BCG Study: APAC Slow to Adopt Cloud due to Talent Shortages

A new eight-nation APAC study conducted by Boston Consulting Group (BCG) shows that spending on the public cloud and related services is growing, yet organizations aren’t confident about the security of cloud infrastructure and are holding back.

The study, “Businesses in Asia-Pacific Can Find Resilience and Growth in the Cloud,” showed that APAC cloud spending is growing at a compound annual rate of 25 percent, which is much faster than similar growth across the U.S. and Western Europe and points to the region’s readiness to invest in cloud initiatives that are accelerating the pace of innovation, growth, and customer engagement.

The study notes that capturing the full potential of the cloud may help companies successfully navigate through the current and post-COVID-19 environment. Remote working is accelerating cloud adoption, but companies need to evaluate their security posture for remote environments.

The April 2020 BCG study was developed in collaboration with Amazon Web Services (AWS) and covers Australia, India, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. It shows that companies in these countries are dedicating an average of roughly 5 percent of their IT budgets to cloud expenditures, a figure that is expected to double by 2023. The study finds that growth in the public cloud could have a positive economic impact of more than $450 billion across the region. It highlights the case of Australian Airways, which saved $40 million per year in fuel costs by using cloud-based analytics to improve thousands of flight routes.

Luc Grimond, a Managing Director at BCG, said, “We’re seeing in the current COVID-19 crisis that more companies are shifting workers to virtual environments and employing end-user computing, using the cloud to quickly roll out essential collaboration tools. Cloud investments will have longer-term benefits as well, such as risk reduction, the ability to provide new and better services to business stakeholders, and improved personalization of product and service offerings.”

Additional findings include:

Despite growing interest in the cloud, only 20 pecent of APAC companies have migrated a majority of their applications to the cloud, and less than 25 percent of business applications are cloud ready. The slow adoption is diluting returns and forcing businesses to maintain on-premise legacy infrastructure in order to run their operations.
Disconnects between business and IT are one barrier to scaling the cloud. Overall, 40 percent of companies said their cloud program lacked a clearly defined business stakeholder.
Skills gaps are another barrier. Effective use of the cloud requires expertise that is in high demand, such as engineers and coders, as well as specialists to design and implement business-focused use cases. The talent shortage is most pronounced in Vietnam, the Philippines, and India. To close the gap, 55 percent of respondents said that they are focusing on reskilling staff. Although retraining exercises are important, they can slow the rate of cloud adoption if they’re not augmented by outside support, says BCG.

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