Executive Summary: ISG Provider Lens™ Next-Gen Private Hybrid Cloud - Data Center Solutions & Services - Singapore & Malaysia 2022
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The growth of cloud computing is accelerating in Singapore and Malaysia, embracing local differences.
The 2022 Next-Gen Private/Hybrid Cloud – Data Centre Services and Solutions study evaluated 48 hybrid IT, colocation and managed hosting service providers that operate in Singapore and Malaysia and provide a range of IT services. From the analysis, ISG Provider Lens™ has identified the key service providers and the main trends driving the markets for hybrid IT, colocation and managed hosting across the region.
The Singapore and Malaysia data centre services and solutions market is dynamic, with substantial providers across each of the three quadrants targeted for study. It is an increasingly developed market with both local and foreign providers playing significant roles in the development of the local ecosystem. What is unusual about Malaysia and Singapore is that due to regulatory, cultural and geopolitical reasons, the two markets operate as different entities. This is unusual, in most technology solution areas, the two markets operate in a similar fashion. This manifests itself in many ways, but most notably, no local Singaporean or Malaysian provider has substantial capabilities in both markets. This is particularly true for the two national telecommunications providers, Singtel and Telekom Malaysia.
We have seen the rise of global providers and local sovereign providers. Very few providers have coverage in both countries, the ironic exception given the inability for Singtel and Telekom Malaysia to compete in each other’s market, is that Telstra from Australia and NTT of Japan have the strongest market coverage in Singapore and Malaysia specifically and ASEAN more broadly. Most global providers only have coverage in Singapore with early capabilities in the Malaysian market which is less mature.
Historically, Malaysia and Singapore had a strong history in IT outsourcing, an offering that led to the growth in cloud data centres. As a result, integrated solutions are common across applications and infrastructure.
There are several key trends that are driving the shift towards the hybrid cloud model and accelerating data centre uptake.
The accelerated shift to digitisation is at the top of the list. Even without the impacts of COVID-19, change was coming to Singapore and Malaysian enterprises and government agencies around the speed of their migration to digital. As a result of the transformations related to changing customer patterns, supply chain issues and regulatory environments impacted by COVID, this has only accelerated. This acceleration has meant that the demand for the range of data centre solutions, including cloud services, to enable enterprises to be truly digital has only accelerated in the past two years. It will continue to accelerate, the shift to digital is a one-way street. There is no turning back.
Some of the trends observed over the last year, and building for the future are presented below.
Sustainability initiatives – integrated across industry and government: Enterprises are looking for providers that are as committed to sustainability as they are in their strategies and operations. In Singapore in particular the need for sustainability is repeatedly highlighted both from government and private sector initiatives. Malaysia is arguably lagging a little in this, but will have to accelerate to remain competitive. Data centres will be at the front and centre of this, with a shift to even greener locations, energy and management than what was expected in 2021.
Platform led automation: There is a rapid increase in use of proprietary or third-party platforms and tools (by both service providers and the enterprise community) for automating cloud operations. AI and machine learning technologies are being widely used to create a differentiation in automating day-to-day operations, with the level of efficiency improvements varying from 30 to 60 percent. Some providers are leveraging automation to improve customer experience, leading to increased revenues and repeat business.
Growing popularity of edge computing: Although still evolving, edge computing is seeing rapid adoption among enterprises of all sizes for various existing and new use cases such as software-defined solutions, IoT processing, hybrid cloud connectivity, firewall and network security, branch and micro data centres, Internet-enabled devices and asset tracking. Edge is also being used to address the latency challenges in the present highly distributed environments, by removing network barriers and bringing processing to the edge.
Smarter and darker data centers: Many enterprises are aiming to increase productivity and efficiency, but with minimal human resources. As a result, there is an increase in investments toward intelligent remote monitoring and automation, where real-time information is assisting organizations to effectively predict and manage requirements and problem areas, respectively. The goal is to deliver cost efficiency by reducing staff or by enhancing the ability to operate for a sustained period with limited workforce.
Comprehensive security measures in hosting environments: As organizations adopt digitalization and expand their remote workforces and hybrid IT solutions, there is a consequent high demand for agile security systems to protect sensitive data, workloads and applications. Hosting providers are offering a unique combination of physical and cybersecurity practices to combat ransomware and distributed denial of service (DDoS) attacks. In 2022. this trend is expected to gain more traction among organizations for which security is a critical component. Most or all providers are offering security as a part of the bundled deal to secure the end-to-end infrastructure of enterprise clients.
Ongoing build out in Malaysian regional areas: In Malaysia, data centre development has focused on Kuala Lumpur and the Cyberjaya district. It is anticipated that development will start to migrate to those locations with cheap and reliable energy capabilities and to locations such as Johore Bahru that offer proximity to the Singaporean marketplace.
Joint solutions and active partnering: To ensure national coverage and global connectivity, as well as the benefits of scale, it is expected that a highly integrated and complicated pattern of solutioning and partnering will accelerate in the future. This will enable the national scale and regional reach required and provide increased access to skills.
A lack of skills will be a major issue: Unemployment in Singapore and Malaysia for the technology workforce is currently at, or near record lows. Migration has slowed as a result of the COVID-19 pandemic. A focus on skills is required to grow the market. Innovative ways of developing and attracting new talent, are required. but it is going to require increased investment in automation across the technology palette for there to be even a remote chance of meeting the skills gap in the two countries and beyond.
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