Tech: Covid-19 accelerates cloud adoption by companies

This article first appeared in The Edge Malaysia Weekly, on June 22, 2020 - June 28, 2020.
Tech: Covid-19 accelerates cloud adoption by companies
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OVER the past few decades, data storage devices have evolved rapidly  from large trunks with the capacity to hold a few kilobytes of data to microchips able to hold a few gigabytes of data.

Today, with data stored in the cloud, we can access our data anywhere and anytime from any device. Essentially, cloud technology has made data more portable, as we do not need to carry any storage device with us.

But what does cloud adoption mean for businesses and corporations?

While many business owners, including those who have been relying heavily on hardware infrastructure, may have realised the benefits of adopting cloud services, some may still be hesitant to migrate due to a technical skills gap and cost concerns.

Nevertheless, cloud industry experts say the Covid-19 pandemic may just change the mindset of business owners once and for all.

A recent survey by the International Data Corporation (IDC) shows that organisations indicate a strong sentiment towards increasing investments for cloud services in 2020.

“Cloud [services] alleviated [the] woes for many organisations during the lockdown where information technology (IT) had to scramble in a short period of time to support remote working by providing the scalability and elasticity required,” it said in a press statement dated June 12. “This included ensuring applications and data were accessible remotely and proper tools for communications, which included video conferencing, were working in a secured environment.”

IDC is a premier global provider of market intelligence, advisory services, and events for the IT, telecommunications, and consumer technology markets.


Building a foundation for the future

Rick Harshman, managing director of Asia Pacific for Google Cloud, acknowledges that the Covid-19 pandemic has been a tough test for businesses. Since the outbreak, he says, Google Cloud has been helping its customers to not only navigate the present circumstances but also prepare for a world that will likely be very different post-pandemic.

“We’re helping customers of all sizes build a foundation for the future. We provide technology to help hospitals, governments and other businesses that are directly impacted by Covid-19, as we take the burden off their workforce, supply chains and IT systems,” Harshman tells The Edge.

Google Cloud is also helping retailers, manufacturers and media companies to better manage spikes in consumer demand, as well as enabling businesses and schools to quickly pivot to remote work and learning scenarios that many were not prepared for.

“If this pandemic has taught us anything, it’s the importance of a strong business continuity plan. While business continuity was once a mere exercise to be carried out each year, it is going to be part and parcel of everyday life for many businesses seeking to perform in a changed environment, and we expect to see cloud continuing to form the backbone of those plans,” he says.

Harshman opines that the trend towards the cloud, which started years ago, has accelerated because of Covid-19. Even if we were to go back to “the old normal”, companies have realised the advantages of moving to the cloud, and hence, the adoption will continue.

“I think it’s a misnomer to say that businesses are not thinking about adopting new technologies and digital transformation at this time. In fact, I’ve seen a significant shift in mindsets, with more companies reaching out to speak with us and adopt the Google Cloud Platform,” he says.

Google Cloud currently focuses on building solutions for several priority industries, including healthcare, retail, financial services, manufacturing, public sector, media, telecommunications and gaming.

“In Malaysia, we work with REA Group, Star Media, Maxis, Mind Valley, AirAsia, Malaysia Airlines, Mass Rapid Transit Corp and PNB (Permodalan Nasional Bhd), to name a few,” says Harshman.

Going forward, he expects more companies to leverage technology to scale their businesses, pursue greenfield opportunities and deliver long-term value due to a changed world.

“For example, we’re seeing traditional retailers expanding into e-commerce to generate omni-channel revenue, and banks embracing new channels to drive the digital customer experience to differentiate themselves and compete,” he adds.


Higher cloud adoption

Alibaba Cloud Intelligence Malaysia general manager Jordy Cao observes that the pandemic has forced companies, small and large, to hasten the pace of digital technology adoption to optimise their business processes, customer experiences and organisational culture.

“From what we can see, many offline-oriented businesses, such as the retail and catering industries, have been severely impacted, and they are also actively looking for cloud-based solutions to save costs and maintain business continuity,” he tells The Edge.

In the last few months, says Cao, there has been a notable increase in Malaysian companies and organisations adopting DingTalk — a platform developed by Alibaba Group — as a communication and collaboration tool. For instance, restaurant chain PappaRich used DingTalk to disseminate training videos and group-wide memos to all its outlets and staff.

Similarly, Touch ‘n Go eWallet integrated software engineering processes inside the platform to give real-time alerts and notifications to its engineering teams to improve efficiency.

Cao warns that at a time when the pandemic is impacting every person, community and country, business organisations may not survive if they do not adapt. The outbreak should therefore accelerate the IT transformation of many companies.

“In our experience from talking to our customers, digital transformation was already among the top priorities for several businesses. But now, the pandemic has made it the most critical one for their survival. Cloud adoption has evolved from ‘nice to have’ to ‘must have’,” he explains.

Cao says there is a big misconception that only large enterprises need to adopt cloud technology. The fact is that smaller companies can actually adopt faster because they have no legacy issues.

“When it comes to benefits, our customers, big and small, have seen significant cost savings and improved business outcomes, as compared to their investment in digital transformation,” he adds.

Will the discovery of a vaccine decelerate cloud adoption?

Cao foresees that post-Covid-19, businesses that have successfully moved to the cloud would set a benchmark and proven examples will encourage more companies to embrace cloud services.

“The discovery of a vaccine to fight the pandemic will come sooner or later. However, by that time, people and businesses would have already adapted to new habits and have the infrastructure in place for the new normal,” he explains.


Fundamental enabler

IDC ASEAN senior research manager Duncan Tan says the pandemic has accelerated the digitalisation of businesses around the world. As the operating model for cloud services allows investment spending to change from capital to operating expenditure, the opportunity has arisen for companies to migrate their workload and storage to the cloud.

“Our advice for businesses is to relook their application landscape and accelerate the migration of critical applications and data towards the cloud. Companies should also take this opportunity to relook automating business processes to minimise future business disruptions,” he tells The Edge.

IDC’s recent survey across Asia-Pacific, excluding Japan and China, reveals that 63% of companies indicated that they will be looking at hosting more applications and workload in public and private clouds.

Meanwhile, 38% of companies indicated that budgets planned for 2020 will not be impacted and 42% expect more IT investment to be available in 2021.

Tan says the pandemic has accelerated spending in IT as it removed any doubts or uncertainty towards cloud services among companies and businesses. “As the cloud is also a fundamental enabler for digital transformation, the growth and demand for cloud services will remain strong post-pandemic,” he notes.

IDC forecast year-on-year growth of 21% for infrastructure as a service (IaaS) for 2021 across Malaysia, Thailand, Indonesia and the Philippines. It shows that despite the pandemic, the growth of cloud computing remains resilient.

IaaS is one of the three main categories of cloud computing services, alongside software as a service (SaaS) and platform as a service (PaaS).

“Continuous investment by global cloud providers such as AWS, Microsoft, Google and Alibaba, as well as local providers investing further in data centres across the region, offer more options for companies to choose which cloud services fit their business requirements and strategies moving forward,” Tan concludes.


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