Digital Transformation with Vietnam Cloud: Shaping the Future of Business IT Infrastructure

Not so long ago, international Cloud providers were the preferred choice for many Vietnamese businesses due to their reputation and long-standing experience. However, the landscape has changed in recent years with the rapid growth of domestic Cloud providers. Fueled by the significant efforts of these local cloud service providers to embrace the digital transformation trend, the domestic cloud market share has begun to rise, joining the competition with global cloud providers.

Now, the trend of shifting from international Cloud providers to "Made in Vietnam" providers is becoming increasingly prevalent. This article will analyze the trends in shifting Cloud storage needs and provide insights to help businesses distribute storage in line with these trends.

International Cloud: Strong Foundation, But No Longer Exclusive

International Cloud providers, with their massive infrastructure and diverse services, were once considered the top choice for all businesses. However, in the dynamic environment of the evolving Cloud services market, international Cloud providers no longer hold a monopoly.

Advantages:

Solid Infrastructure: International Cloud providers possess extensive infrastructure, backed by robust investment and proven over years of operation.
Diverse Services: They offer a wide range of Cloud services, from storage and computing to networking, artificial intelligence, and data analytics, catering to diverse business needs.
Advanced Technology: International providers often lead the way in adopting the most advanced technologies, bringing modern and efficient solutions to businesses.

Disadvantages:

Cost: While initial costs may be competitive, additional fees like international bandwidth charges can make the total monthly cost higher compared to domestic Cloud.
Data Security: Storing data on servers located overseas can raise security concerns, especially for businesses operating in data-sensitive sectors.
Legislation: Businesses need to comply with foreign data privacy and storage laws, which can be complex and costly.
Access Speed: Geographical distance can impact access speeds, leading to service disruptions and poor user experience.

Image 4.jpg — International Cloud faces limitations in terms of cost, security, and access speed, creating opportunities for domestic service providers to grow and compete

Domestic Cloud: Establishing Its Presence

Domestic cloud industry is creating a new wave in the Vietnamese Cloud services market. Its prominent advantages are increasingly gaining recognition.

Advantages:

Access Speed: Infrastructure located in Vietnam enhances access speeds, stabilizes network connectivity, and minimizes service disruptions.
Market Understanding: Domestic Cloud providers have a deep understanding of the Vietnamese market, business culture, legal regulations, and customer needs, enabling them to deliver tailored solutions and provide better support. This is something that foreign providers cannot effectively match.
Cost: Operating costs are often lower due to the maximum utilization of available resources, making them competitive with international providers.
Legal Compliance: Using the domestic cloud allows businesses to easily comply with Vietnamese regulations regarding data security and storage.

Disadvantages:

Service Maturity: While rapidly growing, domestic Cloud providers are still relatively young compared to their international counterparts and lack extensive experience and capabilities in delivering complex Cloud services.
Resources: They may face challenges in investing in new technologies and scaling up due to financial limitations.

Image 3.jpg — In the rapidly accelerating digital transformation landscape, domestic Cloud providers have a significant opportunity to accelerate and make a breakthrough

The Trend of Shifting to Domestic Cloud

Domestic cloud market share is on the rise

According to Frost & Sullivan research, the Cloud services market in the Asia-Pacific region saw a growth rate of 20-30% in 2023, with Vietnam leading the Southeast Asian region. Furthermore, the Vietnam Cloud Computing and Data Center Club (VNCDC) released a report at the end of 2023 indicating that the COVID-19 pandemic boosted digital transformation in Vietnam, significantly increasing the demand for Cloud services.

While international Cloud providers accounted for 80% of the market share in Vietnam four years ago, this figure dropped to 77.8% by 2023, ceding 22.2% to domestic Cloud businesses. This reflects the growing importance of "made in Vietnam" Cloud in the digitalization process, highlighting the intensifying competition between domestic businesses and international conglomerates.

