asia pacific data center and cloud computing market

Asia Pacific Data Center and Cloud

Computing Market

Where is the next billion $ opportunity?

Mayank Kapoor, Industry Principal

Asia Pacific Data Center and Cloud Computing Practice

23 September 2014

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Document Version - Date

Focus Points

1 Where do we stand today?

2 What do the service providers need to focus

on to tap into the growth opportunities?

A Frost & Sullivan analyst will talk more about Cloud Service Provider Business and

Channel Theater at the Cloud Expo Asia event on 29th and 30th October in Suntec

Convention Centre

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Where do we stand today?

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Increasing consumption of data and growing demand for third-party

services is driving revenue growth in

$B

illi

on

CAGR

(2013–2018)

21.5 Billion

SaaS

• Rapid scalability and move to OpEx

• Ease of collaboration

• Enhanced back-up and security and

reduced risks

PaaS

Key Demand Drivers—Cloud

in $

Billi

on

53.4 Billion**

21.5 Billion

53.4 Billion**

Key Demand Drivers —Data Center

Managed

Hosting

Colocation

• Large enterprises and highly regulated

verticals key users

• Cloud and hosting service providers

increasingly emerging as the next growth

drivers

• Lower costs; instantaneous provisioning of

resources; rapid scalability

• SMBs now have access to enterprise class

infrastructure and enterprises can take

risks

• To add custom capabilities to SaaS

• To move development and testing of in-

house applications to the cloud

• Existence of a large developer community

• Increasing data center complexity:

virtualization, mobility and social media

• Increasing costs of in-house data center

• Greater demand for privately hosted

infrastructure

All market numbers are for Asia Pacific including Japan. Source: Frost & Sullivan Analysis

IaaS

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Infrastructure services are witnessing significant growth and will be a focus

area for service providers

• Infrastructure Services: Co-location, Managed Hosting and Infrastructure as a Service

• Indonesia to be the fastest growing market, followed by India and China, both of which have

attained critical mass.

• Australia, Hong Kong, and Singapore are mature market with normalized growth rates. Source: Frost & Sullivan Analysis

*Due to the similarity in market size, growth rate and growth potential, Hong Kong & Singapore’s indicators are overlapped.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%

Gro

wth

Po

ten

tia

l (2

01

3-2

01

5)

Market Growth (2013)

Major Infrastructure Services Markets (excl. Japan)

Taiwan

India Indonesia China

Australia Malaysia

Singapore

Hong Kong*

South

Korea

Philippines

Thailand

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Major trends impacting the Asia-Pacific market

Source: Frost & Sullivan analysis

Growing Importance of the

Hybrid Cloud Model

Increased focus on advanced,

energy-efficient data centers

Cloud enabling Internet of

things

Rise of software defined data

centers

Importance of data center

security

High growth of cloud adoption

across emerging economies

Prevalence of SaaS

Asia-Pacific

Impact

• Using software-defined technologies, service providers are

establishing data centers and connections that provide resources on

demand.

• Companies are increasingly attracted to SaaS because of its platform

simplicity, standardization and impact on business efficiency.

• Cloud providers are leveraging a significant number of SMBs in

emerging economies demanding low-cost, scalable cloud services.

• As a consequence of increased MNC/government focus on the

environment, huge investments are channelled towards green features

in data centers.

• Hybrid clouds are poised to be the solution for changing business

demands, requiring scalable infrastructure from public clouds in

addition to security from private clouds.

• With the rise of smart machines penetrating all aspects of our lives,

the cloud has been instrumental in enabling remote data storage and

operations from multiple locations.

• Data center security has become extremely important in the last year.

Companies are worried about data protection and are being more

cautious and selective in their data center choices.

M

H

H

H

H

H

M

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Increased focus on energy-efficient data centers

With governments across Asia-Pacific focused on green solutions, data center developments

are being monitored for their commitment to environmental friendliness.

