Cloud Computing

Cloud strategies face new era of tension in Australia and New Zealand

Businesses in Australia and New Zealand have enthusiastically adopted the cloud.

A 2023 IDC white paper sponsored by Microsoft said Australia and New Zealand are among the few countries in the Asia-Pacific region where public cloud adoption has outpaced discrete software-as-a-service-based solutions for infrastructure replacement, such as disaster recovery, towards advanced use cases driving digital transformation. and innovation.

But this will not be without tension. by Forrester State of the Cloud in Australia and New Zealand 2023 The report reveals that continued growth in cloud usage across organizations is pushing IT leaders in Australia and New Zealand to focus on efficiency and cost. IT leaders should expect new challenges as demand grows for new use cases like artificial intelligence in the future.

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Explosion in cloud demand puts pressure on cloud strategies

Australia’s top enterprise cloud decision-makers said their organizations had spent an average of almost US$14 million (A$21.85 million) on public cloud over the past 12 months. Forrester said that scale, combined with pressure from a tech sector and an economic downturn, has reignited interest in increasing cloud waste and efficiency.

SEE: Compare public versus private versus hybrid cloud Infrastructure.

“As businesses seek to navigate economic uncertainty, optimization is a priority,” the Forrester report states. “We reached new levels of spending that far exceeded expectations.”

Some IT managers are renegotiating cloud contracts with higher committed spend amounts or higher committed growth rates in exchange for discounts. Many also use cloud-based cost management and optimization solutions to reduce waste, while working with database and network architects could further optimize performance, security and cost issues, a Forrester said.

Organizations are even expanding the adoption of financial operations practices. Rather than simply using new tools, Forrester suggests that IT teams work to strengthen collaboration, hold users accountable for spending decisions, and provide more transparency on spending initiatives.

“This initiative is gaining traction among technology leaders, not just cloud leaders,” Forrester said. “Even though the tech downturn isn’t hitting local companies as hard as local multinationals, Australian businesses still want to get the most out of FinOps – even as layoffs from big tech companies cool the job market. »

Pressure on cloud strategies is expected to continue, Forrester said.

“In the coming years, many companies will begin to explore new cloud use cases, whether edge services or AI-based services,” Forrester said. “Each new opportunity will put new pressure on current strategies. »

Australia and New Zealand prove they are at the forefront of the cloud

The IDC report predicted that Australian public cloud spending would increase by 83% between 2022 and 2026, from A$12.2 billion (US$7.81 billion) in 2022 to A$22.4 billion. Australian dollars (US$14.34 billion). Gartner, meanwhile, predicts that Australian organizations will spend A$19.9 billion (US$12.74 billion) on public cloud this year alone and expects NZ$3 billion (1 .77 billion US dollars) in spending by New Zealand organizations, up 22.9% year-on-year.

The spending forecast reflects the new scale of cloud growth in Australia and New Zealand.

Since the arrival of major public clouds, Forrester research shows that local businesses are increasingly migrating their existing workloads rather than simply using the cloud for new applications. On average, Australian business decision-makers migrating to cloud computing infrastructure as part of public cloud adoption expect to have migrated 46% of their workloads in two years, which would be an increase from 36 % current.

SEE: Explore advantages of cloud computing.

Retailer Woolworths, for example, has completed its migration of 20 SAP applications, 75 terabytes of data, 135 database servers and 435 application servers to Azure in 2022, which included one of the largest SAP environments in the region. Meanwhile, ANZ Bank is in the midst of a company-wide migration to AWS and Google Cloud Platform.

ANZ Bank is far from alone in pursuing a multi-cloud strategy. by Forrester Cloud Infrastructure Survey, conducted in 2022, found that a large portion (95%) of Australian enterprise cloud decision makers in organizations using public cloud report using multiple public cloud providers, demonstrating that multicloud is the predominant strategy for most organizations.

This change is not limited to the private sector. Although moving more slowly, Australian public sector agencies have also been encouraged to adopt cloud-first or cloud-inclusive approaches for several years, including under the 2017 Federal Government. Secure cloud strategywhich was updated again in 2021. Reasons given include increased speed, opportunity for continuous improvement, easier access to utilities, and reduced maintenance costs.

While Australia may not have become the second largest cloud hub in the world as Forrester predicted in 2014, the future looks bright.

“Cultural and business factors that led to this prediction, including the country’s fast follower mentality, a vibrant startup scene, tech-forward citizens, and cultural ties to the UK and US business communities , continue to drive investment,” Forrester said.

Data center expansions will support public cloud growth

Cloud adoption in Australia and New Zealand will be accelerated by new investments in hyperscaler data centers in Australasia. AWS has committed an additional A$13.2 billion (US$8.44 billion) to Australia’s east coast regions from 2023 to 2027, as well as NZ$7.5 billion (US$4.43 billion) to establish a data center in Auckland, consisting of three availability zones. Microsoft and Google also announced plans for New Zealand regions.

The arrival of hyperscaler data centers in New Zealand, in addition to Catalyst Cloud’s existing presence in New Zealand, is expected to propel strong market growth.

SEE: Here what you need to know to choose the right cloud approach For Your Business.

“Growth in cloud adoption continues globally, but 2024 is where we’ll see it explode in New Zealand,” Michael Warrilow, vice president at Gartner Research, said earlier this year . “The entry of hyperscale cloud providers into the local market will drive this accelerated growth. »

Forrester says changing data center footprints is just another reason why organizations will optimize their strategies.

“ANZ businesses must strategically evolve their cloud strategies based on their own business context, including past investments, new pressures and development skills and requirements, revisiting their existing plans to ensure optimization of costs, data, resilience and network architectures”, the research firm. said.

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