The Billion Dollar Cloud Computing Opportunity

BMI View: There is an increasing demand for cloud computing services by Indonesian enterprises. As cloud computing infrastructure remains in the nascent stage, this gives investment opportunities to data centre providers and telecoms operators. BMI predicts the cloud computing market will reach IDR13.6trn (US$1.3bn) by 2018.

As cloud computing becomes a more widely used tool for companies, there will be an increase in demand for facilities by all sizes of enterprise in Indonesia. In 2012, cloud computing spending in Indonesia was IDR2.2trn; a figure we predict will balloon by 2018. Much of the growth is due to fact that Indonesian enterprises have better understanding of this technology and are more receptive towards its usage. Based on survey by Springboard Research in 2011, the development of the use of cloud computing in Singapore has reached to 29%, in Malaysia 27%, Korea 55%, but only 20% in Indonesia. The gap highlights growth potential from the demand side.

To understand what drive cloud computing demand in Indonesia, a survey was carried out by University of Indonesia in March 2012. The result proved that cost-effectiveness, security and reliability of the systems guide decision making on the application of cloud computing. The entry of global participants and marketing initiatives in the form of conferences and road shows are expected to drive awareness level and adoption in the long run. That said, operators need to allay the Security and Privacy concerns enterprises still harbour towards cloud computing to increase acceptance in the short term.

Huge Potential For Companies With Early Take-Up
Indonesia Cloud Computing Spending

BMI View: There is an increasing demand for cloud computing services by Indonesian enterprises. As cloud computing infrastructure remains in the nascent stage, this gives investment opportunities to data centre providers and telecoms operators. BMI predicts the cloud computing market will reach IDR13.6trn (US$1.3bn) by 2018.

As cloud computing becomes a more widely used tool for companies, there will be an increase in demand for facilities by all sizes of enterprise in Indonesia. In 2012, cloud computing spending in Indonesia was IDR2.2trn; a figure we predict will balloon by 2018. Much of the growth is due to fact that Indonesian enterprises have better understanding of this technology and are more receptive towards its usage. Based on survey by Springboard Research in 2011, the development of the use of cloud computing in Singapore has reached to 29%, in Malaysia 27%, Korea 55%, but only 20% in Indonesia. The gap highlights growth potential from the demand side.

Huge Potential For Companies With Early Take-Up
Indonesia Cloud Computing Spending

To understand what drive cloud computing demand in Indonesia, a survey was carried out by University of Indonesia in March 2012. The result proved that cost-effectiveness, security and reliability of the systems guide decision making on the application of cloud computing. The entry of global participants and marketing initiatives in the form of conferences and road shows are expected to drive awareness level and adoption in the long run. That said, operators need to allay the Security and Privacy concerns enterprises still harbour towards cloud computing to increase acceptance in the short term.

Usage Pattern

In terms of service provider, cloud computing can be divided into three models: software-as-a-service (SaaS), infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS). SaaS is concerned with software distribution whereby company provides maintenance, support and client's operation during the service contracted period. IaaS provides to the customer computing infrastructure as a service, using mostly virtualization. The customer will receive resources from outside vendor such as hosting, computing capacity, maintenance and network management. PaaS is focused on providing a complete solution for application and Web services development and launching online. Currently, SaaS accounts for a dominant share of the Indonesian market with approximately 95% share in 2012. The trend is expected to persist due to greater ease of adoption for SaaS, a large base of small and medium enterprises trying out enterprise IT suites for the first time and the higher premium service providers can charge for SaaS compare with other platforms. In terms of usage segments, manufacturing dominates adoption levels across verticals in Indonesia. Small and medium enterprises and large businesses contributed almost equally to the market in 2010, a trend we expect to continue.

Supply Not Meeting Demand

The demand for cloud infrastructure is real, but infrastructure supply has yet to match this latent demand. Local data centre service providers and telecom operators have already identified this investment opportunities and have started streaming into the market - either through partnership with international cloud service providers or entering on their own. Companies such as Google, Amazon, NetSuite, Salesforce, RightNow, Oracle and Zoho have already established their presence in the Indonesian market primarily through channel partners. In January 2014, Australian telecom giant Telstra undertook a memorandum of understanding to form a cloud computing joint venture with Telkom Indonesia, a partnership which will see the former being the sole provider of network applications and services in Indonesia for Telstra and Telkom Indonesia. The two firms are expected to focus on business continuity, business performance optimisation, protection of business information and data assets and improved employee productivity marketed at the Indonesian enterprise market. In our view, suppliers of cloud computing solutions could do more to meet the latent demand we are expecting from this relatively nascent cloud computing market.

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