Trends driving domestic cloud growth

The growth of domestic Cloud is shaped by some noteworthy trends. These changes reflect businesses adapting to the digitalized business environment, fostering competition within the Vietnamese Cloud services industry:

Trend of large businesses using domestic Cloud: Large businesses with abundant and long-term deployment resources are gradually prioritizing domestic Cloud, leveraging advantages in cost, data security, and legal compliance.
Trend of shifting data storage and retrieval services to Vietnam: Businesses are prioritizing storing Vietnamese customer data on servers located in Vietnam to ensure information security and comply with data privacy regulations.
Trend of multinational businesses utilizing domestic Cloud: Multinational businesses are using domestic Cloud to operate domestic systems and store data from local users as per national regulations, while maintaining other data centers in their home countries. This model often incorporates direct connect mechanisms to link domestic and international clouds, ensuring swift and efficient data transfer.
Multi-cloud strategy combining domestic and international cloud: This is a common trend, enabling businesses to maximize the advantages of both types of services, ensuring operational efficiency, information security, and legal compliance.

Image 2.jpg — The rising market share and evident trends indicate the significant potential of "Cloud made in Vietnam" within Vietnam's digital transformation journey

What drives these trends?

The primary driver for these trends is the growth of technology companies, startups, and the digital transformation process in traditional businesses. Notably, Vietnam's young, dynamic, and tech-savvy workforce plays a crucial role. Their rapid access to technology is fueling the development of cloud-based services with high-quality human resources.

Furthermore, the Vietnamese government plays a critical role in promoting digitalization with policies for data management and storage, including Decree 53/2022/ND-CP on data localization and Decree 13/2023/ND-CP on personal data protection. These factors have significantly contributed to the robust growth of the Cloud services market in Vietnam.

Balancing and Leveraging

Both domestic and international clouds have their unique advantages and limitations. Choosing the right Cloud service depends on the needs and specific characteristics of each business. However, businesses can consider utilizing both domestic and international Cloud through a "multi-cloud" model. This model allows businesses to maximize the advantages of both service types, ensuring operational efficiency, information security, and legal compliance.

Here are some examples of how businesses can balance the use of domestic and international Cloud:

Using domestic cloud for data-sensitive services: Storing Vietnamese customer data on servers located in Vietnam helps businesses comply with data privacy laws and provides customers with a greater sense of security.
Combining domestic cloud with international cloud: Businesses can use domestic Cloud for basic services and utilize international Cloud for advanced or specialized services.
Direct connection between domestic and international cloud: This method accelerates data transfer speeds while reducing international bandwidth costs.

To make the optimal choice, businesses should consider the following criteria:

Business Size: Small and medium-sized enterprises (SMEs) can opt for domestic Cloud services to save costs and leverage local market knowledge. Large and multinational companies may require international Cloud solutions with greater scale, reliability, and multilingual support.
Data Security Requirements as per Legal Regulations: Businesses need to select providers that fully meet data security requirements as defined by Vietnamese law, especially Decree 53/2022/ND-CP on data localization and Decree 13/2023/ND-CP on data protection.
System Flexibility and Scalability: Businesses need to choose a Cloud provider capable of meeting the evolving needs and scalability of their systems.

The development of the domestic cloud presents a significant opportunity for Vietnamese businesses. By balancing the use of domestic and international Cloud, businesses can maximize the advantages of both service types, enhancing operational efficiency, information security, and competitive capabilities in the global market.

Image 1.jpg — The choice between domestic or international Cloud depends on the specific needs of each business and requires careful consideration

Conclusion

Shifting to domestic cloud is becoming a trend attracting attention from many businesses. Backed by strong government support, the domestic cloud promises numerous benefits for Vietnamese businesses. However, the transition process is not straightforward. Businesses need to carefully consider factors like scale, technology needs, budget, and security requirements before making a decision.

To maximize the benefits of domestic Cloud, businesses can consider a gradual transition of appropriate services while closely monitoring the efficiency and performance of the process. This allows businesses to manage risks, ensure a smooth transition, and optimize their operations.