Aliyun’s Cloud Covers ‘Internet Plus’ Push

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Aliyun’s Cloud Covers ‘Internet Plus’ Push

“Internet Plus” has become a familiarcatchphrase in China since Premier Li Keqiang proclaimed it during his report to the National People’s Congress in March. Li turned it into aclarioncall for industrial modernization through technology, a sweeping mandate that galvanized companies and government organizations to prioritize their investments in I.T.

“We will develop the Internet Plus action plan” Li said, “to integrate mobile Internet, cloud computing, big data, and the Internet of Things with modern manufacturing; to encourage the healthy development of e-commerce, industrial networks, and Internet banking; and to get Internet-based companies to increase their presence in the international market.”

One business that has been quick to answer Li’s call is Aliyun, the cloud-computing arm of e-commerce giant Alibaba Group. Over the last few months, Aliyun, China’s largest cloud-computing company, has announced anumberof alliances with government and big businesses to help them upgrade and streamline their management systems, offering bureaucracies and SOEs with legacy systems the same efficiencies that Aliyun’s cloud-computing and big-data services provideprivate e-commerce companies.

The latest example: Aliyun today announced it had been selected by China’s customs agency to build a cloud-based big-data platform. The deal, the financial terms of which were not disclosed, calls for Aliyun and Nanjing-based technology company Datatech to create an advanced I.T. system that willbolster China Custom’s ability to process unstructured data such as real-time surveillance videos and data analytics on more than 1,800 customs checkpoints.

Aliyun’s project is part of a larger effort by China Customs to upgrade its systems to combat smuggling and optimize the collection of import duties and taxes. The selection of Aliyun marks the first time in China that a ministry level government agency haschosen a cloud-computing service provider to build a large-scale data platform.

Another one of Aliyun’s more recent customers is Sinopec, Asia’s biggest oil refinery, which is working on a cloud system to better track its petrochemical production chain as well as its emissions. Aliyun and Sinopec are also exploring cooperation in areas such as Internet of Things technology, networked vehicles, finance and online payments, and online-to-offline commerce.

Aliyun isnot working just with nationalagencies and big companies on large projects. “For us, [cloud computing] is a way to centralize our operations, and it will let us avoid doubling our efforts unnecessarily,” said Shang Jianxue, section chief for the Zhejiang Public Security Bureau, which recently engaged Aliyun to streamline its back office operations and enterprise messaging. Switching to the cloud will allow the bureau to replace its patchwork network of disconnected in-house computing resources in favor of Aliyun’s centralized processing capabilities.

“No longer will we operate single-service information systems, we can build integrated real-time online applications,”Shang said. “Our migration to the cloud does not just let us support some operations but changes the way we can work. This will enhance how we manage our information, especially when it comes to our messaging capabilities.”

Attracting new clients such as Sinopec, China Customs and the Zhejiang Security Bureau is part of Aliyun’s drive to support Internet Plus, said Aliyun President Simon Hu. The companycurrentlyhas some 1.4 million customers as well as strategic agreements with Chinese provinces, municipalities and government agencies including the China Central Government Procurement Agency.

This is just the beginning: “Aliyun will support users in traditional industries such as finance, energy, healthcare and education,” Hu said, “allowing them to accomplish rapid transformation by leveraging cloud-computing technology, which saves them operating costs while enabling them to apply analytics to a large amount of data.”

Indeed, Hu sees Aliyun growing into nothing less than an I.T. version of the electrical grid, providing the country with cheap, secure, reliable computing power, data-storage capacity and big-data analytics in the same way power companies supply electricity.

This is an ambitious agenda, but not an outlandish one. Worldwide, cloud computing is a $150 billion industry that’s growing quickly. Cloud services are increasingly being adopted by many organizations and companies, because itallows organizations that once had to purchase and maintain their own costly I.T. infrastructure to “rent” server capacity and network infrastructure from cloud-services providers. Besides lowering costs, the cloud also lets companies centralize and streamline their computer operations while retaining the ability to quickly scale their processing capabilities to match demand.

In China, cloud computing is still at a relatively early stage of adoption. Public spending on this technology in China currently represents only about 5 percent of the global public cloud budget. China’s public cloud segment, however,is expected to grow at a combined annual average growth rate of 33.2% from 2015 to 2018, according to IDC.

With cloud computing still in its infancy, Aliyun–which IDC says is China’s largest provider Infrastructure-as-a-Service (IaaS) provider in China with a 22.8% market share in the first half of 2014–appears situated for further growth. The company has been providing commercial cloud services only since 2009, but Alibaba Group reported revenues of $147 million from cloud and infrastructure sales in the first nine months of 2014, up 58 percent compared with the same period the previous year.

Aliyun’s vast network and processing infrastructure was initially developed to handle the traffic volume and data-management needs from the transactions on Alibaba’s retail platforms. Today Aliyun supports a large portion of Alibaba’s integral processes, including those of affiliated e-payments provider Alipay, which generates more than 80 million transactions a day and has over 300 million active users.

Commercial offerings currently span a range of cloud computing services including website traffic management services, database services, corporate e-mail and network security, and big data analytics, but the company has demonstrated an ability to offer customized services to a wide range of organizations both large and small.

Aliyun counts among its clientsbusinesses inInternet gaming, digital entertainment and consumer electronics. Last year, Alibaba signed a strategic agreement with the China Meteorological Administration (CMA) to provide cloud processing for more than 60 years of historical weather data. More recently, Aliyun struck a deal with the Xi’an International Medical Investment and DHC Software to create what they are calling the first “cloud hospital” in China. The program would involve the creation of an administration platform that will manage individual patient cases and perform analytics on health data, while allowing hospitals to build and run online services such as appointment bookings.

While building up its client base in China, Aliyun has its eye on global markets. The company recently opened its first overseas data center in Silicon Valley and just announced a technology joint venture in Dubai to serve the Middle East and North Africa. Hu, Aliyun’s president, said thatgoing globalis one of the company’s key initiatives this year. Given that many Chinese companies also are looking to expand abroad, Aliyun’s learning curve might parallel that of their Chinese clients.

“Aliyun’s overseas strategy aims to help Chinese enterprises to reach the world, and help foreign enterprises to enter China,” Hu said. “The launch of the data center in Silicon Valley will enable Internet companies in China to expand their businesses in North America.” As the company gains experience and partners overseas, data centers are planned in Europe, Japan, Southeast Asia, and the Middle East, he said.

That’s not to say the company has lost sight of its powerful domestic base. Alibaba expects its cloud-computing arm to play a key role in China’s “Internet Plus” strategy—as well as a role in the evolution of the I.T. industry as a whole.

“We are going through a time of change,” Alibaba Executive Chairman Jack Ma said last year during the signing of an agreement calling for Aliyun to help China’s Hainan Island develop cloud-based “smart city” services. “Consumption patterns are changing, lifestyles are changing and business infrastructure is changing. In five years, we anticipate that the human era will move from the information-technology era to the data-technology era.” Data is what Aliyun is all about.

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