Accelerating Cloud Adoption in Asia
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A presentation I did to CCAP (August 2013) as part of the Asia Cloud Computing board of directors. Contents coming from ACCA, with additional slides contributed by me.
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Accelerating Cloud Adoption in Asia
- 1. 1 Accelerating Cloud Adoption in Asia Francisco “Cocoy” J. Claravall IV ACCA Board - Globe Telecom fjclaravall@globetel.com.ph
- 2. The economic slowdown in China in 2012 will be short-lived. 10% growth Australia, New Zealand, and the ASEAN markets will remain resilient. 10%+ growth Korean organizations will accelerate the drive toward IT transformation. 4% growth India’s IT spending growth <10% Japan’s IT spending growth will stay flat in 2013. 0% growth 2 APAC tech industry outlook (2013)
- 3. Percentage of enterprise application that will be on cloud in 2014* 3 Cloud adoption 50% 56% 34% 24% “Large Latin American and Asia Pacific companies are the most aggressive adopters of cloud computing – while their European and US counterparts remain conservative about shifting apps to the cloud” - TCS
- 4. 28% 42% 12% 33% 26% 22% 36% 24% 12% 20% 17% 21% 40% 26% 48% 47% 68% 50% 53% 38% 38% All APEJ Singapore Malaysia Hong Kong India China Australia Cloud Adoption APEJ* Yes, already adopted No, but planning to No plans 4 Cloud adoption – APEJ by country
- 5. 13% 35% 49% 33% 40% 28% 15% 29% 45% 27% 30% 30% 6% 44% 57% 37% 49% 43% 0% 10% 20% 30% 40% 50% 60% No significant impact It will accelerate time to market It will reduce our costs It will provide our management with greater transparancy and… It will change our interaction with customers and suppliers It will fundamentally change our business model APAC EMEA AMERICAS 5 Understanding of Cloud Which of the following best describes the potential impact of cloud on your business model / operations? Cloud is not just for reducing costs, it is a transformative technology. This is particularly true in emerging markets. Asian executives understand this as reflected by the fact that they are more likely to describe cloud has having fundamental impact to their businesses KPMG 2011
- 6. Predicted cloud spending Private Cloud Public Cloud $2.9bln ($30.3bln) $32bln ($241bln) $21.8bln $2.3bln $534m $10.1bln 2011 2020 $1.1bln to $15.7bln $341m to $5.4bln $283m to $2.9bln $270m to $2.4bln $889m to $5.6bln
- 7. The Economics of Cloud Today • Cost of power • Infrastructure labor costs • Infrastructure buying power • Network capacity boom Supply side economies of scale • Time of day patterns • Randomness • Multiplexing • Broadband Growth Demand side economies of scale
- 8. Japan: largest market + Mature, broadband network, PaaS particularly strong, – Strong local IT providers, preference for custom-built solutions, conservative Australia: most mature + NBN, presence of global players, transparent - Concerns around data sovereignty, international bandwidth China: fastest growing + Local players, increased awareness, gov’t strong advocate, data centre investments - Underinvestment in IT, reliance on manual labour, lack of local Saas players, regulation India: ramping up + local players ramping up, SaaS increasing in city areas – Internet adoption low, no gov’t initiatives ASEAN: vary widely + Singapore lead, mobile internet access high, strong local IT skills – connectivity a challenge, concerns around data protection, data sovereignty Philippines’ Internet growth and savvy IT skills seen as positive for cloud growth in the country 8 Market Drivers
