Market Trends of Indonesia Cloud Industry
Public Cloud is Expected to Hold Significant Share of the Market.
- Public cloud services have transformed the way companies operate their IT budgets. The pay-as-you-go model lets organizations access diverse services without incurring upfront costs for software and hardware. Traditionally, procuring and operating hardware meant substantial investments, but the cloud's operational expenditure approach changes the financial landscape. In confluence with this, the pay-as-you-go pricing model benefits startups and small businesses with limited capital and allows larger enterprises to optimize their IT spending. Apart from this, it encourages experimentation, as companies try out new ideas without committing to significant expenses, which provides an impetus to the market.
- Software as a service (SaaS) is a cloud-based model in which a cloud provider develops applications and makes them available to end users over the Internet. An independent software vendor (ISV) may contract a third-party cloud firm to host the application in this model. SaaS applications include a billing invoicing system, customer relationship management (CRM), help desk, and Human Resource solutions.
- Organizations are deploying the SaaS model to utilize multiple advantages, including the reduced upfront costs of commercial software, the need to establish software on individual machines, service scalability with a firm's growth, integrations with other software applications, and instant updates to all users. For instance, Dropbox is a real example of SaaS. Cloud storage allows firms to store, share, and collaborate on files and data. The users can sync and back up files to access them from any device.
- In September 2023, BDO in Indonesia, a member of BDO International Limited, one of the world's largest accounting, tax, and advisory firms, announced a commercial partnership with MVGX Tech, a Carbon Software-as-a-Service (Saas) company that aims to empower corporations, governments, and institutions to take action at every stage of their decarbonization journeys. Through its partnership with MVGX Tech, BDO in Indonesia's client base will be able to kickstart their sustainability journeys and strengthen existing ESG initiatives through MVGX Tech's Carbon Connect Suite.
- A private cloud becomes a costlier solution as organizations must create a complete hardware setup. Additional costs of the IT team required to run, maintain, etc., are the other running costs required. These factors make pure private services a costlier solution. Some of the end-users have priority to speed (latency) and confidentiality. In that case, significant data can be stored in an on-premise cloud.
- According to Indosat Ooredoo, the e-commerce sector held around 29 percent of the total spending on cloud infrastructure in Indonesia. It was followed by the media and gaming industry, with a share of approximately 22 percent. Along with server and storage consolidation in data centers, HCI is being used to implement private cloud architectures and hybrid cloud architectures. Cloud infrastructure is also being implemented using HCI, combining on-premises private clouds with public cloud services.
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BFSI is Expected to Hold Significant Share of the Market
- The banking sector has been using a cloud model through which critical banking processes and applications are migrated to private clouds for better security. Non-critical applications are relocated to the public cloud for agility and cost efficiency. As the majority of a bank's IT spending is done on legacy technology maintenance, managing and maintaining disparate systems, this has forced banks to invest in a hybrid cloud solution, which involves a mix of on-premises, private, and public cloud services, to greater scalability and integrated communication between disparate systems.
- A cloud solution enables banks to reveal critical insights throughout the customer journey. These insights further help with customer satisfaction and management programs. Hybrid cloud vendors also aggressively target the BFSI (Banking, Financial Services, and Insurance) sector to ensure they comply with new regulations such as the Revised Payment Service Directive and MFID (Markets in Financial Instruments Directive). BFSI organizations can effectively separate data loads and transfer the relevant part to a cheaper public cloud using cloud systems. This enables BFSI end users the place to store sensitive financial information safely but still scale the resources when needed, proving it to be one of the most suitable types of cloud computing for the BFSI sector.
- Cloud is also increasingly being adopted to tackle the issues faced in this sector, such as the increased number of payment transactions without a card, digitization of bank branches, shift to remote work, need for online documentation, etc. The banking and financial organizations can significantly leverage the benefits of on-demand scalable infrastructure services, effective data and storage management, SDI-enabled private cloud infrastructure in pay-per-use models, AI-driven cloud management, and agile operations solutions that embrace their cloud adoption journey. This way, the hybrid cloud adoption can help BFSI end users achieve digital transformation.
- Recently, the Indonesian digital bank PT Bank Jago Tbk has established a SaaS banking medium from the banking and financial services provider Mambu. This adoption will form a key basis as the bank prepares to expand into a technology-based institution. Mambu's financial solution platform will underpin Bank Jago's service products, which will foremost include everyday transactions and payments, with programs to branch out into SME lending.
- As we advance, the BFSI segment is also anticipated to adopt more agile ways of working; hence, there should be a continuous review of policies, practices, and controls, updating the firm's continuity and disaster recovery plans and encouraging clients to use digital and other virtual channels wherever required, which is again leading to the adoption of cloud in this sector. Further, according to the Financial Services Authority (Indonesia), as of January 2023, 106 different commercial banks were located in Indonesia.
