Natalya Makarochkina, Senior Vice President of the Secure Power Division, Schneider Electric, discusses the remarkable progress of Digital Transformation in the Asia Pacific region, driven by widespread tech adoption and unprecedented speed and scale. She outlines the growing influence of media services such as TikTok and Instagram on consumer preferences and the rise of three new digital superpowers in the region – Indonesia, Vietnam and the Philippines – boasting a staggering combined user base of over 200 million users.
The Asia-Pacific market beyond China is a dynamic and expanding region for data center investments, cloud, IoT and emerging technologies. About half of all Asia Pacific organizations indicate that they plan to operate a mixture of public cloud and on-premises infrastructure within this high growth area.
These investments are driven by evolving demand, new business models and Digital Transformation. According to Insider Intelligence, Singapore, Indonesia and Philippines have become the three fastest-growing e-commerce markets in the world. Analyst McKinsey noted that the Asia Pacific region had leap-frogged in certain areas of technological development like emerging technologies including AI, IoT, cryptocurrencies, Blockchain and Software-as-a-Service.
This has enabled the rapid emergence of new business models and consumer habits. Recent observations were that some Asian markets skipped the credit card stage, going directly to e-wallets and ‘super apps’, building on novel combinations of the aforementioned technologies.
Facilitating all of this, is the increasingly sophisticated use of hybrid IT environments that encompass on-premises, hybrid cloud and edge infrastructure.
Mass acceleration
A report for the UN Economic and Social Commission for Asia and the Pacific (UN ESCAP) noted that: “The COVID-19 pandemic has accelerated mass digital adoption and expedited tech adoption across industries, advancing Digital Transformation at an unprecedented speed and scale.”
In the manner of leapfrogging, many Asia Pacific businesses jump into hybrid cloud services to meet demand and increase capability rapidly.
Forrester, in Software 1 Survey 2022, reports the top three reasons that Indian technology leaders cited for SaaS adoption did not feature cost. They were:
- Increased IT/cloud resilience – important for raising overall business resilience
- Higher speed of implementation and deployment – crucial for supporting ever-changing customer expectations
- Regular automated delivery from vendors – great for innovation and reduced technical debt
These high-priority IT infrastructure upgrades include data center and cloud, Edge Computing deployments and customer experience projects. Three out of 10 Asia Pacific organizations say they already have contemporary Edge Computing sites deployed while others say they are in the early stage of cloud adoption.
According to the data and analytics company, Global Data, the market for Edge Computing in APAC is estimated to grow at a compound annual growth rate (CAGR) of 21% to reach US$5.8 billion by 2024.
Resilience and agility for opportunity
In today’s rapidly evolving landscape, there is a remarkable drive to establish resilient and agile infrastructure and capabilities that can effectively cater for emerging opportunities. This forward momentum is evident in the surge of e-commerce demand and the increasing popularity of ‘shop-ertainment’ where shopping becomes a form of entertainment.
Additionally, consumer preferences for media services like TikTok and Instagram have skyrocketed, particularly in the Asia Pacific region. According to Statista, the top three Asia Pacific countries for TikTok users are Indonesia, Vietnam and the Philippines with a combined total of more than 200 million users. This combination is experiencing a rise in the use of blended channels to reach new opportunities as consumer tastes and practices rapidly evolve.
These trends have led to a significant concentration of activities in Indonesia, earning the nation a reputation as a ‘digital-first nation’ as highlighted by McKinsey. The country is undergoing a remarkable Digital Transformation and experiencing an unprecedented e-commerce boom.
Indonesians demonstrate an exceptional enthusiasm for digital technology, spending an average of four hours per day accessing the Internet on their mobile devices, twice the average time spent by individuals in the United States.
The dynamic nature of these emerging opportunities necessitates the presence of infrastructure and orchestration systems that are highly agile, adaptable and resilient. The ability to predict the next trend, product or viral sensation remains elusive, emphasising the need for services capable of handling not only new technological mediums for delivery and interaction but also unexpected surges in demand.
To ensure continued success, businesses must navigate the usual disruptions and threats while staying attuned to the consumer-driven landscape of these transformative opportunities.
Cloud drives renewables development
In the move to cloud and As-a-Service offerings, there is something of a split between hyper scalers and co-location providers with both sectors making significant investments. According to Arizton, the hyperscale data center market in the region will grow to around US$64 billion by 2027, with a CAGR of more than 7%.
Analysts note that sustainability is taking center stage and it is expected that Renewable Energy Sources (RES) will be a key consideration for data center operators when building facilities in the region. The preference for most operators is to have green and renewable power for current and future capacity.
This supports Forrester’s report that large firms in the region are accelerating their sustainability efforts but need to do more. Other data suggests that as RES providers scramble to meet these demands, the RES market in the region will see strong growth by 2028 with a CAGR of 9%.
5G wave for last mile
As a key component to meet infrastructure demands, 5G is seen as a major advantage with the benefit of its low latency connectivity. 5G networks can quickly and efficiently deliver services to meet emerging demand and is uniquely equipped for the variability in use.
Even without European and North American deployments, data tracker from S&P Global Market Intelligence shows that as of late 2022, over 46 operators in 19 Asia-Pacific markets have launched commercial 5G services. ABI Research reports that deployment of 5G private networks in Asia Pacific is expected to reach revenues of US$13 billion in 2028, that will be up from US$732 million in 2022.
Demand opportunity
In this region, developing demand, new opportunities and growing user and customer numbers are driving investment in sophisticated infrastructure that is not held back by perceived gaps.
Only vendors that have the breadth of capability and deep interoperability will be able to service these dynamic emerging use cases in an already exciting region. With pioneering work being done in combining existing channels for blended media, there are exciting opportunities to see where services from the cutting edge will become the norm elsewhere.
