Asia reaches to embrace the cloud - but needs to step up the pace

Cloud spending is increasing in businesses across APAC, but foundational gaps are slowing adoption and impeding growth.

Cloud computing has long moved on from being a new trend to becoming a vital part of the technological landscape. Surveys continually show that around 90 percent of companies are deploying cloud in some way - all those initial concerns about cloud have long disappeared.

But this transformation has only really been visible in North America and Europe, while these regions have been overhauling their IT set-ups, it's not the same story in Asia-Pacific - or at least, the picture has been patchy.

That's about to change; according to research from the Boston Consulting Group, the APAC region is expressing dizzying amounts of growth, outstripping their counterparts in the west. According to the report, spending on the public cloud and related services is growing at a compound annual rate of 25 percent across the APAC region. As a sign of its growing penetration, cloud spend represents about five percent of the average IT budget, a figure that is expected to double by 2023.  

Is that a reflection of the low user base or a sign that companies in Asia have embraced cloud in a major way? According to Alain Schneuwly, managing director Boston Platinum Computer Group and co-author of the report, this rise reflects "genuine growth". Both in fairly mature systems such as Australia, New Zealand, South Korea and Japan, and in other countries, like those in south-east Asia and Singapore where there's little cloud.

It's a view that's echoed by cloud providers. Selina Yuan, president of international business, Alibaba Cloud Intelligence, sees the company tapping into genuine interest within the region, one that could lead to a transformation in the way that business will be conducted. She explains, "There's now a huge digitally connected and sophisticated user base in many APAC countries - including China - that are looking for new content to consume and new products and services to purchase. This is driving an ever-accelerating adoption of cloud services for fairly obvious reasons - the agility, economics and scale they deliver, without compromising security."

One of the problems with talking about APAC is the diversity in the region. When it comes to western Europe or North America, there's a good deal of homogeneity within the countries but that's not the case with Asia. And we're not just talking about the gap between the advanced economies and the others, there's also some distance between lightly regulated countries and others.

As Schneuwly points out, this mixture of regimes has made it hard for global cloud providers to get a foothold in the region. "Because of the diversity, it makes it difficult for these companies to have one size fits all approach. For example, SE Asia is a bit behind technologically, partly because of regulation - these make it very difficult for global players."

These providers are fighting competition in highly regulated markets like Indonesia and Malaysia where domestic players are having some success. That's beginning to change as more of the global players look at the area with interest.

It's an indication of how the appetite for change is beginning to grow. Kavita Herbert, director of sales for Templafy APAC, says that there's a huge interest in cloud in the region and a willingness to adapt. Templafy, which offers a cloud-based document management system, has just opened an APAC office in an attempt to build on this growing interest in cloud. Like others, she highlights the lack of homogeneity as an issue but is excited by the dizzying growth that the region is seeing; "What's exciting about this market is the forward-thinking people here. The adoption of cloud in APAC is fast outpacing other regions and this is being fuelled by innovation and growth."

That's not to say that businesses have eagerly embraced cloud. As the Boston report says: "Despite growing interest in the cloud, many APAC companies are failing to get the full benefit from their investment. Only 20% of respondents have migrated a majority of their applications to the cloud, and less than (sic) 25% of business applications are cloud ready."

It's a hesitation that can partly be explained also by a lack of technical support. "They are facing a skills challenge - there aren't the skilled engineers around. If you look at somewhere like Bandung Institute of Technology in Indonesia. It's one of the best technical universities in the region but it can't produce enough skilled people to cater for the market."

Herbert agrees that cloud in the region had been held back by a lack of technical expertise. "In the past, very few companies had engineering skills but they have been investing in those skills."

This transformation is driving the way that businesses in the region operate. Alibaba, which remains the dominant Asian provider, reported that during the company's Global Shopping Festival last year, Alibaba Cloud supported US$38.4 billion in transactions on a single day.

Yuan says that the company also came into its own during the recent Covid-19 crisis.  "Thanks to our quick capability to add servers within minutes, DingTalk - Alibaba's enterprise communication and collaboration app - added 100,000 cloud servers to support the nationwide demand for cloud-based communications that connect those working outside an office setting."

The onset of Covid-19 may have been the boost to take cloud up to the next level. The recent growth has been impressive but there's still some way to go.  

The Boston report highlights that the lack of commitment to cloud means that, in too many cases, the lethargic take-up of cloud is forcing businesses to run operations on-premise, just to keep going.

So, the story for APAC is a region that has been slow to adopt a way of working that has transformed western economies, but Asian companies are beginning to respond to the possibilities thrown up by cloud, driven by the entrepreneurial spirit in many of the economies.

As Tempfarly's Herbert points out, governments are doing their best. For example Singapore is providing digital transformation grants to SMEs - companies are investing in businesses in the region - all of which will help drive the economy.  "We're excited about the potential of the region - all of these things are things they do well," she says.

The APAC region is a geographic area with some smart people and almost unlimited potential growth. Widespread adoption of cloud could certainly accelerate that process. As the Boston report indicates, there's been a promising start but still some way to go.