crossing Diveo Telefonica Oi CTBC Algar Tecnologia Intelig Telmex Embratel Global Village (GVT)... Telecom Operators Pure Data Centers Alog Terramark Ativas... Software Providers Microsoft SAP TOTVS Oracle... IBM HP EDS Tivit Sonda Procwork Stefanini Synapsis... ASP / SaaS / Cloud Computing UOL DH&C Locaweb Telium Turbosite... ISP / Web Hosting Google Microsoft Yahoo Amazon Facebook... Supply Verticalization Complete Service Provider (partnerships)

30 Projected Data Center Growth in the Region Thousands m2 Data Center Growth Perspective on Latin America - in m2 Thousands m2 Available space for Data Center in Latin America - m Brazil Mexico Argentina Chile Colombia Brazil Mexico Argentina Chile Colombia Source: Mckinsey, 2011

31 DATA CENTER COST BREAKDOWN ILLUSTRATION Breakdown depends on organizational model ~30-40% Investment Equipment Construction (if appliable) Equipment cost (IT/NW/energy) Material cost Land cost Requirements for DC building Taxes Tax incentive DC Layer Level Required IT equipment ~60-70% ~25-30% ~15-25% Workforce Maintenance Capacity Availability Worker cost Equip. maintenance cost Energy distribution Cooling system Elevated ground, ceiling Operational ~10-15% ~5-10% Energy Facilities Supply availability Cost KwH Colocation rent Equip. operation Fire suppression Protection against disaster ~5-10% Network Broadband avail. Network cost XX% Proportion of Total Cost (including depreciation) Quantitative Qualitative Other Resources Disasters e.g. Water supply Caused by man (probability and impact) Natural (probability and impact)

32 TRADITIONAL MODEL HINDER PROFITS 17 7 Enterprise Computing Cost Projection Indexed cost considering zero volume growth and stable deliverable model Wages inflation Aging of active population Lack of skilled resources Productivity stagnation Increase of HW performance Stable price/perfomance relation Increasing power density Prices of energy / emissions trade Lack of capacity Increase on buiding / installation services Workforce cost HW / SW cost Energy cost Facilities cost Margin DC 5% 0% % -8% -11%

33 CLOUD COMPUTING IN BRAZIL: OPPORTUNITIES BEYOND DATA CENTERS Sustainable cloud computing infrastructure (energy-saving) For the Brazilian government: improve IT asset utilization and search for efficiency Opportunity for the Brazilian software industry Developing a regulatory framework

34 DRIVERS FOR CLOUD COMPUTING IN BRAZIL Sustainable cloud computing infrastructure (energy-saving) Rather than buy or lease the equipment necessary to run the events,.. Soccer World Cup 2014 Olympics 2016 the organizers of the Youth Olympic Games (Singapore, 2010) could save 60 percent to 80 percent of the cost of purchasing the equipment themselves. Efficiency Agility Innovation

35 CLOUD COMPUTING IN BRAZIL: RISKS ``If you entrust your data to others, they can let you down or outright betray you. Eg.: Amazon the Orwell s 1984 removal episode. ``Data stored online has less privacy protection both in practice and under the law. E.g.:, recent hackers attacks to clouds (Sony, Gmail, etc). Before, the bad guys usually needed to get their hands on people s computers to see their secrets; in today s cloud all you need is a password! ``Thanks in part to the Patriot Act, the federal government has been able to demand some details of your online activities from service providers and not to tell you about it. Conflicts with Brazilian Laws. ``The cloud can be even more dangerous abroad, as it makes it much easier for authoritarian regimes to spy on their citizens. The Chinese government has used the Chinese version of Skype instant messaging software to monitor text conversations and block undesirable words and phrases. John Zittrain, Harvard University Professor

36 CLOUD COMPUTING: STRATEGY Government concerns: legal framework: users' rights, data protection and privacy - including the global aspects of these issues (e.g., national critical data). technical fundamentals: fostering research efforts that focus on critical issues such as security and reliability. (eg. Amazon outage!) ``Freedom to innovate, e.g., Apple apps! Research programs on cloud computing issues Goal: to support Brazilian R&D efforts on cloud computing (call for proposals) Market: support pilot projects for cloud deployment, involving Brazilian universities. push cloud computing pilot projects for public and government services (DATAPREV-LNCC-SERPRO-MCTI Project). Cloud Computing Training Program International Collaboration

37 CHALLENGES FOR CLOUD ADOPTION BY GOVERNMENT 1. Security Centralize certification and accreditation for cloud solutions Prioritize security controls to counter the most serious threats 2. Standards Define and evolve standards to ensure interoperability, portability, and security Create business and technical use cases and neutral reference cases 3. Procurement Develop procurement vehicles to accelerate the purchase of cloud solutions Maximize strategic sourcing to buy cloud solutions Integrate needs of federal government and local governments 4. Governance Set management policies and enforce budget priorities Align with regulatory and legal frameworks

38 CLOUD COMPUTING: KEY ACTIONS Explore the realization of the benefits of cloud Advance understanding and management of cloud computing risks Demand service transparency Clarify accountability across all relevant parties Ensure data portability Guarantee interoperability Accelerate adaptation of regulatory frameworks related to clouds Provide sufficient network connectivity to cloud services

39 Thank you!

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