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ASEAN datacentre providers must up their game

Digital transformation trends are changing the ASEAN datacentre landscape and those that wish to succeed must transform themselves, says Frost & Sullivan

The datacentre market in ASEAN remains promising, but datacentre providers will have to pay attention to rapidly changing trends if they are to succeed, according to Frost & Sullivan.

Speaking to industry executives at the Cloud and Datacentre Convention in Kuala Lumpur on 11 April 2019, Nishchal Khorana, director of Frost & Sullivan’s digital transformation practice, said enterprise digital transformation is growing at a rapid pace and this augurs well for players in the region.

“Our revenue forecast growth for the total datacentre service market in ASEAN is 16.1% [compound annual growth rate], growing from $1.9bn in 2017 to $5.4bn in 2024,” Khorana said in his keynote address. “Any double-digit growth is always good for the industry and this signals significant growth opportunities in the datacentre industry.”

Although countries such as Singapore and Malaysia have sizeable datacentre markets, Khorana said much of the growth is taking place in other ASEAN markets such as Indonesia, Thailand and Vietnam.

Arguing that the growth experienced in ASEAN is not merely in the co-location businesses but also managed services, Khorana said enterprises not only need more space, power and cooling but also require datacentre providers to have end-to-end capabilities.

“The value proposition provided by datacentre providers is changing, as enterprises are asking for a single point of contact for all their needs as they become more digital,” he said.

According to Khorana, there are several factors driving this trend. The first is the ongoing digital transformation efforts undertaken by enterprises across the region, particularly in two key technology areas: the internet of things (IoT) and predictive analytics.

“The use cases are already there, and IoT and advanced analytics are a reality today,” he claimed. “We see this in connected buildings, connected cars, smart grids, connected health – essentially every industry has some form of IoT use cases.

“With IoT in place, there is a lot more data to process, store and analyse, and analytics is becoming a priority for CIOs,” he argued.

Khorana said the accelerated focus of the public sector towards digital initiatives such as smart cities is another trend. Many ASEAN governments are already involved in some kind of smart city initiative and these would bolster the datacentre industry, he noted.

Another issue is data sovereignty, which is causing datacentre players to relook their location strategy.

“There are opportunities for datacentre providers to set up a datacentre in every country they operate in, so that they will adhere to local legislation on data sovereignty like what we saw in Indonesia when Government Regulation 82 was implemented.

“[When that happened] we witnessed an increase in local datacentre operators, which gave them a chance to compete with regional and global players,” Khorana argued.

Two other trends affecting the datacentre market are enterprises’ move towards a multi-cloud strategy and edge computing, Khorana pointed out.

“This maturing digital ecosystem means enterprises will not only stick to one vendor for their cloud strategy, but also use multiple vendors to serve them according to their needs.

“Also, as enterprises embrace IoT, smart cities and other digital services, they will require lower latency and shorter data processing time to operate,” he explained. “So, enterprises are expected to move from hybrid cloud to multi-cloud to the edge computing strategy.”

Against this backdrop, Khorana urged datacentre providers to embrace a paradigm shift in their growth strategy.

“For example, security is now a hygiene factor and not a differentiator anymore. Service providers need to go beyond co-location into managed services to differentiate themselves. They need to address market needs with data privacy and sovereignty requirements and also have a way of working with hyperscale providers to support a multi-cloud strategy.”

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