Advanced data center markets

Taiwan Hong Kong

Australia

Singapore

South Korea

South Korea, Hong Kong, Taiwan,

Singapore and Australia are advanced-

data center markets with a secure stream

of data center investment and high power

efficiency.

It is estimated that data center space will

increase by approximately 10% in Asia-

Pacific over the next three years, with a

specific focus on energy-efficient models.

Key features of energy-efficient data

centers are: cooler lighting, sensor-based

lighting and fans, conservative water

usage.

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Cloud enabling the Internet of Things (IoT)

The Asia-Pacific Internet of Things market is expected to reach US$59 billion by 2020 and grow

at a CAGR of 44.2% until then. Cloud computing will be the platform that enables this shift.

While the Asia-Pacific IoT market is

still in a nascent stage, it is poised to

grow faster than the European and

US market.

More than 50% of organizations in

Asia Pacific plan on adopting IoT in

the next few years.

The fastest growing IoT

markets are China, Japan, Singapore

and South Korea.

In Asia-Pacific, the fastest growing

segment of IoT is consumer devices,

followed by business devices.

More than 40% of companies

recognize the value in IoT,

especially for faster

consolidation and greater

accessibility.

Enterprises believe that more

than 60% of customers

witnessed better service due to

IoT devices.

Privacy is a key risk faced by

IoT consumers. There is an

uncertainty with regard to

information storage and usage.

.

In Asia-Pacific, private or hybrid cloud platforms are

preferable to alleviate security concerns, though IoT is still in

an early stage in many of the developing countries.

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Rise of Software Defined Data Centers

With different demands from consumers and the availability of the public cloud, IT service

providers have begun to focus on network optimization. This includes increased customization

to utilize resources efficiently across networks and data centers.

Software-Defined Data Centers Optimized Networks/Connections

In 2013, IO opened

their first Asia-Pacific

Software-Defined Data

Center in Singapore.

With elastic

technology, customers

are able to use storage

efficiently per their

varying demands

This has spurred an interest across Asia-

Pacific in software-defined predictive

analysis that allows companies to estimate

their costs depending on their chosen data

center environment.

In 2013, Pacnet launched

a first-of-its-kind Network

as a Service solution.

Providing scalable

bandwidth, customers

can customize depending

on speed, latency and

usage requirements.

This will provide customers with the

opportunity to transfer large amounts of

data between data centers at competitive

pricing and desired speeds.

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What do the service providers need to focus on to

tap into the growth opportunities?

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Key priorities for service providers

1. To be a cloud broker or a service provider

• Service providers should formulate a clear business strategy on either continuing to enhance own cloud services portfolio or

transforming towards a cloud broker.

• Supported by a broad cloud ecosystem of technology partners, cloud broker is able to create an environment that allows

customers to gain access to multiple interfaces, applications and network services via a single point.

• Besides aggregating public cloud services, some quality of service (QoS) or security assurance, such as network

performance optimization and data security, should also be provided.

• This approach can enable a faster speed to market, but cloud brokers need to build a strong commercial and technical

model covering the identification, negotiation, and management of partners.

• Frost & Sullivan predicts connected industries will be a catalyst for efficiency and productivity by linking power, data and

signals to enable greater automation process.

• Key examples of industries expected to undergo ICT-driven transformations include automotive (connected cars),

healthcare (connected health), and manufacturing (smart manufacturing).

• Relying on this big trend of connected industries, service providers should expand their end-to-end capability and/or extend

their vertical coverage to generate new service revenue from cross-industry ICT services.

2. To meet key data center customer needs

• As managed hosting services are gaining popularity against colocation, service providers should start building up new

capabilities in the managed hosting segment, including server management and infrastructure management.

• Moreover, operational reliability and data center design are two key qualifications when enterprises evaluate data center

partners, while security and connectivity are ranked highest (in importance) when considering data center locations.

