Cloud computing is the future of business in Asia, and companies around the region are beginning to jump on board the train, although infrastructural and regulatory challenges remain, according to the Economist Corporate Network’s recent report.
Given the immense cost-saving, convenience and efficiency benefits brought about by cloud-based services, Asian firms have been eager to invest in internet technology for their business. Almost a fifth of Asian-based enterprises are actively converting most of their IT capabilities into cloud, “on-demand” or other utility models, indicative of a technologically forward-looking culture, according to the study.
Against a backdrop of impending ASEAN integration, strong economic growth and a rapidly expanding middle class population, the impetus for businesses to invest in technological infrastructure and cloud-based systems is strong and urgent.
And businesses in Asia also recognize the importance of their IT capabilities – at least 80 percent of respondents believe enterprise applications and client data were “mission-critical” for their operations in Asia. In fact, half saw client data as a unique competitive advantage for their businesses, a sign of the rising recognition of Big Data as a key source of customer insight and operational performance analytics.
At the moment, a majority of businesses still manage their technology in-house, particularly for sensitive data such as corporate and client information. Acceptance for multi-strategy management of IT operations, however, is broadening, with a significant and rising proportion of businesses also employing these strategies for functions such as enterprise applications, remote and mobile access and messaging.
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Across the region, cloud awareness and readiness is rising, according to the 2014 Cloud Readiness Index produced by the Asia Cloud Computing Association (ACCA). “Data speeds have increased across the board, data center connectivity options are growing as the Asia Pacific Gateway cable is completed, and regional broadband charges are among the lowest in the world,” the report observed.
As cloud infrastructure takes root and expands around the region, more businesses are placing at least parts of their operations onto the internet. More than three-quarters of businesses were willing to do so, and two-thirds have already begun to do so. By 2025, many businesses believe at least 60 percent of computing will be cloud-based, according to the Data Center 2025 report by Emerson Network Power.
Significant challenges, however, remain before the full potential of cloud computing can be unlocked in Asia. Data privacy and cyber security issues especially weigh on the minds of senior executives – nearly a third of respondents found the lacking state of data privacy in Asia a major deterrent for them.
Despite the importance of cross-border data transfers to international trade and investment today, the complexity of data regulations between Asian countries is impeding the growth and uptake of cloud technology, according to another ACCA report. For example, some local governments enforce restrictions to keep certain data classes within the country and require companies to invest in local data centers, raising costs and creating inefficiencies.
Because cloud computing remains a relatively new development, especially in Asia, there remains uncertainty at all levels on the best practices to manage it, posing challenges for businesses who want to navigate the “alphabet soup” of regulations.
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Patchy internet connectivity and the lack of reliable power supply are also physical impediments to cloud growth, especially in emerging economies such as India, Indonesia and Vietnam, according to the ACCA.
That said, the cloud market continues to grow and optimism remains high. With the strong demand, businesses and analysts are hoping infrastructure and regulation will soon catch up.
Many global and regional cloud vendors are expanding their operations across the region. Amazon, Google and Microsoft already have data centers in Singapore. Microsoft has also announced possible intentions to become the first multinational company to set up a data center in India, which it expects will soon be the world’s fastest growing market for cloud services.
In China, Aliyun, the cloud services subsidiary of internet giant Alibaba, saw 26 percent year-on-year revenue growth in 2013 and is now looking to expand beyond the borders of its home country.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asia@dezshira.com or visit www.dezshira.com.
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