New Directions in the ASEAN Cloud Market as Enterprises Advance Their Journey

Summary Bullets:

A. Amir

• The accelerated cloud adoption in ASEAN is driving the market awareness and maturity in the region. Enterprises are starting to look for more advanced features such as integrated cloud solutions with other ICT domains.

• New requirements are also driving competition and attracting global cloud players to expand their footprints to capture the high growth opportunity.

About a year and a half since the pandemic first hit the region, ASEAN enterprises had gone through various ICT transformations including accelerated cloud deployments to enable remote working. The awareness and maturity of cloud have significantly increased in the last 18 months. Based on our recent engagements with leading cloud providers and enterprises in ASEAN, some of the current key trends in the cloud market are the convergence with other ICT domains, hyperscalers’ momentum, and the beginning of edge computing.

1. Cloud Convergence with Other ICT Domains: Cloud is no longer just about infrastructure modernization, but more of a platform that enables other solutions. Cloud is moving away from a standalone product and becoming a part of bigger solutions. Enterprises are beginning to see the importance of integrating cloud with other technologies such as network, collaborations, and cybersecurity.

Cloud and network convergence is gaining traction driven by the demand for better performance of applications in the cloud; and service providers’ initiatives to offer new capabilities. Cloud-aware network and network-aware cloud solutions are emerging to meet business requirements. Enterprises are starting to see the values of these integrated solutions to gain wider visibility across both domains and achieve higher efficiency. For example, software-defined Interconnect offers real-time control and monitoring of network across multiple cloud environments. Cloud providers are also expanding their network partnerships and building their own infrastructure to enhance service delivery across both domains.

The increasing cloud demand is also driving the need for cloud security. Cloud access security broker (CASB) and security at the edge such as zero-trust architecture (ZTA) are gaining traction in the market for better data protection and authentication. There are also increasing requirements on other cybersecurity services such as multi-factor authentication (MFA), security information and event management (SIEM), identity and access management (IAM), data loss prevention (DLP), and threat intelligence in cloud services. Remote working is a key requirement, but large-scale IoT deployments will also drive the need for integrated solutions. For example, secure and automated provisioning and authentications are crucial to address manual provisioning which is no longer practical in large-scale deployments.

2. Hyperscalers’ Momentum: Singapore has been a key Asia Pacific hub to house global hyperscalers facilities for many years. The data centers in the country host most of the hyperscalers’ public cloud services across ASEAN. However, the fast-growing adoption in neighboring countries has attracted global cloud players to strengthen their presence in this region in the last few years. Hyperscalers are expanding their ecosystem and building new infrastructure such as new ‘regions’ and networks to gain an edge in the untapped markets.

AWS launched new edge locations in Thailand and Indonesia in the last 12 months and is set to open a new ‘region’ in Jakarta by the end of the year. Google launched its region in Indonesia last year while Azure plans to open new facilities in Indonesia and Malaysia. Alibaba Cloud has regions in Malaysia since 2017 and Indonesia (2018), and plans to open a new one in the Philippines. Tencent, another China-headquartered market challenger, opened a data center in Indonesia and Thailand recently. These cloud providers are also investing in submarine cables such as Apricot, Echo, and JUPITER. Besides infrastructure, they are also expanding their presence through partner programs and collaborations with local players from multiple verticals.

3. The Beginning of Edge Computing: Edge computing is also starting to gain its traction in the region. Cloud providers are adding edge capabilities such as AWS Outposts, Azure Edge Zones, and Google Anthos. There is also 5G multi-access edge computing (MEC) driven by telcos through partnerships with hyperscalers and other players. AIS Thailand is one of the leaders in MEC in the region with its initiatives with industry players across verticals and the recent launch of 5G Smart Manufacturing Solutions. Singtel is also quite advanced in the market through its partnerships with AWS, Azure, and Ericsson, while many other operators are still exploring the opportunity and developing new use cases.

While edge computing is still seen as a supplier-driven market today, there is an increasing awareness among enterprises as well. Edge computing can enable various new applications with strict latency, sovereignty or very high bandwidth requirements such as robotics, autonomous vehicles and mixed reality. The adoption is still in the very early phase, but many enterprises are showing interest in the technologies by participating in various initiatives to co-create edge solutions. GlobalData ASEAN Enterprise ICT study with 158 ASEAN decision-makers early this year shows 42% of enterprises plan to deploy edge computing solutions within the next three years. For more on telco edge computing, please see Telco Edge: The Next Big Battleground in Cloud Computing , November 5, 2020 and Telco Edge Computing in ASEAN, February 3, 2021.

What’s Next

The accelerated adoption and new trends are also changing enterprises’ buying behavior when considering new cloud solutions (for more, please see 2021 ASEAN Cloud Buying Trends: Cost and Scalability are No Longer the Top Criteria, September 1, 2021). Cloud providers could align their propositions with the new demands such as buying drivers and solution criteria. Providers such as telcos and system integrators could also play to their strength by offering integrated solutions with other technology domains (e.g., network, cybersecurity) and managed service capabilities to address the market needs. They can also consider expanding the ecosystem with hyperscalers to widen their service capabilities and enhance the market positions.

For enterprises, the cloud ecosystem is maturing in the region as most enterprises have migrated some or most of their workloads to cloud. Enterprises should already have a cloud roadmap that mapped to business outcomes across lines of business to stay competitive.

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