As the world nears the end of 2020 but still in the grips of a global pandemic, we have seen an accelerated rate of digital transformation in response to rapidly changing societal trends. Many tech startups in Southeast Asia have had to pivot their business models to remain competitive in the new normal. The long-term effects of the COVID-19 crisis on businesses remain unknown, but one thing is clear, the market for cloud computing in Southeast Asia will continue to see rapid innovations and new opportunities for growth.

Why is Cloud important?

The long-term benefits of cloud computing are being realised all over Southeast Asia. Not only does it offer elastic consumption and agile development; but the cloud also provides global reach in an increasingly globalised world. Uniquely positioned, tech startups can prosper as they are more adaptable to quick changes. In this cutthroat market, they are free of the bulky infrastructures of more established companies slowing them down. Startups no longer compete just locally, or even regionally, but on a worldwide scale. Cloud services provide a cost-effective, easy access alternative, adaptable to the current and future needs of the company.

One startup that has benefited from optimizing its cloud services is Singapore-based MoneySmart, Southeast Asia’s leading personal finance portal. The MoneySmart Group had seen an increase in monthly costs, mainly due to a rapid rise in launching new applications and project initiatives. The startup began as a mortgage comparison site and expanded to include broader financial decisions such as loans, credit cards, and insurance. 

Leveraging Amazon’s Web Services (AWS), MoneySmart reduced its cloud footprint and cut more than 28% per month in spending. Through cost optimization exercises provided by AWS, it significantly increased its efficiency, a vital aspect in maintaining the swift growth it is experiencing as a company.

IDC projections

According to the IDC forecast, cloud services will see sustained growth throughout 2020 and into 2021 in ASEAN organisations. The next six months will see Platform-as-a-Service (PaaS) have a projected growth of 38.5%. Meanwhile, Software-as-a-Service (SaaS) is likely to increase by 22.8%. In the same time span, Infrastructure-as-a-Service (IaaS) will see an increase of 26.0%. This is no doubt caused by the higher demand for collaboration technologies and business continuity brought on by the pandemic. 

As stated by Duncan Tan, Senior Research Manager at IDC Malaysia, “It is clear that organisations have benefited from cloud technology during this crisis. As ICT spending overall is seeing a decline, we are expecting to see more organisations shift budgets towards cloud based applications and technologies in the near future”.

Cloud thrives in the pandemic

In the wake of the pandemic, there has been a surge in digital transformation initiatives. COVID-19 lockdowns in ASEAN countries caused a massive shift, meaning that many companies and startups had to go from a large, in-person workforce to smaller, remote working models. This created new challenges with an increased demand for data sharing and video conferencing services that operate in a secure environment. 

Cloud is the underpinning platform that offers easily accessible and safe solutions for these digital transformations leading to a rapid rise in demand. In Singapore alone, the expected growth in the public cloud services market is about 13% from 2019 to 2020.

The growing need for data centres

With an accelerated shift to cloud computing, the need for data centres, and the challenges they present are also increasing. Despite its small size, Singapore boasts 93 data centre sites and counting. It is now the third most desirable location for data centres globally. Singapore, already a business hub in the region with many well-established companies and thriving startups, also has a highly skilled workforce, making it a prime location for the ever-growing cloud service market. It is also a centre of global connectivity as a result of its advanced network of undersea cables, and all these factors contribute to make it prime real estate for data centre locations. 

This, however, has raised some concerns when it comes to the rate of energy consumption and has placed some pressure on the country to find sustainable solutions to combat the rising energy usage. Singapore remains committed to finding sustainable solutions from more efficient cooling systems, developing more renewable energy sources, and using AI to help identify and reduce energy usage. With increased reliance on cloud services, data centres are more necessary than ever, and Southeast Asia has become a key region in the industry.

If anything, 2020 has proven that tech startups in Southeast Asia can adapt quickly. Adversity breeds innovation, and the pandemic plus the resulting lockdowns have given rise to swift and abundant digital transformation that will continue in 2021. As ASEAN countries such as Singapore become hubs for data centres, we will continue to see a rise in cloud computing in Southeast Asia. Despite an uncertain future, success in this sector seems likely.