- 9. “Of the 207 respondents from outside the US, 56% were less likely to use US-based cloud providers after the revelations and 10% had cancelled plans to use American services. About a third said the revelations would not affect their provider choice.” 9 A recent article refers to a survey conducted by the Cloud Security Alliance, who surveyed 456 organizations around the world:
- 10. Face-To-Face interactions are critical for IT sales in Asia Majority of APAC info workers use 3+ devices for work Some other regional aspects 75% 61% 29% 29% 19% F2F with vendor F2F with integrator or agent Online (SaaS vendor website) Online (local reseller website) Phone 26% 22% 18% 20% 14% One Two Three Four or five Six or more 52% three or more
- 11. How will ASEAN IT managers use Cloud? TechTarget Study 2013
- 12. In the Philippines, customer adoption of cloud services is starting to increase but has to cross the chasm to gain traction … REVENUEGROWTH TIME EARLY MARKET BOWLING ALLEY TORNADO MAIN STREET TOTAL ASSIMILATION Total Cloud industry revenue growth @ 57% p.a. IAAS in 2016 at 5.8B (McKinsey) IAAS demand in 2017 range between 600M to 1B pesos (IDC & Gartner) THECHASM Globe launched In 2011
- 13. Maximize their strengths ... 1. Infrastructure 2. Customers 3. Scale 4. Coverage 5. Ability to offer end-to-end SLAs 6. Billing capabilities TO OVERCOME WEAKNESSES Perceived lack of Customer-centricity IT and Network Silos Perceived lack of Innovation Speed of Execution “Telco-minded” thinking Philippine Telcos are now moving to the Cloud
- 14. Asia has opportunities and challenges • multiple markets and regulatory regimes, • cloud readiness discrepancies among APAC countries • security, privacy, integration, service level, licensing concerns.
- 15. Mission: to accelerate cloud-computing adoption across the region of Asia Pacific by engaging stakeholders, providing tools to remove barriers and demonstrating the benefits of adoption. Vision: become the leading influencing industry voice on cloud-computing promotion and governance to business, government and citizens in Asia 15 Asia Cloud Computing Association Asia focus
- 16. 16 Membership
- 17. OUR THOUGHT LEADERSHIP 17 Cloud Readiness Index Public Policy Newsletter Data Sovereignty Study Data Sovereignty Heat Map SME Cloud Index SME Resource Centre Cloud Assessment Tool Service Provider Index Advocacy Stakeholder engagement
- 18. 18
- 20. 20 ACCA Data Sovereignty Tools Detail the legal/regulatory landscape for 14 Asia-Pacific countries: • Identify the laws and regulations • Describe the law creation process • Identify the governing bodies • Project the impact of the regulatory laws Help ACCA members to: Focus: telecom, finance, government and health Inform strategic business decisions Identify market specific products & policies Inform and educate customers Dispel myths Advise govts
- 21. SME CLOUD Working Group provides thought leadership and education to governments, the vendor community and the SME’s to bring cloud computing technologies to the SME market. DELIVERING • the SME Cloud Index a comparative index of Asian countries’ SME size, attractiveness and readiness for cloud computing adoption • the SME resource centre a collection of information and resources relevant for cloud computing use in general and the SME segment in particular. 21
- 22. See: membership@asiacloud.org www.AsiaCloud.org @accacloud (twitter) Asia Cloud Computing (linkedin) 22 ACCA is about: • Shaping Asia’s cloud future, • Collaborating with leading companies, • Magnifying your influence and visibility.
