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Cloud Providers in Brazil Customer Challenges and Pains Analysis

Challenges and Pains faced by Customers

Based on the analysis of the provided reports and supplementary information, customers of cloud providers in Brazil face a range of significant challenges and pains across various aspects of cloud adoption and usage. These issues can hinder their digital transformation efforts, impact operational efficiency, and increase costs.

A primary pain point for customers is the lack of skilled cloud professionals. There is a significant talent shortage in Brazil, with a forecast gap of approximately 150,000 cloud professionals by 2026. This scarcity leads to difficulties in effectively implementing, managing, and optimizing cloud environments. The resulting wage inflation for skilled roles like senior DevOps further adds to customer costs.

High energy costs and the related need for sustainability represent another major challenge, particularly impacting the Infrastructure layer of the value chain. While primarily a concern for data center operators, these costs are often passed on to customers in the form of higher service fees. The push for sustainability also requires customers to consider the energy sources of their cloud providers, which can be challenging given the scarcity of renewable Power Purchase Agreements (PPAs) outside specific regions.

Regulatory complexity is a significant hurdle for Brazilian cloud customers. Navigating compliance with regulations such as the Lei Geral de Proteção de Dados (LGPD), Central Bank guidelines for the financial sector, and other sectoral data-locality rules increases the friction involved in adopting and using cloud services. This is particularly challenging for Small & Medium Businesses (SMBs) who may lack the resources and expertise to ensure adherence.

Security and governance concerns are also paramount for customers. The risk of data breaches, often traced to misconfigured resources, and the lack of mature Identity and Access Management (IAM) practices, especially among SMBs, highlight the need for robust security measures and expertise. Customers are pained by the constant need to ensure the security and integrity of their data and applications in the cloud.

Network coverage and latency issues, particularly in northern and interior regions of Brazil, pose a challenge by inflating last-mile costs and resulting in higher latency. This impacts the performance and accessibility of cloud services for businesses and individuals in these areas, creating a digital divide.

Vendor lock-in and the complexity of multi-cloud environments are growing pains as customers adopt strategies involving multiple cloud providers. Portability between different platforms (like AWS, Azure, and GCP) is often hampered by proprietary services, and managing resources across disparate environments adds operational overhead and requires specialized tooling. The lack of standardization can prevent application compatibility and portability.

Finally, macroeconomic volatility, specifically exchange rate swings between the Brazilian Real (BRL) and the US Dollar (USD), impacts the cost of imported hardware and the dollar-denominated billing of hyperscaler services, creating cost unpredictability for customers.

Here is a prioritized table of the main challenges and pains faced by customers:

Priority Challenge/Pain Description
1 Skill Shortage Difficulty finding and retaining skilled cloud professionals for implementation, management, and optimization.
2 Regulatory Complexity Navigating and ensuring compliance with diverse data protection and sector-specific regulations (LGPD, Central Bank, etc.).
3 Security and Governance Ensuring robust security measures, managing access controls, and preventing misconfigurations and data breaches.
4 Network Coverage & Latency Limited fiber backhaul in certain regions leading to higher costs and latency, impacting service accessibility and performance.
5 Energy Cost & Sustainability High electricity costs contributing to operational expenses and the challenge of meeting sustainability goals through renewable sources.
6 Vendor Lock-in & Multi-cloud Complexity Difficulty in migrating between cloud providers and managing resources across multiple, potentially incompatible, platforms.
7 Macroeconomic Volatility Unpredictability in cloud service costs due to fluctuations in the BRL/USD exchange rate.

Correlation with Value Chain

These customer challenges and pains are intrinsically linked to the different steps of the cloud provider value chain in Brazil:

  • Infrastructure: Challenges related to Network Coverage & Latency and Energy Cost & Sustainability directly impact the Infrastructure layer. Limited network infrastructure in certain areas is a bottleneck in the physical connectivity segment. High energy costs affect the operational expenses of Data Centers, influencing pricing for customers.
  • Platform: While not a direct pain stemming from this layer's core function, the proprietary nature of some PaaS services offered by Hyperscalers contributes to the Vendor Lock-in issue experienced at the customer level when trying to adopt multi-cloud strategies.
  • Software: Although the Software layer focuses on delivering applications, the underlying complexities and costs from the Infrastructure and Platform layers can indirectly influence the pricing and performance of SaaS applications consumed by customers.
  • Services & Consulting: The Skill Shortage is a critical pain point that the Services & Consulting layer attempts to address by providing expertise in consulting, managed services, and training. Customers rely on players in this layer to bridge their internal capability gaps. However, the high demand for skilled professionals also impacts the cost and availability of these services. Security and Governance issues are often addressed by services offered in this layer, but the prevalence of breaches indicates that customers still face significant challenges in this area, highlighting a potential gap in effective service delivery or customer adoption of best practices. Regulatory Complexity also creates demand for consulting services to ensure compliance. The complexity of managing multi-cloud environments drives the need for specialized managed services and consulting.

The Macroeconomic Volatility acts as an external factor that impacts the cost structure across the entire value chain, from the procurement of hardware in the Infrastructure layer to the billing of services at the Platform and Software layers, ultimately affecting customer costs.

The identified challenges and pains demonstrate that while the Brazilian cloud market is growing rapidly, driven by demand across all value chain layers, there are fundamental constraints and complexities that need to be addressed to ensure continued expansion and customer satisfaction. These pains highlight areas where cloud providers, service providers, and potentially government initiatives need to focus to improve the customer experience and accelerate cloud adoption across all segments, particularly in underserved regions and among SMBs.

References

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