Massive Potential Attracts International Players to Iran's Cloud Computing Market, Despite Challenges

Creating strong infrastructure through local collaboration will enhance growth opportunities, finds Frost & Sullivan's Digital Transformation team

DUBAI, U.A.E., Aug. 17, 2017 /PRNewswire/ -- The nascent Iranian cloud computing market offers immense potential for future growth. This is subject to a sturdy understanding of the country's long-term economic development, and information and communication technologies (ICT) investment plans. The biggest challenges to deployment are low internet speed/connectivity as well as ease of doing business for outsiders due to poor security measures. Also, most infrastructure is acquired illegally. Hence, collaboration with the government or large telecom players will be critical to market entry and growth.

"The outsourcing culture has been low in Iran, and market entry policies and regulations are still vague," said Digital Transformation Consultant Gowtham Bandi. "Until there is improvement in infrastructure and government assistance, it will be tough for international players to establish a foothold in the Iranian cloud market. To start with, non-core business applications like web hosting and mails will help create an ecosystem to host/implement other solutions."

Iran Cloud Computing Market—Macro Outlook and Technology Trends, 2017 examines critical aspects for investing in and entering the Iranian cloud market. The study highlights industry verticals to target in order to create distinctive positioning to enter the public, private and hybrid, infrastructure-as-a-service (IaaS), product-as-a-service (PaaS), and software-as-a-service (SaaS) cloud markets.

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Local cloud providers, such as Afranet, DP Iran Co, and Innfinision, that operate using/reselling global products, presently dominate the Iranian data and cloud market. Integrating with telecom players for infrastructure, and European/Indian IT solution providers to enhance portfolio capabilities, will provide growth avenues for all stakeholders.

International players will have to overcome several issues to gain a foothold:

• Copyright is a challenge in Iran, resulting in a barrage of illegal software that can potentially hamper the growth of SaaS;
• There is a lack of foresight and awareness on the telco side in terms of the benefits and opportunities the cloud presents;
• Preference for local vendors is higher due to better 'local market requirement' understanding;
• Lack of knowledge about the cloud results in virtualisation being mistaken for the cloud; and
• Small budgets, numerous sanctions, and political uncertainty restrain investments.

The hybrid cloud segment holds massive opportunities, driven by demand from the small and medium enterprises sector. Creating robust infrastructure and addressing security concerns will be vital for success.

"New business models are being developed to create revenue opportunities through the cloud," noted Bandi. "This will help them achieve a strong competitive standpoint against established players in the Iran cloud market."

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Iran Cloud Computing Market—Macro Outlook and Technology Trends, 2017
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