Notes de l'éditeur
- The cloud is obviously a hit buzz word, and lots of investment is flowing there for good reason. Effective use of the cloud can reduce IT costs by up to 25%. But the Cloud isn't a productivity opportunity; it's an innovation opportunity. Leading companies like Amazon and Google are using the cloud not to lower their IT costs (only) but to innovate, and they've had remarkable success. Clearly these companies are standouts, but companies that aren't taking every advantage of technology to innovate are shooting themselves in the foot.Cloud computing is potentially one of the biggest drivers of economic growth over the next decade. Cloud computing is expected to create 14m jobs globally, 10m of these in Asia 2011-2015. IDC’s research also predicts revenues from cloud innovation could reach $1.1 trillion per year by 2015. A few months ago Gartner predicted that cloud computing is forecasted to contribute to as much as 2% growth of EU’s GDP by 2020The world’s economic center of gravity continues to shift towards the Asia Pacific region.The cloud computing market will grow almost 20% this year to become a $109 billion industry, research firm Gartner predicts, with business process as a service (BPaaS) and software as a service (SaaS) dominating the market, but infrastructure as a service (IaaS) quickly gaining momentum.In 2011, the market stood at $91.4 billion and the research firm expects it to grow to $206.6 billion by 2016. Cloud is still only a very small part of the overall IT spending market though. In July, Gartner predicted total IT spending would be $3.6 trillion in 2012.BPaaS currently represents the largest share of the cloud market, making up more than three-quarters of the spending in the cloud. This refers to business processes delivered from the cloud, including email, payroll and cloud advertising -- which is the largest single chunk of cloud spending in the market right now, representing $84.2 billion in spending. Cloud advertising is expected to continue to make up almost half of spending in the cloud market through the next four years, Gartner predicts.The next largest market is SaaS, which Gartner expects to finish of the year as a $14.4 billion market, following by IaaS, which is slated to be a $6.2 billion market. Platform as a service (PaaS) is the smallest of the three major cloud models, representing about $1.2 billion in spending. Another significant and growing area of the cloud market is around cloud management and security services, which Gartner says will be a $3.3 billion industry this year. During the next four years, Gartner expects the IaaS market to grow at a faster pace than the SaaS market and for the two to be of about the same size by 2016.
- The economic slowdown in China in 2012 will be short-lived. As China goes through a planned political transition in 2013, the government needs to ensure economic stability to facilitate the successful transfer of political power. To counteract the negative external market factors that have led to a slowing Chinese economy, the government is expected to issue a new stimulus package.IT-related spending will be positively affected and will grow by approximately 10% in 2013 in local currency — versus 9% in 2012. Australia, New Zealand, and the ASEAN markets will remain resilient. IT spending growth has picked up in sectors like financial services, drivenby transformation projects; these will continue to drive growth in 2013. Indonesia, the Philippines, and Vietnam to lead the ASEAN region for IT purchases, with strong domestic demand driving growth of more than 10% in 2013. Malaysia will experience lackluster performance in 2013; ongoing political dysfunction and heavier reliance on global exports will result in growth of less than 8% Korean organizations will accelerate the drive toward IT transformation. Korean organizations that have traditionally valued high degrees of customization and strongly supported local providers have slowly begun to embrace far more global standards and ubiquitous technology, such as x86 servers. We expect other infrastructure platforms, such as storage, to begin following a similar pattern in 2013. At 4%, 2013 IT spending growth in Korea will be in line with the regional average. India’s IT spending growth will continue to disappoint in 2013. India recently launched reforms in the retail and insurance sectors to attract foreign direct investments (FDIs). However, we do not expect these reforms to significantly affect IT spending growth rates before 2014, and IT spending growth in India will remain below 10% in 2013. Japan’s IT spending growth will stay flat in 2013 because of a contracting hardware market. The economic recovery following the 2011 disaster is now over, and we expect economic growth rates to slow in 2013. General elections in 2013 will also create a climate of uncertainty, which will hamper business investments. IT purchases growth rate in Japan to hover around 0% in 2013 compared with 3.5% in 2012.
