While Australia’s uptake of cloud technology has been slower over the last 15 years than other modern economies, the pendulum is definitely swinging towards faster adoption.
Until recently, the slow uptake has largely stemmed from a lack of understanding of about what exactly cloud technology is and what efficiencies it can bring to SMEs in Australia.
Data from the 2015-16 ABS Census shows 18% of the 6570 Australian businesses and executives that partook, cited a lack of knowledge of the technology as the number one reason for their hesitancy to transition into cloud computing.
Australian businesses also fear a lack of control over their data and systems if they employed cloud technology, as well as an increase in security breaches and a requirement for staffing resources with different skill sets, as other reasons for not employing cloud technology.
Aging legacy tech driving interest
Australian businesses feel that their ROI on existing enterprise purchases measured over the long term will be diminished by employing cloud computing.
However, once these enterprise purchases have been superseded, many businesses are looking to cloud computing as a viable option to hold their databases and software.
Australia is already seeing a small shift with organisations downsizing their data centre requirements in favour of hosting, co-location and cloud.
This move from smaller, individual data centres to fewer, larger data centres operated by third-party providers using hybrid cloud setups will help improve the relevance of traditional data centres.
An imminent shift is likely to occur when businesses come to realise that without cloud computing and relying on their existing computer infrastructure that they will not be able to take advantage of technology advances in artificial intelligence, virtual reality and machine learning.
Indeed, SAP’s global technology chief, Bill MacDermott, recently highlighted significant opportunities for accelerated growth in Australia as they look to seize market share across government and smaller enterprises, in a generational shift towards cloud-powered artificial intelligence and machine learning.
And Iland, a client of International Accounting Solutions Services, recently expanded its operations into Australia, after demand for its services in the Asia-Pacific region amplified in the last year. As a global cloud service provider of secure and compliant hosting for infrastructure, disaster recovery and backup, it has headquarters in the USA with data centres across the Americas, Europe and Asia.
In addition, they will also find their existing systems will be bogged down by the huge amount of data created by the increased prevalence of connected devices and object on the Internet of things.
Australian cloud computing statistics
Today, most Australian organisations are using the public cloud, in varying degrees, even if it is just for their public facing systems, for test/develop, backup or disaster recovery.
The ABS research on IT Use and Innovation in Australian Business 2015-16, has found that just under a third of Australian businesses reported the use of paid cloud computing services (31%). The previous year, there were 19% of businesses using paid cloud computing. Of these businesses; software was the most common paid cloud computing service used (85%), followed by storage capacity (60%).
Company size was a big factor in determining the use of cloud services – 25% of businesses with 0-4 employees to 60% of businesses with 200 or more employees had employed cloud technology.
Of these businesses, most found that mobile internet was of the highest importance to their business with cloud technology coming in at third most important.
A 2016 Microsoft survey found that 40% of Australian businesses are already using hybrid cloud technology which they predict to increase to 49% in the next 12-18 months. Of these, 43% are only using a private cloud with 17% using purely public cloud solutions.
The study showed that respondents are not likely to increase their investments in private or public only cloud solutions, reinforcing the demand for a more integrated, hybrid approach.
IT research group Gartner predicted in February 2017 that the Australian cloud market would increase by 15% from last year to almost $6.5 billion, due mainly to the boom in software-as-a-service adoption.
Australian Government policy on cloud technology
Current government policy requires all agencies to consider cloud solutions as a priority when rolling out or replacing ICT infrastructure, applications or services.
The Australian Signals Directorate has certified three cloud service providers to store classified information. This directorate provides agencies with more options to use cloud storage in a secure way and in line with government policies.
Another eight providers are certified to store sensitive information that is not categorised as classified. As more cloud providers enter the market, the opportunities for government to adopt cloud solutions will increase, as will the market opportunities for providers of cloud services.
Cloud.gov.au is a new government platform designed as a faster, safer and standard way to change web apps without impacting users. This platform makes it easier for government to release, monitor and grow user-facing digital services, freeing up teams to focus on writing code that meets user needs.
As of October 2017, cloud.gov.au had 47 apps in production, and 272 apps in development across their programs of work.
Opportunities for cloud technology in Australia
As more Australian businesses find that the cost to maintain in-house servers is expensive when considering capital expenditure and utilities, they will see cloud computing can reduce a companies’ storage and computing costs.
‘As CIOs manage constant technological advances and the exponential pace of change, they need vision as well as dexterity to offload the weight of operational inertia.’
Kevin Russo, Deloitte lead partner for technology in Australia and the Asia Pacific region.
Australian businesses need to think like a start-up when it comes to IT
Re-educating Australian businesses that cloud technology can help them to keep up with advances in technology, allowing their operations to be agile and improve customer service, all without the need for specialist in-house skills.
Changing the mindset of IT teams that the cloud offers new methods in monitoring and protecting information in terms of security.
For businesses that may struggle to raise enough capital for investment in new technology may find the operating expense model of cloud services more appropriate to their business than the traditional capital expense model.
Cloud computing providers must be mindful of industry needs too
For cloud providers, adopting a flexible connectivity for its customers will help companies adopt the technology to test solutions and dispel their cloud misconceptions. Avoiding long-term contracts and showing them the substantial reduction in infrastructure investment will be an added benefit.
The Austrian company, Emarsys is a great example of a marketing cloud platform that capitalised on the growing Australian demand and accelerated its global expansion into Australia accordingly. Read our case study on Emarys in Australia here.
Whether you are just curious about the Australian cloud market or are thinking of expanding or setting up business in Australia, contact us or speak to an expert at International Accounting Solutions on +61 2 8298 5301 (intl: +61 2 8298 5301).
Like to read more? Check out setting up a business in Australia or read 6 reasons why your startup should expand to Sydney.