Digital transformation is sweeping the globe, presenting new opportunities for emerging markets, and Latin America (LATAM) is one of the rising stars. While it’s still one of the smallest regions in the digital economy, it’s also one of the fastest growing. Since 2008, internet usage has grown from less than one quarter of the population to over 62% on average,i and LATAM is projected to have the largest growth rate in private Interconnection Bandwidth between now and 2021.ii Other signs that LATAM is on the digital fast track include major investment in the region by players such as Netflix, Amazon, Google and Apple. PayPal also recently invested $750 million in Argentina-based MercadoLibre, the eighth largest online marketplace in the world.iii
LATAM cloud adoption just getting started
With all these indicators of rapid growth, it’s easy to assume that cloud adoption in LATAM is well underway, however, that is not necessarily the case. LATAM enterprises looking to move to the cloud need to understand the landscape to do it right. Nearshore Americas Research recently spoke with three leading cloud consultancy companies operating in LATAM, and they had this to say:iv
- “The region is lagging behind in adoption – only 10% of the region’s workloads have migrated to the cloud” – Leonardo Suarez, CEO of Clouxter in Colombia.
- “The cloud market in Mexico and LATAM is extensively behind compared to other international markets.” – Alfonso Valdés, Founder and CTO of ClickIT Smart Technologies in Mexico.
- “There is still a lot of knowledge missing about what the platform can do and [we have to] assume a more evangelizing role about the solution in this part of the world.” – Rodrigo Alonso, Director of Operations at Tavano Team in Uruguay.
However, these consultancies also believe that the region is on the verge of tremendous growth, and Frost & Sullivan projects that the Infrastructure-as-a-Service (IaaS) market in LATAM will grow to US $7.4 billion by 2022 at an annual growth rate of 31.9%.v
Remote cloud connectivity poses unique challenges for LATAM enterprises
The map above illustrates where three major providers (AWS, Azure and Google) have distributed their computing and storage infrastructure. Except for Sao Paulo in Brazil, the largest concentration of infrastructure near Latin America is located in the northern part of the continent, more specifically, on the U.S. East Coast. That means that LATAM enterprises who want to migrate to the cloud will need to factor in that their resources are going to be remote as traffic will have to travel to where the infrastructure is located. Longer distances mean higher latency that will likely impact performance.
So how can LATAM companies accelerate their cloud adoption while maintaining optimal performance?
Leverage private interconnection to optimize network and cloud connectivity
If the cloud is effectively remote for many LATAM businesses, then proximate private interconnection to carriers and cloud providers becomes a crucial element. This includes direct access to submarine cable landing systems, such as Monet, GlobeNet, Curie and Seabras-1 that connect North, Central and South American metros.
Sources: Atomia; Telegeography
The map on the right shows generally how internet traffic flows in the region. It’s clear that traffic from Mexico travels primarily through Dallas and Los Angeles, while the traffic from the rest of the LATAM region is concentrated mainly in Miami. That means that to reach the cloud, LATAM traffic must traverse carrier networks located in these metro hubs. By establishing an interconnection hub(s), or “edge node(s),” in these cities, where businesses can directly interconnect with multiple carriers and cloud providers, LATAM companies can minimize latency issues. It also enables them to migrate apps and data to the cloud while avoiding the performance constraints and security concerns of the public internet.
For example, let’s assume a hypothetical LATAM company uses Azure for employees to consume services such as Microsoft Exchange, Office 365, Sharepoint, etc. At the same time, their online business is hosted on Google Cloud, while AWS is used to store historical data. These three clouds will need to exchange some data to work properly and effectively. Since the cloud infrastructure is physically located in the U.S., backhauling traffic between the clouds and the point of origin in LATAM will create a “trombone” effect, introducing high latencies that will likely result in unacceptable performance.
By leveraging Equinix Cloud Exchange Fabric™ (ECX Fabric™) on Platform Equinix®, which sits at the edge, adjacent to multiple carriers networks and cloud providers, this company can tap into telecommunication circuits from their carrier of choice, while at the same time, dynamically and simultaneously interconnecting to multiple cloud providers over high-speed, low-latency virtual private circuits.
ECX Fabric is currently available in 35+ key metros worldwide, including Dallas, Miami and Los Angeles, as well as cloud-dense locations like Ashburn (VA) and Silicon Valley (CA). All of these platforms are deployed inside Equinix International Business Exchange™ (IBX®) data centers and interconnected to each other, enabling private access to cloud providers in both local or remote locations. Benefits include:
- Ecosystem value: As the world economy continues to digitize, the Interconnection of people, things, locations, clouds and data is accelerating. A colleague at Equinix once said that it is not enough to have a good house, the neighborhood matters as well! A thriving digital and business ecosystem enables companies to connect and collaborate with their neighbors (networks, clouds, partners or customers) in an optimal way. This opens the door to new possibilities of shared value and enables IT teams to quickly adapt to the demands of their business. More than 9,800 companies are part of the Equinix customer ecosystem, including nearly half of the Fortune 500 and over a third of the Forbes Global 2000.
- Provider flexibility: No single operator is able to provide end-to-end connectivity for multiple clouds, applications and locations around the globe. Direct and secure connectivity to over 2,900 cloud and IT providers and 1,800+ network providers (including subsea cable carriers) on a single, global interconnection platform means that LATAM enterprises can deploy hybrid and multicloud architectures with their provider of choice anywhere in the world. This makes the hypothetical example of using three different cloud providers achievable and helps avoid vendor lock-in. It also opens up the possibility to leverage newer, more flexible connectivity technologies such as SD-WANs, which are faster and easier to provision that most MPLS networks.
- Optimal performance and reliability: LATAM organizations can reach any ECX Fabric participant (cloud, network, SaaS, information security, etc.) with the lowest possible latencies. By selecting the right carriers, avoiding the unpredictability of the public internet and establishing a presence at the edge, it is possible to limit the number of “hops” over long distances and avoid the “trombone” effect. In addition, the multiple network and cloud providers on ECX Fabric means more reliable, redundant hybrid and multicloud infrastructures in the event of a failure.
- Lower cost: Some cloud providers charge a significantly larger fee when the data is read over an internet or virtual private network connection. Reading data from the cloud using direct, private interconnection can be up to six times more cost-effective.
- Enhanced security and control: By deploying private interconnection on ECX Fabric, businesses can enable distributed security closer to the data and applications they are protecting, while bypassing the public internet.
Listen to the IDC webinar (in Spanish) to learn more about the best way to connect to the cloud in LATAM.
To learn more about Interconnection growth trends download the Global Interconnection Index (also available in Spanish).
[i] ResearchGate, Latin American Internet Usage, Dec 2007 as cited in (A Review of Online Learning and its Evolution in Latin America, NORMA SCAGNOLI, University of Illinois at Urbana Champaign, USA pages 555-565 http://dx.doi.org/10.2304/pfie.2009.7.5.555); Hootsuite, The Global State of Digital in 2019 Report, Internet Penetration By Region, page 33, Jan 2019.
[ii] Equinix, Global Interconnection Index Volume 2, 2018.
[iii] Banyan Hill, Latin America’s Internet Growth Will Mint Millionaires, Mar 2019; Digital Commerce 360, PayPal is investing $750 million in MercadoLibre via Bloomberg News, Mar 2019.
[iv] Nearshore Americas, Cloud in LATAM: An Inside Look at Growth Drivers, April 2019.
[v] PR Newswire via Frost & Sullivan, Cloud Services in Latin America Set to Exceed $7.4 Billion by 2022 Powered by IoT and Cognitive Intelligence, April 2018.