South Korea Launches Ambitious Cloud Storage Agenda

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By Elaine Ramirez

South Korea has outlined an ambitious agenda to bring the government and private businesses onto cloud servers, in an effort to reduce public agencies’ information technology costs, drive the creation of a more robust domestic cloud services market and make the country a global leader in cloud technology by 2021.

The Ministry of Science, ICT and Future Planning (MSIP) aims to get 40 percent of public agencies to commit to cloud service adoption by next year. It collaborated with other ministries on a 2017 roadmap, released Jan. 11, to further grow its 1.19 trillion won ($993.9 billion) domestic cloud market. The plan includes revamping two state-run cloud server centers, completing a third one by 2018 and establishing a cloud procurement support center to help public agencies make the transition.

“In Korea, like many other countries, the cloud is recognized as the core execution base of the fourth industrial revolution, and it is an essential infrastructure for the development of new industries,” Kim Soo-jeong, deputy director of the MSIP’s Software Promotion Division, told Bloomberg BNA.

Already, 119 out of 1,118 public agencies surveyed in October and November, or 10.6 percent, said they have adopted cloud computing, according to the MSIP. Another 188 agencies, or 16.8 percent of the total, plan to do so by 2018. The overall figure includes administrative agencies, governments and public institutions at the city, provincial and national levels.

“The public sector not only needs to innovate business while reducing its IT cost by utilizing the cloud service, but also to make it a market driver by promoting public demand,” Kim said.

Opportunities for Global Players

Cloud services allow users to store data on the internet rather than on a physical hard drive, making it easier to access and share the information from different devices. But whether South Korea’s push for more cloud computing translates into business opportunities for foreign companies remains to be seen.

The MSIP’s aim to foster the development of domestic cloud companies into globally successful enterprises will require billions of dollars in investment and continuous technological innovations, Lee Han-joo, executive vice president of the cloud-hosting solutions company Hostway, said. That raises the question of whether domestic companies will be able to compete with those that are already operating on a global scale—even at home.

Because of that potential disadvantage, some aspects of Korean law may favor Korean companies, Lee said. For example, a policy for the financial industry that requires cloud storage hardware to be approved by Korean government presents a hurdle for international competitors like Inc. and Microsoft Corp., he said.

“It’s a backdoor way of giving unfair advantage to the native cloud providers,” Lee said. South Korea, he said, has adopted some “not-so-obvious” types of laws that are clearly “designed to promote the local flavor of cloud.”

Private Server Demand Rises.

South Korea’s public agencies can pick from among private commercial clouds, in-house cloud servers or the state-run Government Integrated Computing Center Cloud, dubbed the G-Cloud. With the exception of highly sensitive material, the agencies can migrate as much data as they wish to private servers, which are rising in popularity.

The number of agencies planning to adopt private cloud servers doubled from 2016 to 2017, while demand for the other two types of servers declined. New agencies, in particular, tend to favor private servers; existing agencies tend to transition to state-provided options.

There are 51 agencies, with 116 systems between them, that plan to convert to private cloud servers this year, and 59 agencies with 181 systems that intend to make the shift in 2018. Private servers are considered to have a more mature security and innovation level than government servers, Lee said.

The government also plans to expand cloud adoption to companies operating in national industrial complexes, promote cloud-based precision medical projects and smart factories, and upgrade its open cloud platform-as-a-service ("PaaS-TA”) to promote a cloud ecosystem. PaaS offers customers a platform for developing web applications.

Government Offers Cloud Incentives

The Ministry of the Interior is spearheading an effort to shift all central administrative agencies to the cloud as part of the “Government 3.0” drive to promote synergy between departments and agencies through data-sharing and collaboration.

Since last year, South Korea has actively pushed for public institutions to adopt cloud storage, including by providing them with bonus points on their evaluations, removing obstacles to adoption, opening a public cloud support center and even appointing 48 “chief cloud first officers” (CCFOs) across the government.

After implementing the Cloud Computing Act in September 2015 to promote cloud computing by enhancing information security and user protection, the government earmarked 84.2 billion won ($70 million) in June 2016 for efforts to integrate information systems. The G-Cloud was created last year to bring three-fourths of government systems onto the cloud.

The government’s First Basic Plan for Cloud Computing Development (2016-2018)—intended to promote innovation and competitiveness in the local cloud industry—called for a number of steps last year, including implementing a cloud security certification system, setting guidelines for public institutions to adopt cloud and easing cloud regulations for the financial technology, health care and education industries.

Domestic Cloud Industry Booms

The public sector’s enthusiasm reflects a local boom. The domestic cloud market has seen double-digit yearly growth since 2014 and was up 55.2 percent last year to 1.2 trillion won ($1 billion), according to a report citing the Korea Association of Cloud Industry (KACI).

With the country’s cloud usage rate expected to reach 30 percent next year, competition is expected to intensify and the market is projected to reach 2 trillion won ($1.66 billion), KACI said.

“I think what’s driving all this is a digital transformation powered by the cloud,” Lee of Hostway told Bloomberg BNA. “It’s a story about digital transformation, and how it’s being powered by the cloud, and how the cloud presents great opportunities for Korean companies to get ahead in this new digital era.”

The Struggle Over Data

There are enduring concerns about data security as more information moves to the cloud, but those are a red herring, Lee said. Data in a government-maintained physical center is unlikely to be any more secure than one maintained by commercial cloud providers, who often employ more and better levels of security, he said.

Governments, for their part, tend to be more concerned with data sovereignty, Lee said. That leads them to protect against the entry of companies from outside their borders, and particularly from the U.S., he said.

“They don’t want the data being produced inside the country to be consumed outside of the country,” Lee said. “It goes beyond the local interest in promoting the local cloud. It’s all wrapped up in this larger context of digital transformation, data sovereignty and, ultimately, who’s going to drive the future.”

To contact the reporter on this story, Elaine Ramirez in Seoul at eramirez@correspondents.bna.comTo contact the editor on this story, Keith Perine at

For More Information

The survey results can be found in Korean at

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