Southeast Asia is on the cloud. Corporations are turning serverless and cloud-native as more international cloud services providers invest in ASEAN. There is an emerging need to meet the burgeoning demand for cloud technology in the region.
A study by Alibaba Cloud found that on one hand companies are moving online, while on the other hand companies using cloud will increase their investments. Among ASEAN nations, the increase will come from Thailand (95%), followed by Indonesia, Philippines, and Singapore. Sectors such as gaming, media and telecom, internet and technology, and financial services are expected to invest heavily into cloud services.
The pandemic played a role in this transformation. Due to lockdowns and remote working, there was an increase in digital touchpoints. This continued even after Covid subsided. Since cloud computing enabled scalability and flexibility during peak demand periods, ASEAN nations doubled down on their cloud efforts.
SPRINTING TOWARDS CLOUD
Cloud has enabled companies to experiment with new technologies and digitise traditional business models. Another factor to consider is the rising internet population. More than 420 million Southeast Asians are internet users, of which 50.1% users belong to Indonesia.
Data from IDC showed that the cloud infrastructure revenue in this region stood at $2.18 billion in 2022, a 25% increase over the previous year. Singapore took a lion’s share of this amount at ~$1 billion. But what was more interesting is countries such as the Philippines, Indonesia, Vietnam, Thailand, and Indonesia reported growth upwards of 30%.
These double-digit rates of growth necessitate the addition of new data centres in the region. Global corporations such as Alibaba, Amazon, Cisco, Google, NTT, Oracle, and Microsoft are making fresh investments into SEA.
The NTT Group of Japan is planning to invest $90 million to build its data centre in Bangkok. Amazon will spend $6 billion in Malaysia over the next 14 years to expand its cloud computing services. Oracle will open its second cloud region in Singapore. To bridge the talent gap, Microsoft has set up a cloud talent academy in Singapore.
ESTIMATED SPENDING ON CLOUD IN 2024
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With local demand picking up, cloud providers have also moved closer to their target markets. Google Cloud, for instance, is setting up two new cloud regions in Malaysia and Thailand apart from New Zealand to cater to the specific needs of SEA.
Even as more companies get a taste of cloud, technology-first groups such as Indonesia’s GoTo relocated their data to cloud to improve efficiency and enable faster transactions.
WHERE’S THE FUTURE HEADED?
Cloud can either be public (shared usage), private (dedicated to a single organisation), or hybrid (a mix of public and private). While public cloud remains popular because of its affordability, there is a rising trend of switching to hybrid cloud services. And the pace of adoption is quicker.
Take the case of Al Rajhi Bank Malaysia, a subsidiary of the world’s largest Islamic bank Al Rajhi. The entity has decided to move its entire IT infrastructure to Amazon Web Services (AWS) by 2026. AWS will also power its digital bank Rize. Its move to cloud is likely to be in a hybrid mode since it will offer the ability to secure sensitive data.
Surveys conducted by cloud providers also point to a similar trend. An Alibaba survey found that SEA companies have changed their cloud strategy to make a transition to hybrid cloud. It is anticipated that the preference for hybrid cloud for customised services will propel the digital economy in this region.
A BCG report said that the Asia Pacific region’s total cloud spending is likely to reach $200 billion by 2024. With estimated annual growth over 20%, organisations that move to cloud will enjoy a serious competitive edge.
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