Enterprises are spending more of their IT spending budgets than before on cloud infrastructure because of the increase in remote working requirements and other challenges brought forth by the covid-19 pandemic.
Companies in the Asia-Pacific (APAC) region are dedicating “roughly 5%” of their IT budgets to their cloud expenditures, indicates a study by the Boston Consulting Group (BCG).
The growth in the APAC region is faster than that in the US and Western Europe, said Rajiv Gupta, managing director and senior partner, BCG.
“Across the APAC region, spending on the public cloud and related services is growing at a compounded annual growth rate (CAGR) of 25%, much faster than in the US and Western Europe,” he said.
The BCG study was conducted in collaboration with Amazon Web Services and covers companies in India, Indonesia, Australia, Malaysia, Philippines, Singapore, Thailand and Vietnam. According to the study, growth in the public cloud could have an economic impact of over $450 billion across the region by 2023.
“The pandemic made cloud a bare necessity. We see an overt mention of remote working but that is just one of the many use cases for cloud,” said Monesh Dange, partner and national leader, advisory markets, EY India. “Video Communication Products, Secure Collaboration Frameworks, Virtual Desktop Enablement, and Cybersecurity solutions would all converge to provide a sustainable workplace structure which could be anywhere,” he said.
“One of the main benefits of cloud computing is access to innovation and agility,” said Luc Grimond, a managing director at BCG. Grimond added that companies are “shifting workers to virtual environments” and using more end-user computing like collaboration tools. “Cloud investmentswill have long-term benefits as well, such as risk reduction, the ability to provide new and better services to business stakeholders, and improved personalization of product and service offerings,” he added.
Spending on cloud IT infrastructure in Q4 2019 grew by 14.5% year-over-year worldwide to $13.3 billion worldwide, according to an April 2020 report by the International Data Corporation (IDC). Private cloud also grew by 8.2% to $6.1 billion in this period.
Cloud spending is expected to make up as much as 10% of IT spending budgets by 2023, the BCG study said. An Australian airline involved in the study said it was able to save $40 million in annual fuel costs by using cloud-based analytics. The airline simulated “tens of thousands of flight patterns” to create more efficient routes. “We were able to spin up approximately 4,000 CPUs, run the analysis, and then spin use back down to nothing,” the company’s CIO said in the study.