Cloud brings foreign IT spending to U.S.

U.S.-based corporations and government agencies have been shipping application development work to offshore IT services providers for years.

Now, thanks to cloud computing, foreign companies are starting to bring their business to providers of data center services located in this country.

Consider Grupo Posadas, a large hotel company in Mexico that today relies on five data centers to support more than 17,000 guest rooms in over 100 hotels. Grupo Posadas IT personnel run three of those data centers; the other two are run by outsourcing partners.

Later this year, most of the company's IT capability will be moved to a data center in Texas run by Savvis, a hosted services provider based in Town and Country, Mo., said Grupo Posadas CIO Leopoldo Toro Bala.

The U.S. data center will provide cloud-based infrastructure and managed database services, according to Toro Bala.

By moving some operations to Texas, the Posadas IT group will have more time to focus on developing systems like mobile and social networking tools that could help the business grow, he added.

"Our IT strategy is aligned to our growth, and our growth means that we need to be flexible and agile," he said.

The shift to the cloud will not affect IT costs. Instead, it will provide capabilities that will help streamline deployments of new IT systems, said Toro Bala. Previously, implementing a new system often required new equipment that could take months to deploy.

Cloud computing makes it possible to deploy new services in a matter of weeks. "That is the type of capability that we were lacking -- that agility," said Toro Bala

Meanwhile, as U.S. providers of cloud-based services start to attract foreign customers, some countries are enacting laws to protect their domestic providers, and some foreign companies are overseeing so-called FUD (fear, uncertainty and doubt) campaigns designed to raise questions about the security of U.S. data centers, said Daniel Castro, an analyst at the Information Technology and Innovation Foundation.

For instance, ads by Deutsche Telekom and other companies claim that their cloud products are more secure than those of U.S. vendors because U.S. companies have to comply with laws such as the Patriot Act, executives from industry groups and tech vendors told a U.S. House of Representatives subcommittee during a hearing late last month.

"We commonly see almost absurd positioning of what the Patriot Act permits," said Justin Freeman, the corporate counsel of Rackspace, a provider of hosted services.

Such marketing efforts, said Castro, represent a significant threat to U.S. providers of cloud-based services.

"The potential market for cloud computing is very large, and the U.S. right now is the country that stands to gain the most from it," said Castro, who also testified at the hearing.

Castro said most countries have laws that are similar to the Patriot Act, and some, including Canada and Australia, allow businesses to turn over data voluntarily to government agencies. A U.S. company would violate its terms of service if it did that, he said.

Concerns about a lack of security or privacy in U.S. data centers didn't affect the outcome of the outsourcing decision at Grupo Posadas, which has a long history of working with U.S. IT companies, said Toro Bala.

Grant Gross of the IDG News Service contributed to this story.

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on

Copyright © 2012 IDG Communications, Inc.

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