3. To leverage on the Connected Industries

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Case Study 1

Cloud Broker

SingTel launched Singapore’s first integrated cloud computing marketplace for businesses.

Source: SingTel

Sin

gT

el m

yB

usin

ess C

om

po

nen

ts

My Business Portal (mybusiness.singtel.com) Largest SME online community with 500 visits per month

• Aggregated posting

of RFQs and

tenders

• Procurement

advantage

Group Buys

Trading Board

Opportunities

Trading, Buying, and

Cost Saving as a

Community

• Comprehensive

online grant library

• Monthly grant

reviews

Provide Reviews

One-stop Resource

Grants

A-Z Government

Grants

• Dedicated SME

content

• Share experience

and adoption

Case Studies

Weekly Blogs

Insights

Perspective on

Technology and

Business

• Single sign-in

• One bill

• One helpdesk

• Affordable

Apps Market Place

Simplified Experience

SaaS Apps

One-Stop SaaS

Experience

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Case study 2

Key Data Center Industry Challenges

N=600 ; Source: Frost & Sullivan

4%

4%

5%

3%

5%

3%

4%

8%

6%

7%

23%

19%

20%

17%

20%

14%

23%

23%

25%

19%

39%

41%

37%

42%

29%

27%

32%

34%

37%

33%

27%

28%

29%

28%

35%

32%

30%

27%

22%

32%

6%

9%

10%

10%

12%

24%

11%

9%

9%

9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Dearth of IT manpower

Lack of visibility into datacenterassets & performance

Managing the virtual infrastructure

Implementing Virtualization

Network Latency

Securing the applications & data

Running out of storage

Running out of rackspace

Poor Cooling

High Energy Consumption

Least Critical Less Critical Neutral Critical Most Critical

Survey done with IT Managers and CIOs in Australia, Hong Kong, China, India, Singapore and Malaysia in Q2 2013. 64% with >500 employees and 36% with 200 to 499 employees.

Security, network latency, data deluge, implementing virtualization and managing the

virtual infrastructure are some of the leading challenges

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Case Study 3

Connected Industry

MindWave Solutions innovation in Healthcare:

designing devices, enabling M2M integration and patient analytics in real time

Source: MindWave; Frost & Sullivan analysis

Sensors and AIDC Managed

connectivity M2M and MindMart

Patient Health Insights

MindWave End-to-end Capability

• Location tracking

• Pulse

• Temperature

• Panic button

• Integration to hospital systems

• Analysis of data records

• Incidence of events

• Correlation of events

MindWave Solutions has been awarded a contract to provide IoT solutions to more than 200 hospitals in South East

Asia. The company will leverage its end-to-end capabilities in IT infrastructure services, Cloud services, its sensor

solutions and analytics platform to provide real-time visibility and insights on patient’s health and well being .

Cost-effective and

timely treatment of

patients

Secure and reliable network

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Conclusion Slide: Key Take-Aways or Recommendations

Emergence of ITaaS - Where IT becomes an internal service provider - A multi-delivery

model environment

Service providers need to identify their niche or unique value proposition to

differentiate themselves from the crowd

Ecosystems approach will emerge as key to success with joint GTM and solutions – co-

creation to define the market

Need to take organizations on a journey – a journey of change!

Frost & Sullivan will share more about Cloud Service Provider Business and

Channel Theatre at the Cloud Expo Asia happening on 29th and 30th October at

Suntec Convention Centre, Singapore.

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Next Steps

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Today’s Presenter

With almost a decade of experience in advising ICT clients across the Asia

Pacific market, Mayank Kapoor is the lead analyst for the Asia Pacific Data

Center and Cloud Computing practice. He played a pivotal role in

successfully setting up the data center and cloud computing research

program for Frost & Sullivan Asia Pacific.

Mayank Kapoor, Industry Principal

Frost & Sullivan

Follow me on: (Connect with social media)

@cloud_analyst

http://my.linkedin.com/pub/mayank-kapoor/a1/1b9/349/