The digital universe is doubling in size every two years; it will multiply ten-fold by 2020. In fact, by 2020, there will be an estimated 4 billion connected people, 50 trillion gigabytes of data, and $4 trillion revenue opportunity generated by the Internet of Things (IoT). Cloud is showing the same incredible growth, with Frost & Sullivan predicting that the market value of Asia-Pacific data centre and cloud services will climb to $65.2 billion in 2019 from $25.7 billion in 2014, representing a compound annual growth rate of 20 percent.
These technology trends have paved the way for incredibly innovative, disruptive companies like Uber and AirBnB, that were not only born of the cloud, but have put forward innovative business models, adapting to the new technology-enabled business environment. Korea has identified the capabilities enabled by the cloud and earlier this year, passed the world’s first cloud-specific law, with the aim of encouraging cloud adoption in the country. In order to support the growing cloud adoption in the country, it is increasingly critical to ensure that the data centre infrastructure backbone is able to support businesses’ current and future requirements.
How businesses in Korea can leverage technologies like cloud and IoT to transform their business
IoT and cloud computing are likely to take centre stage in the technology space and continue to be a trend in 2016 and the years beyond. Home to technology giants such as Samsung Electronics and LG Electronics, South Korea is seeing the implementation of technologies among companies to stay ahead in the era of IoT. Just last year, Samsung Electronics unveiled an IoT platform called Artik that will connect almost all kinds of devices from wearable devices to drones. With the passing of the cloud act, the cloud computing market is forecasted to grow by over 30 per cent each year. Cloud computing is quickly changing everything when it comes to enterprise IT spending and companies that have not already implemented a cloud strategy or are currently formulating plans to implement cloud may find it difficult for their business to survive in the industry.
IDC shared in a recent report that both technology vendors and buyers will need to recognise the industry drivers and barriers that come with cloud deployment, understand the transformational changes that the cloud has brought about to the business and to take advantage of these changes by adjusting their business and technology strategies accordingly. Getting the timing right is vital as the business process redesign needs to happen in line with cloud adoption for organisations to reap the full potential of their cloud systems. This enables the firm to address any complexities that often arise during the early implementation and operational stages.
As cloud computing matures in the region, organisations will start demanding various types of cloud systems that not only improves the efficiency of their work processes but also meets their security needs and offers innovation at a lower cost. To achieve this, Korean enterprises have been observed to adopt server virtualisation in order to gain greater efficiency and agility, including Daewoo E&C, one of the largest companies in the construction sector in Korea, as well as Rsupport, a remote support solutions provider in Asia. For companies like these to be able to manage multiple cloud models such as public, private and hybrid cloud models seamlessly, it is crucial for them to shift to a unified cloud platform that supports applications across devices.
What Korean companies can learn from global cloud leaders
South Korea is the fourth largest economy in Asia and has displayed a willingness to spend a large percentage of its GDP on research and development, according to McKinsey. For instance, the Ministry of Science, ICT and Future Planning (MISP) announced its plan to invest over US$90 million into IoT testbed projects, an indicator that IoT will dominate the country’s technology industry in the years to come. Supporting this IoT growth is South Korea’s adoption of cloud computing, with ITA research indicating that the cloud computing market is currently worth US$432 million and will grow to US$1.78 billion by 2018. With the government planning to expand cloud services and develop data centres through public-private partnerships, Korean companies should developing cloud strategies which will enable them to leverage the business landscape.
Regulatory support
Looking at Japan, the leading cloud market within the Asia-Pacific-Japan region and the top cloud market for the third year in a row on the Cloud Readiness Index, the country’s cloud industry owes its success to the government’s commitment to cloud services. By establishing a regulatory environment that allows the free exchange of data while still protecting privacy, Japan has created a uniquely connected market that encourages local players to capitalise on cloud servers.
The Korean government is on its way to achieving Japan’s level of success, with its blueprint for developing the cloud computing sector presented in 2015 – a good step towards elevating cloud use and encouraging the growth of cloud companies. Korean companies may be slower when adopting cloud computing due to their scepticism about cloud security but government regulations that promote the growth of cloud computing and protection of confidential information can improve confidence of companies in sharing their data on a cloud server. The government also plans to increase the cloud computing’s proportion of the budget in software research and development from nine to twenty per cent by 2018, a sign of the government’s efforts to nurture the growth of the cloud computing industry.
Expansion strategy
Korean companies have been observed to take a variety of approaches when it comes to expanding in the cloud computing space. KT Corporation, a telecommunication company, leveraged cloud data centres in adopting cloud computing to improve the performance and security of online businesses in the Korean market. Tibero, a database management system (DBMS), expanded into the global market by partnering with a cloud platform to host their products and services so that customers can access them worldwide.
Much like the case in other ICT sectors, U.S. cloud providers have earned leading global positions in the cloud computing space; according to a Sky High Networks report, 17 out of top 20 enterprise cloud services came from U.S. based companies. Korean companies can learn much from the aggressive expansion strategies of U.S. companies, including establishing their brands through marketing campaigns and their physical presence abroad via sales offices or data centres. Adopting a cloud system can provide companies with scale and high levels of expertise, as seen in the case of General Electric rolling out over 90 per cent of its applications in a public cloud environment in 2014.
For Korean companies to expand their operations abroad in the long term, there is a need for them to leverage innovative solutions such as cloud computing and IoT. By promoting the awareness of best practices abroad and within industries, companies can understand how their businesses can be more efficient and innovative, thus increasing user confidence in the widespread use of these new technologies.
Written by Krupal Raval, CFO of Digital Realty Asia Pacific
