APAC expenditure on public cloud growing at 25% annually: BCG

Companies in the Asia Pacific (APAC) region have increased their investments in cloud infrastructure, with spending on public cloud growing at a compound annual rate of 25%, according to a study conducted by global management consulting company Boston Consulting Group.

The report “businesses in Asia-Pacific can find resilience and growth in the cloud” was based on data gathered from eight countries. The Boston, Massachusetts based consultancy firm also found that public cloud growth was much faster in APAC than the US and western Europe due to the region’s readiness to invest in cloud initiatives.

Most APAC leaders see the cloud as a way by which innovation can be increased (71%) and risk can be reduced (71%), the study found. 

Some 52% of respondents felt the investment could lead to a revenue increase while 57% said it could significantly reduce costs. The BCG survey was conducted in collaboration with Amazon Web Services. 

Read: Why Covid-19 will accelerate the cloud computing era across enterprises

Conducted in April in companies across Australia, India, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, the survey showed that roughly 5% of the company’s information technology (IT) budgets were dedicated to cloud expenditures. BCG expects the number to double by 2023 and also estimates that the growth of the public cloud could have a positive economic impact of more than $450 billion across the region.

“We’re seeing in the current Covid-19 crisis that more companies are shifting workers to virtual environments and employing end-user computing, using the cloud to quickly roll out essential collaboration tools,” Luc Grimond, managing director at BCG said in a statement.

Grimond also said that cloud investments could have long term benefits such as risk reduction, ability to provide better services to stakeholders as well as personalised services and offerings.

The report also identified the challenges that companies face while migrating to the cloud. About 75% of respondents said weak alignment between business and IT teams hindered cloud adoption, with 40% saying their cloud programme lacked a clearly defined business stakeholder.

The report showed that only 20% of the respondents migrated a majority of their applications to the cloud, while less than 25% of their applications were cloud-ready.

“Without a coherent cloud-operating model, these companies struggle to integrate cloud capabilities in their core business and deliver sustainable outcomes,” the report said.

Companies can take a few key steps to accelerate their cloud migration journeys, including aligning ownership and business outcomes, determining the optimal migration path, defining a target cloud operating model, creating a strategy that combines internal and external talent, rethinking cloud cybersecurity and future-proofing the technology architecture, the report said.