BCG Study Shows APAC Companies Spend Heavily on Cloud to access
increased innovation, launch new capabilities, and lower costs—all
crucial for survival and success in Post-COVID-19 World
Singapore: A new eight-nation APAC study conducted by Boston Consulting Group (BCG) shows that spending on the public cloud and related services is growing at a compound annual rate of 25 percent. This is much faster
than similar growth across the US and Western Europe and points to the region’s readiness to invest in cloud initiatives that are accelerating the pace of innovation, growth, and customer engagement.
Titled “Businesses in Asia-Pacific Can Find Resilience and Growth in the Cloud,” the study notes that capturing the full potential of the cloud may help companies successfully navigate through the current and post-COVID-19 environment.
The April 2020 BCG study was developed in collaboration with Amazon Web Services (AWS) and covers Australia, India, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. It shows that companies in these countries are dedicating an average of roughly 5% of their IT budgets to cloud expenditures, a figure that is expected to double by 2023.
The study finds that growth in the public cloud could have a positive economic impact of more than $450 billion across the region. It highlights the case of Australian Airways, which saved $40 million per year in fuel costs by using cloud-based analytics to improve thousands of flight routes.
“One of the main benefits of cloud computing is access to innovation and agility,” said Luc Grimond, a managing director at BCG. “We’re seeing in the current COVID-19 crisis that more companies are shifting workers to virtual environments and employing end-user computing, using the cloud to quickly roll out essential collaboration tools.
Cloud investments will have longer-term benefits as well, such
as risk reduction, the ability to provide new and better services to business
stakeholders, and improved personalization of product and service offerings.”
Rajiv Gupta, the Managing Partner, said “Across APAC region, spending on the public cloud and related services is growing at a CAGR of 25%, much faster than in the US and Western Europe. It is interesting to note that while variabilization of cost (against the fixed cost of data centers) has been a traditional driver of cloud adoption by companies, a large majority of respondents we surveyed in the APAC region said that they are pursuing the cloud as a way to propel growth.
We’re seeing in the current COVID-19 crisis that more Indian companies are shifting workers to virtual environments and employing end-user computing, using the cloud to quickly roll out essential collaboration tools and provide access to data. Our study also found that growth in the public cloud could contribute to a total economic impact of more than US$450 billion across six major markets in APAC (Australia, India, Indonesia, Japan, Singapore, and South Korea) from 2019 through 2023.”
Barriers to Greater Growth: But there are also factors contributing to delayed adoption and, as a consequence, forcing some companies to maintain on-premises legacy infrastructures rather than migrating to the cloud. Chief among these is the fact that many businesses in the region demonstrate weak alignment between business and IT, despite many business leaders understanding the potential of cloud computing, such as the ability to deploy new services 30%–60% faster.
Furthermore, few companies outside of the financial services and industrial goods industries have adapted their monitoring, procurement, risk practices, and governance of the cloud. Without a coherent cloud-operating model, these companies struggle to integrate cloud capabilities into their core business and deliver sustainable outcomes. They are also burdened by a lack of IT professionals with deep experience in engineering and coding, and who are able to design and implement business-focused use cases that demonstrate the value of cloud computing.
Ultimately, companies that are able to integrate cloud computing into their technology initiatives can unlock strategic value in ways that go well beyond cost savings to speed innovation, find new ways to engage with end-users, and grow their bottom lines. The BCG study provides valuable insight into the advantages of cloud computing, outlining the six steps companies can take to adopt the cloud more quickly and increase return on their IT investments.
J P GUPTA for SMART GOV