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Frost & Sullivan: Australia Leads Asia Pacific Adoption of Cloud Computing

Announcement posted by Frost & Sullivan 26 May 2011

Frost & Sullivan report identifies the top 4 predictions for the Australian Cloud Computing Market
Sydney, 26 May 2011 - Australia continues to lead the adoption of cloud computing in Asia Pacific with 43% of enterprises now using cloud computing in some form and 41% of IT decision makers indicating that cloud computing will be a top priority for them in the current fiscal year.  The primary reasons that companies are turning to cloud services include reductions to capital and operational expenditure, cost savings, increased business agility, and the ability to deliver IT on-demand. These are among the key findings in the latest Frost & Sullivan report, State of Cloud Computing in Australia: 2011.

The study identifies three main cloud computing deployment models:

      public clouds which are typically offered via a web application or as web services over the internet and involve applications such as customer relationship management, messaging, conferencing, payroll and office productivity;

      private clouds which are owned by the user company and/or a service provider deployed inside a corporate firewall; and

      hybrid clouds involving a combination of public and private cloud services.

Hybrid cloud deployments are the most popular model in Australia having been adopted by 22% of total enterprises and by more than 50% of current cloud users.   This compares to 18% of organisations using public clouds.  Frost & Sullivan expects hybrid clouds to remain the dominant deployment model in the near term due to the flexibility offered to choose the right cloud environment based on cost, security, reliability and service level agreements.  

Most customers are struggling to understand the differences between a private cloud and virtualised infrastructure or between private cloud and datacentre as a service.  With a lack of clear metrics on usage measurement and asset ownership, this confusion is likely to persist in the short-term.

Delivery models

When it comes to delivery of cloud services the decade-old software-as-a-service model continues to lead the way, having been adopted by 72% of cloud users.   Infrastructure-as-a-service which delivers compute and storage on a utility basis, has seen rapid take-up in the past 12 months with almost half of cloud users adopting this model.  Platform-as-a-service remains in the early stages of adoption.

The major cloud services providers include Microsoft, Google, IBM, VMware, Amazon, HP, Cisco, Rackspace and Telstra, all of whom enjoy a high brand recall in an increasingly crowded market segment.

Predictions

In addition to examining the current state of the market, the Frost & Sullivan study lists four predictions for the year ahead:

1.     Enterprises will continue to be cautious about the type of workloads that they move to the cloud, performing rigorous risk-benefit analysis before doing so. Compute-as-a-service for test and development work, storage for the purposes of business continuity planning or disaster recovery, email and email filtering are some of the workloads expected to rapidly move to the cloud. Expect greater hesitation with custom applications, sensitive storage data and production environments.

2.     Server virtualisation and network security will be the enablers that underpin investments in private clouds.

3.     Spending on cloud will increase but in a measured manner.  All IT decision makers will either maintain or increase their spending on cloud computing in the current fiscal year. Nevertheless, customers will continue to be cautious about the upfront cost savings from cloud computing due to concerns over hidden costs and downtime.

4.     IT departments will continue to be the biggest influencers in cloud-related decisions but more CXOs will either influence the IT department or will get involved in decisions relating to cloud. Also, while some visionary IT managers see cloud as a means of freeing them from performing mundane IT administrative tasks, there is still inherent fear about the impact of cloud computing on IT employment.

Arun Chandrasekaran, Research Director – ICT Practice, Frost & Sullivan, says, “There has been a significant increase in the use of cloud services in Australia in the past 12 months and all the indications are that this will continue.  While a formal “cloud first” policy does not exist yet in most enterprises, the idea of a “cloud alternative” evaluation is increasingly common. We expect to see a number of trial deployments this year as companies dip their toes in the water and test non-mission critical applications and infrastructure.”

Frost & Sullivan's State of Cloud Computing in Australia: 2011 forms part of the Frost & Sullivan Australian Cloud Computing Research program. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. Interviews with the press are available.

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