I would breakdown those challenges in the following areas:

1. Market Perception & Cloud Implementation Drivers: In Latin America everyone is talking about cloud computing, but so far very few companies have implemented it. There’s been a lot of activity around virtualization in the region, but most projects are in an initial phase. The key drivers for cloud adoption in the region are primarily perceived as a good opportunity to cutting IT costs (mostly CapEx – capital expenditures) as a result of implementing basic public cloud offerings (mostly SaaS applications such as email, collaboration and CRM) rather than seeing it as a great opportunity to innovate and create incremental business value (i.e. using PaaS to develop new business applications). Also, I’ve identified still a lot of confusion among IT professionals about how to make key cloud adoption decisions, such as what workloads to migrate from on-premises platforms to the cloud, and what delivery model approach to follow (public cloud model dominating the market). On the other hand, there’s a certain level of perception that cloud services are a re-branding and a marketing strategy from vendors to repackage and sell ASP applications or managed hosting offerings from the past. From that perspective, I would say Cloud Vendors’ biggest marketing challenge is to deliver a clear and consistent message across all channels about which offerings could match better with the primary drivers of Latin American companies (by segment), what real benefits customers could expect from implementation, and how these companies could capitalize their previous investments in on-premises platforms and applications, including open source investments. Let’s not forget that Latin American countries have a large open source customer base.

2. Barriers for cloud adoption: Some of the barriers for cloud adoption are similar to those presented in other mature markets: data privacy, security and compliance. Security and connectivity issues are major concerns for all the companies looking at cloud computing in Latin America. Also potential risks such as data loss and SLAs are frequent questions from CIOs: What happen if there’s data loss or if I experience application downtime? Who’s going to be liable and what compensation will I get from the cloud provider? Those some of the issues that are making companies very cautious about implementing cloud computing solutions. Additionally, in the public sector and for certain types of applications, I’ve seen some government entities requiring cloud data storage to reside in the country of origin, so this could be a potential challenge for Cloud Vendors as their majority of data centers are located overseas. These objections and answers need to be well documented by vendors in order to be able to objectively respond to customers and lower their concerns to get C-level approval for cloud projects.

3. Competitive Landscape: One of the biggest challenges for Cloud Vendors is to be able to differentiate their cloud-services offerings from their main competitors. I see three types of cloud service providers in the region. The first group are large enterprise IT providers such as IBM, Oracle, Microsoft, HP. The second group: global public pure cloud players, such as Google, Amazon, and Salesforce.com. (Especially in the SMB segment and the education sector I’ve seen an increased of adoption of Google Apps). The third group is a new breed of emerging local could-service providers such as Telmex and Telefonica, which are large Telecomm companies entering the market very aggressively to compete in the cloud sector with competitive offerings such as cloud storage, hosted email, and managed IT infrastructure. The former has strong financial muscle and also have a large customer base to which they’ve selling data services for many years. To effectively out-compete each key player in every group it will be necessary to develop a winning market strategy to positioning the customer value proposition and unique selling points of the vendors’ cloud offerings for each customer segment and market.

4. Channel Ecosystem: Local expertise is a critical factor for cloud adoption because there are not as many cloud implementation experts and consultants in LATAM as in the US. Some large IT solution providers in the region are still in the early stage of developing their local cloud computing practices, and there’s absence of pure cloud System Integrators. At the same time, driving cloud projects thru VARs and SIs partners is becoming a challenge itself, as cloud-based solutions have a different kind of revenue model. Those partners will need to change their traditional up-front traditional solution sales revenue model into a revenue stream of usage-based fees and aggregated services across the life-cycle of the cloud implementation. This is definitely another huge challenge for Vendors as the channel ecosystem needs to be presented a compelling value proposition so the partners could be motivated to push their customers to implement cloud solutions as well as developing new cloud-based complementing offerings. This will require a laser-focused readiness plan, which includes retraining existing partners as well as recruiting new partners with cloud strategic focus and expertise.

5. Offerings payment localization: Another key aspect that I’ve encounter cumbersome for many companies in the region is the payment method offered by cloud-service providers. Given that the use of a credit card to consume IT services is not a very broadly adopted practice in Latin America, so many customers see this as an inconvenience. Vendors would need to present some other alternatives (such as invoicing charges) to customers for charging for cloud services to effectively compete to those large Telco’s that are offering a bundle of services (phone, broadband and now cloud services) included in their monthly bills.

6. The Latency Factor: The majority of global cloud providers don’t have Data Centers deployed inside many of the largest countries in LATAM, so their cloud services offerings are in some countries limited due to latency issues. Those cloud providers that are constrained by infrastructure in many places will definitely face tough competition from local vendors.

The most recent Gartner study about Public Cloud Services forecast for 2010-2015, projects that Latin America will represent only a 2% of the global market for public cloud services. Putting that analysis in perspective is very clear the region will fall behind all the rest of the markets in terms of cloud adoption.

To conclude, I consider that large cloud vendors won’t be making any big efforts to grab only a small portion of the cloud opportunity. And, as with the previous IT industry refresh cycles, the adoption will be driven from top-down, which is large corporations making the big bets and negotiating with large vendors to make the switch to the cloud more compelling and flexible for them. But, definitely we are far from a mainstream adoption of enterprise cloud services in Latin America.