- Asean’s ICT industry is growing fast, employing 11.7 million people and contributing US$32 billion, or 3%, to the bloc’s gross domestic product. Knowledge Economy will fuel Asia’s futureThe cloud is the next great ‘leveler’ – SME’s well positionedLower IT install base compared to other parts of the worldLarge numbers of small/medium sized business with low IT skillHigher numbers of mobile devices; good (3G/LTE) connectivityDeveloping economies can leapfrog the developed
- Fifty-two percent of organizations in Asia Pacific excluding Japan (APEJ) are either currently using or actively planning cloud initiatives — up from 44% in 2010 and 22% in 2009 · Cloud adoption is currently strongest in Singapore and Australia. Forty-two percent of organizations in Singapore are currently leveraging cloud, up from 16% in 2010 and 6% in 2009. Cloud adoption in Australia has also accelerated rapidly, with 36% of Australian organizations currently leveraging cloud-based services, up from 22% in 2010 and 14% in 2009. · Chinese organizations are beginning to mobilize around the cloud. While lagging some of the more mature APEJ IT markets in current cloud adoption, China has the highest percentage of cloud planners at 40%, well above the regional average of 24%. This indicates a strong likelihood that Chinese organizations will adopt cloud services over the next 12 months. · Despite slow economic growth, the cloud market opportunity in Japan is enormous. We did not include Japan in the most recent cloud adoption survey for the Asia Pacific region. However, separate research indicates that cloud adoption in Japan currently lags Australia and Singapore but remains ahead of China and India.Given the sheer size of the Japanese IT market, this translates into a massive cloud opportunity in Japan. There is minimal variation from the regional average in cloud adoption by organization size in Japan. The only exception is among very small organizations in Japan (fewer than 100 employees), with a mere 21% having already adopted cloud solutions or approaches.
- Cloud is not just for reducing costs, it is a transformative technology. This is particularly true in emerging markets. Asian executives understand this as reflected by the fact that they are more likely to describe cloud has having fundamental impact to their businesses
- Australia, China, India, Japan, and the Association of Southeast Asian Nations (ASEAN), which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. all four public cloud market segments and three of the four virtual private cloud market segments (excluding dynamic BPO services) — will grow from $2.9 billion in 2011 to $32 billion in 2020. To put the regional estimates into context, analystsforecast that the global market for these seven cloud market segments will grow from $30.3 billion in 2011 to more than $241 billion in 2020. Asia Pacific’s share of global spending in these seven cloud segments will therefore increase from approximately 10% in 2011 to more than 15% in 2020. The public cloud market in Asia Pacific will grow from $2.3 billion in 2010 to $21.8 billion in 2020. The virtual private cloud market in Asia Pacific (excluding dynamic BPO services) will grow from $534 million in 2010 to $10.1 billion in 2020. This market represents a hybrid business model combining highly standardized public cloud offerings with control over how services are accessed (typically via a virtual private network) and where data is stored (meaning which data center and/ or country).
- In our view, market-side drivers have been far more relevant in driving forward thecloud computing agenda and will continue to provide its momentum into the future.We consider both the advantageous supply- and demand-side economies of scale,before looking at other associated advantages for cloud customers.Supply-side economies of scaleCloud computing is not a return to the mainframe era, but in fact offers economiesof scale and efficiency that exceed those of a mainframe. The key feature on thesupply-side is multi-tenancy, which allows for data to be concentrated at a singlephysical location. In other words, one data centre can host resources for multiplecustomers. This results in the following economies of scale: Cost of power. The operators of small data centres must pay the prevailing localrate for electricity, but it is possible for larger operators to pay a fraction of theaverage rate by locating their data centres in locations with inexpensive electricsupply and through bulk purchase agreements. This rapidly decreases the costper MIP (million instructions per second) as the scale of the operation increases. Infrastructure labour costs. The workforce required to service, maintain andupdate a given number of servers decreases markedly when those servers areconcentrated in a single physical location. Whereas one IT professional couldpreviously service around 140 servers at different locations, he or she can nowlook after a data centre of 10,000. This in turn permits IT employees toconcentrate on higher value-add activities such as building new capabilities andimproving user control. Infrastructure buying power. Bulk buying data centre hardware and softwarereduces unit costs, favouring the larger cloud data centre controllers.Demand-side economies of scaleThe efficiency with which the capacity is used also plays a role in achievingeconomies of scale, and this is improved with demand aggregation. Time-of-day patterns. Behavioural patterns dictate the degree of serverutilisation at different times of the day. In business use, peaks tend to beobserved during nine-to-five working hours. Capacity has to be built-in toanticipate these peaks, but under conventional server systems it would remainunused at other times. Cloud data centres are able to run the same workload formultiple time zones on the same server. Equally, multi-location scheduledprocessing can ‘follow-the-moon’ to consistently make use of cheaper night-timeelectricity costs. Randomness. Random usage can account for spikes in required servercapacity. However, the pooling of servers will necessarily smooth this as the totalnumber of users increases. Multiplexing. On the cloud, capacity is shared and when not being employed byone user, it can be allocated to another. This is antithetical to the case withindividual desktops, where processing power is locked up on individual machineswhich is plainly extremely wasteful. The same is true on the software side, and soa smaller number of copies of pieces of software are required, again reducingcosts.
