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Storage is moving to the cloud in Asean. According to the Computer Weekly/TechTarget survey IT Priorities 2017, 40% of Asean-based IT decision makers are planning a cloud storage initiative in 2017 and 40% are planning cloud backup projects.
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To answer the growing demand for cloud storage, new cloud suppliers are setting up datacentres in the region. Southeast Asia’s cloud market is already well populated by the big players – AWS, Microsoft, IBM, HP, Oracle – and a host of smaller datacentre and managed IT services providers. Alibaba Cloud and Google Cloud have both set up in Singapore recently to attract Asean customers.
“With the entrance of Alibaba and Google into the cloud storage market, enterprise IT decision makers have a wider choice of services, and this will benefit those who are able to develop a cloud model – be it immersing their business fully in the cloud or implementing a hybrid cloud model,” said Rick Scurfield, president at NetApp APAC.
According to Andy Cocks, CTO at Dimension Data Asia Pacific, the biggest impact of the entry of cloud storage providers in this region will felt by small and medium-sized businesses (SMBs). “Looking at some of the top traditional storage suppliers in the market, growth is limited in the marketplace and these numbers are pretty flat,” he said. “With the move to cloud, hyperscale providers such as Amazon and Microsoft Azure and new entrants such as Alibaba Cloud and Google Cloud will cause a significant impact for SMBs.”
Cocks suggested a complete shift to cloud storage was generally considered too risky for enterprise companies because of mission-critical applications or sensitive information, such as in the finance, healthcare or government sectors, and they are concerned with security risks and the lack of data sovereignty that is associated with cloud platforms.
“As such, it will be mostly SMBs that will be the ones moving their storage to the cloud, especially since more new applications are coming up on cloud,” he said. “For instance, startups are using cloud providers to run their applications, without having to build infrastructure.”
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Paul Serrano, chief evangelist at Nutanix Asia Pacific and Japan, said: “As enterprise IT departments evaluate both public and on-premise clouds in 2017, they will come to the conclusion that public clouds are better suited to elastic workloads – which means workloads that have undetermined requirements.” But he said it might be too early for many to move into the public cloud.
For Prabhitha Sheethal Dcruz, senior market analyst services research at IDC Asia/Pacific, Southeast Asian organisations are not moving to the cloud quickly enough. “Organisations in Southeast Asia have been rather slow in adopting cloud,” she said. “The Asean market is less mature, and its inherent conservatism has so far limited AWS, Google and Azure penetration to mostly discrete workloads, and the local cloud providers have yet to build their capabilities to a level where they will be accepted by the larger enterprises.”
But Dcruz said that with the entry of companies such as Alibaba Cloud and Google Cloud, customers would begin to move their second-tier steady-state workloads to a cloud infrastructure.
Alibaba succeeds in China
According to IDC’s six-monthly public cloud tracker for the first half of 2016, Alibaba was the number two provider for cloud services in Asia Pacific (excluding Japan), outpacing Microsoft and Google. “However, Alibaba’s success has been restricted to China alone and its lack of an extensive partner ecosystem outside China will mean that it won’t make any significant impact on the market except at Chinese companies with operations outside China, and Asean companies doing business in China,” said Dcruz.
“The reality of the enterprise market will force Alibaba into a secondary role, with its partners taking the lead on engagement. To target the enterprise market with any credibility, Alibaba needs to build a partner ecosystem to match its rivals.”
But Nishchal Khorana, director cloud and datacentre Asia Pacific at Frost & Sullivan, does not see such limited prospects for Alibaba Cloud. “From a longer-term perspective, it is critical to note that the Asean cloud storage market is highly price-sensitive, giving an opportunity to Alibaba Cloud to emerge as a key supplier in the region given its aggressive pricing strategies,” he said.
However, it will be a while before Alibaba Cloud emerges, said Khorana. “Indonesia, Malaysia and Philippines are the fastest-growing cloud infrastructure markets in Asean, with the infrastructure-as-a-service [IaaS] market estimated to grow at a rate of 40 to 50% a year from 2015 to 2022. While Alibaba Cloud and Google are well positioned to tap into the growth of the cloud storage markets in these markets, Amazon Web Services and Microsoft Azure will still hold the dominant positions in the near future due to their well-established presence.”
Will on-premise storage market shrink?
According to Khorana, the growth of on-premise storage will be slower as cloud models gain maturity, with increased focus on enterprise security, and enterprises increasingly transition to a hosted private, public cloud or hybrid IT model.
“Overall, the on-premise storage market will remain relatively stable, without significant shrinkage in the coming years,” said Dimension Data’s Cocks.
James Woo, CIO at Farrer Park, a Singapore-based healthcare and hospitality real estate company, said: “I doubt on-premise storage is going to shrink that quickly, because it will take time for organisations to re-engineer their infrastructure to work with cloud storage.”
Towards a hybrid model
According to Dcruz at IDC, Asean organisations are still positioned in the “ad hoc and opportunistic stages of IDC’s maturity framework”. She added that the heterogeneous state of the Asean region meant not all countries would follow similar adoption patterns, and some countries may be faster than others in adopting cloud storage for more complex use cases.
“Current adoption is mostly restricted to data backup, data protection or disaster recovery,” she said. “With more provider options and appealing price points, cloud storage may be an attractive proposition for many organisations, but various legislative, cultural and political implications make cloud unpalatable for Asean governments that are promoting in-country cloud solutions.”