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Looming shift to hybrid cloud in Southeast Asia

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Cloud computing is growing increasingly popular. Big IT corporations the likes of Amazon, Microsoft, IBM and Google are recording increasing revenue from their cloud services and infrastructure.

However, Southeast Asia is still lagging behind in embracing this technology. In its research called “The State of Cloud in Southeast Asia” International Data Corporation (IDC) found that enterprises in Southeast Asia still prefer to manage their infrastructure and applications in-house rather than outsourcing these services.

Sreenath Kandarpah

IDC Asia/Pacific IT Services research manager, Sreenath Kandarpah

However, IDC expects 70% of enterprises in the region will commit to a hybrid cloud strategy. “Organisations in Southeast Asia are moving aggressively towards Digital Transformation (DX). To enable this transformation, the underlying technology architecture will be hybrid cloud. They can deploy mobile, social, big data, machine-to-machine (M2M) and Internet of Things (IoT) to meet their DX objectives,” IDC Asia/Pacific IT Services research manager, Sreenath Kandarpah told Reseller Malaysia.

Over the past couple of years, hybrid cloud has become a predominant choice of deployment in enterprises, due to its capabilities, such as reduced total cost of ownership, high availability, elastic scalability, agility, speed of implementation and lower complexity, compared to traditional IT systems.

Enterprises will commit to hybrid cloud: they can use private cloud to retain control of their IT environment and security while moving non-critical workloads to the public cloud to take advantage of scalability. “Despite the fact that enterprises currently prefer traditional in-house deployment of services due to security and privacy concerns, the growing complexities of ‘digital solutions’ and a lack of in-house skills will drive the adoption of cloud services,” Kandarpah predicted.

“We see local service providers (SPs) partnering with global vendors to strengthen their security offerings. They are increasingly addressing and providing a layer of security in the cloud environment,” he said.

The transition will not be easy though. There will be challenges in calculating the return on investment and getting management buy-in. With the exception of Singapore, enterprises in Southeast Asia are more passive in adopting new technologies and take a “wait-and-see” approach. “Knowing the passive mindset of decision makers, it has to be a combination of problem statements and solutions being sold about the strategic value of cloud services.

“Cloud deploying is still driven from a cost-saving perspective, especially in the current economic uncertainty. Enterprises are not fully aware of the business value derived from hybrid cloud,” he said.

On the other hand, it is commonly understood that cloud will be the base technology architecture for DX. SPs are also pushing cloud offerings, playing a bigger role in building awareness around cloud’s business value, Kandarpah said.

“It is crucial then for IT enterprises to clearly define their business objectives, and also understand how the adoption of hybrid cloud strategy can help them achieve those objectives. SPs are strengthening their consulting services to help customers identify which cloud model best fits their requirements and which workloads should be moved to the cloud,” he explained.

Sherrel Roche

IDC Asia/Pacific senior market analyst Sherrel Roche

SPs in the region are partnering with analyst firms to organise events such as CIO summits, roundtables, speaker engagements and conferences for line of business (LOBs) to drive awareness on the benefits of hybrid cloud, said IDC Asia/Pacific senior market analyst Sherrel Roche.

“These events engage end-users through local user case studies on how organisations implemented cloud services and the business value they are achieving from it,” Roche said.

Traditional outsourcers will have to reinvent themselves. “We believe the outsourcing services market has already reached its tipping point. ‘As-a-service’ has become a common parlance in a majority of deals in Southeast Asia,” she said.

She noted that traditional outsourcers are continuing to struggle to reinvent themselves and redefine their value proposition because their revenues come from “legacy” product-centric services. “Vendors with no legacy lineage are free to forge alliances across the ecosystem and can provide services tailored to their customers’ needs.

Increasing competition from pure-play cloud service providers and pressure on traditional revenues will push traditional outsourcers towards greater automation, standardisation and strengthening their cloud capabilities, Roche said.

The outsourcing services market in the region is rife with competition, Roche observed. Global vendors and pure-play cloud providers compete with local vendors who have a strong foothold in their home countries and are now expanding their regional presence. “Some of the key players are NCS in Singapore, VADS in Malaysia, IPC in Philippines and Biznet Datacenter in Indonesia, to name a few,” Roche said.

She said large enterprises in the region are more willing to work with SPs who have a strong local presence and can provide a personal touch to the business relationship in addition to technical expertise. “This trend benefits local SPs who in turn are partnering with global and pure-play cloud SPs. They can ramp up their cloud offerings and compete in the regional and global market.

“With such partnerships and programs, local ISVs and SIs can build their knowledge and expertise to strengthen their cloud offerings, and speed up the adoption of cloud amongst local enterprises,” she said.

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