- The public cloud market in Japan will grow from $833 million in 2011 to $11.4 billion in 2020. Australia government’s “Whole-of-Government” approach to data center consolidation over the next 10-plus years to increasingly steer agencies such as the Australian Taxation Office (ATO) and Department of Immigration and Citizenship (DIAC) toward cloud-based delivery of services, both internally and externally. the unparalleled economic growth in China will certainly help spur strong cloud market growth in China across most cloud segments through 2020. But unique market characteristics are hindering cloud market evolution in China, specifically, ongoing over-reliance on manual labor in place of automation, underinvestment in IT relative to other countries and regions, a strong preference for local IT providers over global firms trying to penetrate the China market, and the slow emergence of local cloud providers (including basic SaaS solutions) to support enterprise IT requirements India. While cloud growth will be strong across India, over the next two to three years we expect large organizations and subsidiaries of global multinational companies to drive demand for cloud segments other than SaaS
- Talk about the Snowden report, hacking of the US meetings in New York
- Most vendors report that 60% to 90% of their total revenue in Asia Pacific currently flows through distributors, depending on the mix of hardware, software, and services they sell. Asian customers still value face-to-face engagement. Small and midmarket users still prefer to buy IT solutions through resellers. Q3 2011 survey, three-quarters of end users indicated that they prefer face-to-face interaction with the salesperson — vendor or channel — when purchasing a SaaS solution (see Figure 3). Distributors with reseller reach in this segment will benefit. The same survey revealed that the top three areas in which CIOs prefer channel partners to help them with cloud-based solutions are training (75%), integration (73%), and migration (72%).
- The early adopters speak to the Innovators as they are both technically oriented. Technology is king.The late majority speak to the early majority as they are both interested in the economic partBut the Early Majority does NOT speak to the Earlyadopters
- There are no uniform laws to regulate cross-border data transfer across Asia Pacific; jurisdictions are in wildly different stages of development, and each has its own regulations/guidelines for data security and privacy laws. In countries where comprehensive Personal Data Protection Laws (PDPLs) have been established, transferring personal data requires prior consent from individuals; data transfer to third countries without adequate privacy protection is generally prohibited. As of December 2012, Australia, New Zealand, Hong Kong, Japan, India, Korea, and Taiwan have comprehensive PDPLs in place. China drafted new guidelines in 2011, while ASEAN countries lag. A combination of PDPL-related concerns over noncompliant transfer of data from one country to another and censorship concerns in countries like China — and Myanmar, North Korea, Vietnam, and Singapore to a certain extent — will drive faster adoption of virtual private cloud-based services versus public cloud services accessed via Internet gate Key laws/regulationsPerspective on how governments implement their lawsPotential impact on cloud service providers and their customersInforming strategic business decisions regarding market entry and product marketingHelping identify or design products or product-related policies (e.g., terms of service) for specific marketsProviding a basis of fact to inform and educate customers regarding the impact of laws/regulations on their adoption of cloud products or servicesdispel myths regarding potential legal or regulatory issuesadvise governments on regulatory or legal matters related to cloud computingFor the Philippines: Clear cut policy on adoption and procurement of cloud computing servicesEstablish Minimum Contract TemplateJurisdiction/Choice of Law/Authority of GRPEstablish privacy and security standardsData Privacy Act complianceSecurity standards: location of servers, susceptibility to national security threats