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Majority of Asia Businesses Expect to Increase Cloud Investment in 2023

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Eighty-four percent of existing cloud users are expecting to increase their cloud technology investment in 2023 while four in five (84%) are planning a full cloud migration in two years.

These are revealed in a new survey report titled “The Next-Generation Cloud Strategy in Asia” commissioned by Alibaba Cloud, the digital technology and intelligence backbone of Alibaba Group.

Increasing investment in the cloud

As more companies move their critical businesses online to efficiently handle their workloads in the post-pandemic world, businesses in Asia that are already using cloud services plan to increase their investment across various cloud strategies.

The increase will most likely come from Thailand (95%), Indonesia (94%), the Philippines (91%), Hong Kong Special Administrative Region (SAR) (83%) and Singapore (83%). A larger percentage of surveyed businesses in Japan and South Korea indicate they will maintain their current levels of investment. Among the key industries, the gaming sector is expected to see the sharpest increase in cloud investment followed by media and telecommunications, internet and technology, and financial services.

In terms of investment priorities, a larger share of businesses in Asia will focus on data analytics and AI (53%), cloud computing (52%) and automation (46%). The fact that more than half of the businesses plan to increase investment in cloud computing underscores the importance of cloud infrastructure in supporting business growth.

“The latest research reveals important insights for businesses and cloud services providers in Asia. Cloud adoption has become a prerequisite for businesses to succeed, and our customers are adopting a diverse cloud strategy to drive business growth in the digital era. With cloud infrastructure being the ultimate foundation for many cutting-edge innovations such as generative AI, we are as committed as ever to providing proven cloud-based solutions for businesses in different industries and supporting their seamless migration to the cloud services,” said Selina Yuan, vice president of Alibaba Group and president of International Business for Alibaba Cloud Intelligence.

While more than two-thirds (69%) of all surveyed businesses have used cloud for at least three years, those in Hong Kong SAR, Japan and Singapore are the earliest adopters, with only one in five (20%) having less than three years of experience using cloud services. Industry-wise, internet and technology, manufacturing and financial services show the highest level of cloud maturity.

Alibaba Cloud commissioned global market research firm NielsenIQ to conduct the survey, with an aim to better understand the state of adoption of the prevailing cloud strategies — private, public and hybrid — across Asia.

Full migration to the cloud by 2024

The research also reveals that 84 percent of surveyed businesses expect to fully migrate to the cloud within the next two years, partly driven by new needs that emerged during the pandemic. More than a third (36%) of respondents even anticipate a complete cloud migration within the next six months.

Among the surveyed businesses, the impact of COVID-19 has led to significant changes in their use of IT, with 54 percent reporting an increased use of cloud-based software and 41 percent reporting acceleration with their cloud migration.

A strategy toward more diverse cloud adoption

At the time of the survey, private cloud (40%) was the most popular strategy in Asia, followed by public cloud (27%). Strong reputation for security, reliable local support and attractive pricing are the main reasons for businesses to choose public cloud, with 38 percent of surveyed businesses expecting to boost investment by more than one fifth in the coming year.

Among the surveyed Asian markets, South Korea has the highest public cloud adoption rate (43%). The top sectors currently using public cloud are gaming, the public sector, retail, and internet and technology.

Meanwhile, hybrid cloud adoption is on the rise, with the survey recording a 7 percentage-point net increase in current adoption rate compared to the respondents’ initial cloud strategy adoption. Moreover, of the respondents who have changed their cloud strategy, the highest proportion of 39 percent have switched to hybrid cloud. In addition to security, businesses tend to choose hybrid cloud for customized cloud services.

“The variety of cloud strategies adopted in Asia indicates that more businesses are looking for robust, resilient, secure and flexible infrastructures to digitalize their business. As a leading provider of cloud services, we will continue to introduce innovative and secure public cloud services to satisfy this demand,” Yuan added.

Key survey findings

Cloud investment

Increasing investment in the cloud: 84% of surveyed businesses in Asia will increase their investment in the cloud
By market: Thailand (95%), Indonesia (94%), the Philippines (91%), Hong Kong SAR (83%), Singapore (83%)
Areas of investment: Data analytics and AI (53%), cloud computing (52%), automation (46%), metaverse (39%)
COVID-19 as a catalyst for cloud adoption: Increased use of software in the cloud (54%), accelerated cloud migration (41%), changed cloud strategy (31%), added cloud vendor(s) (25%)

Cloud maturity

69 percent of businesses surveyed have used cloud services for at least three years
By market*: Hong Kong SAR (84%), Japan (84%), Singapore (82%)
By sector*: Internet and technology (80%), manufacturing (79%), financial services (74%)

Strategy toward more diverse cloud adoption

Current cloud strategy: Private cloud (40%), public cloud (27%), hybrid cloud (24%)
Reason for choosing public cloud: Strong reputation for security (58%), reliable local support (46%), attractive pricing (46%)
Increasing investment in public cloud: 38 percent of surveyed businesses expect to boost investment by more than one fifth in the coming year
South Korea has the highest public cloud adoption rate (43%), compared with 27 percent on average across the region
Hybrid cloud adoption recorded a net increase of 7 percentage points (current cloud adoption (24%) vs first cloud adoption (17%)
Of respondents who have changed their cloud strategy, 39 percent have switched to hybrid cloud

Continued evolution in cloud strategy

84 percent of businesses in Asia that are currently cloud users expect to fully migrate to the cloud within the next two years

Philippines-specific data points

Philippine investment in cloud services: Businesses in the Philippines expect to increase investment in various cloud services over the coming year: Private (77%), public (65%), hybrid (68% ), multi-cloud (63%)
Philippine businesses’ migration to cloud: 85 percent of Philippine businesses expect to fully migrate to cloud within the next two years
Increased use of cloud computing: 78 percent of Philippine businesses are likely to shift to the cloud due to the rapid growth of the local data center market; the government’s plans to digitalize the Philippines resulted in 79 percent of Philippine businesses planning to shift and/or increase cloud investments
Focus on sustainability: 98 percent of Philippine businesses prioritize working with cloud vendors that have a focus on sustainability
Types of cloud strategies adopted by Philippine businesses: The key reason for Philippine businesses to choose public cloud is its attractive pricing.
Top aspects businesses plan to invest more in the coming year: ​​Data analytics and artificial intelligence (69%) alongside cloud computing (62%) are the top two aspects Philippine businesses are looking to invest more into over the next 12 months.

About the survey

The survey was conducted between the end of September and early October 2022, collecting feedback through online questionnaires from 1,000 cloud strategy decision-makers in small to large businesses that are currently using cloud services in eight markets in Asia: Hong Kong SAR, Malaysia, Singapore, the Philippines, Indonesia, Thailand, Japan and South Korea. The respondents represented a wide range of industries, including financial services, gaming, internet and technology, manufacturing, media and telecommunications, public sector and retail.

*Have used cloud services for at least three years

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