Terremark Cites Federal Cloud Growth

Jose Segrera, chief financial officer at Terremark Worldwide Inc., has noted a trend we’ve been covering lately: the government’s high level of interest in cloud computing. Speaking Dec. 8 at a UBS conference, Segrera jokingly cited President Obama and federal CIO Vivek Kundra as the company’s top sales engineers. Here's why.

Segrera said administration officials have been talking up cloud computing as a way to reduce operating cost. Segrera said the majority of the company’s cloud success has been with government customers, naming USA.gov and Data.gov among the cloud adopters.

“This is the first time that anyone on our team has seen the federal government adopting something faster than the private sector,” he said.

Segrera identified data security concerns as the main obstacle in landing federal cloud deals. He said the company spent a lot of time getting customers comfortable with the integrity and security of the cloud environment.

Another trend Segrera cited: a shift among mid-market businesses away from traditional IT outsourcers. He said some organizations in the $1 billion to $10 billion range that fully outsourced IT to companies such as EDS (now HP Enterprise Services) or Perot Systems (now Dell Services) have found that delivery approach inefficient. Those mid-sized companies are now taking part of the infrastructure back in house and asking niche providers to manage particular components. Segrera said recent Terremark wins follow that scenario.

The ability to take business away from the big guys, may give Terremark the upside to better the industry growth rate. Segrera, citing various market research projections, pegged the compound annual growth rate for infrastructure services at 19 to 20 percent over the next five years.

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