How the cloud can drive economic growth in APAC (and everywhere)

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Public cloud adoption in the Asia Pacific (APAC) region continues to outstrip the pace of growth in North America and Europe, according to BCG’s “Ascent to the Cloud: How Six Key APAC Economies can Lift-off” report. BCG’s report examines the public cloud’s economic impact in six key APAC markets: Australia, India, Indonesia, Japan, Singapore, and South Korea. Although public cloud adoption in these markets are still emerging when compared to the U.S. and Western Europe, the growth rate is much faster (25% in APAC versus less than 20% in the U.S. and Western Europe) and there is great potential for further development.

The Cloud is not just a digital transformation story; it’s also an economic one. BCG finds that cloud adoption is expected to contribute about $450 billion of GDP across the six markets between 2019 and 2023. The direct effects of the economic boost has the potential to produce approximately 425,000 jobs in the covered economies, and influence about 1.2 million additional jobs by second order effects of public cloud deployment in key industries that drive the economy. Greater acceleration of cloud adoption and a supportive policy environment could increase the contribution to $580 billion with 770,000 direct jobs created and as many as 2.1 million jobs influenced.

As part of its research, BCG identified six key benefits APAC businesses are experiencing as they embrace the cloud–with broad applications for businesses worldwide. Here’s more on what BCG’s research found.

1. The cloud enhances team productivity
Because the cloud creates a standardized environment with scalable back-end systems and functions, and it provides access to proven tools that the IT teams can use to develop systems, many businesses find that moving to the cloud results in improved IT efficiencies. This means they can focus more on high value tasks like customer targeting, content development, and bringing new products to market. Better collaboration tools such as G Suite create administrative and communication efficiencies, while advanced applications such as artificial intelligence or machine learning, enable faster, clearer insights that enhance the overall productivity of the organization.

L&T Financial Services provides quick access to financial services for rural communities in India. It relies on G Suite to help staff work together efficiently. Employees can interact with each other in real time using Hangouts Meet, and the task of information sharing is more seamless and secure through Drive. BigQuery also helps L&T Financial Services generate behavior scorecards to track credit quality of its micro-loan customers.

“Cloud is the technology that enables us to achieve scale and reach,” says Sunil Prabhune, Chief Executive-Rural Finance, and Group Head-Digital, IT and Analytics, L&T Financial Services. “Today there are countless data points available about rural consumers which enable us to personalize our products to serve them better. With access to faster compute power, we can also on-board consumers more efficiently. Our rural businesses have clocked a disbursement CAGR of 60% over the past three years.”

2. The cloud can reduce time to market
The public cloud allows users to take new products and services to market quickly, helping organizations develop a fail fast approach that alerts them to problems immediately and makes a fast turnaround possible when something needs to be fixed.

The mobile game maker Netmarble, for example, uses advanced public cloud based tools including analytics and machine learning to support new game development, manage infrastructure, and infuse business intelligence throughout its operations. The company also uses productivity tools for real-time collaboration across front and back offices.

“The public cloud aligns with our vision for innovation and is as committed as we are to building better player services with advanced artificial intelligence and reliable, scalable cloud infrastructure,” says Duke Kim, SVP, Head – Netmarble AI Revolution Center, Netmarble.

3. A better security and compliance environment can be found in the cloud
The top public cloud providers spend billions of dollars every year on cyber security–far more than most businesses can spend on their own. As a result, security has increasingly become a key incentive to using the public cloud.

Recognizing that gaining and maintaining trust would be key to customer and partner adoption of its new products and services, Bank Rakyat Indonesia (Bank BRI) decided to pursue ISO 27001 certification in 2018. In fact, it was the first bank in ASEAN (the Association of Southeast Asian Nations) to be certified as information security compliant. Now, fintechs, insurance companies, and financial institutions that lack the talent or the financial resources to do quality credit scoring and fraud detection on their own are turning to Bank BRI. They also package data through more than 50 monetized open APIs for more than 70 ecosystem partners wanting to do credit scoring, business assessments, and risk management.

4. The cloud helps businesses launch new products and services faster and more efficiently
Many businesses find that the compute infrastructure they gain by moving to the cloud allows them to introduce new products or services, as well as the internationalization of new digital products and services. With the public cloud, they are better able to expand their business models.

Australia Post recently expanded into parcel delivery and growing its digital business to include retail, travel, and financial services and solutions. Using BigQuery, Australia Post has visibility into every stage of the mail delivery process and reduced the time taken to perform analytics. Operations managers can now see what’s happening in sorting facilities in real time, helping to identify flow blockages almost instantly. Previously, these types of insights would only be available at the end of the day, but now they’re delivered within 15 seconds–that’s 300 times faster.

“With near real-time data analytics, we can free up valuable resources, act quicker and provide better service to the millions of Australians that rely on us every day,” says Australia Post CIO John Cox.

5. The cloud enables enhanced customer engagement and experiences
For many businesses, moving to the cloud means access to advanced tools such as big data analytics and machine learning that can help them improve customer experiences. To win over new customers, many feel the need to excel over their competitors when it comes to engaging the clientele and offering a positive experience–and are turning to the cloud to do it.

DeNA leverages public cloud-based ML to improve the experience for new players of its mobile game Gyakuten Othellonia. To help beginners learn how to play the complex game competitively, and most importantly, enjoy the game, DeNa used AI to create a deck recommendation system for beginners and a smart AI player that would match the gamer’s level of skill.

“Using the public cloud, we have been able to leverage Google Cloud’s expertise in AI to build and serve several components in our game,” says Kenshin Yamada, Director of AI Dept, DeNA Co., Ltd. “The cloud’s open and serverless technologies also enabled us to host our AI models without worrying about scalability of infrastructure or portability of code.”

6. The cloud can reduce costs
The cloud offers the potential for substantial and meaningful cost reductions when businesses embrace transforming their architecture and consolidating their IT management functions. As a result, many find they’re able to achieve cost efficiencies that result from operating with smaller, fully autonomous agile IT teams that are able to focus on business rather than on managing the IT infrastructure.

Before moving to the cloud, AirAsia ran its IT apps and services in an on-premises infrastructure that required extensive maintenance that diverted technology team members away from projects that would add value to the business. In addition, the infrastructure could not scale quickly and cost effectively to support its data-first transformation to a digital airline. By moving to the cloud, AirAsia found the business agility it needed, as well as a 5% to 10% forecast reduction in operating costs. It’s now looking at adopting machine learning to drive further cost efficiencies through optimizing pricing for a range of services and predicting demand for items like additional baggage, seats, and meals.

Building better businesses with the cloud in APAC–and beyond
With its scalable infrastructure and a flexible, pay-as-you-go delivery of computing services, the cloud has become an increasingly essential digital transformation driver for APAC. By embracing the public cloud, these businesses are finding they can fuel growth through increased productivity, enhanced customer experiences, decreased costs, and reduced time to market. Many organizations also find significant benefit in the public cloud’s ability to provide security at a scale that often surpasses what even large companies can afford.

To learn more about BCG’s findings, download a copy of the report.

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