Cisco: digital could accelerate APAC economic recovery
In its latest report, Cisco details that the digitalisation of small and medium businesses (SMBs) in Asia Pacific (APAC) could add US$2.6trn to US$3.1trn to Asia Pacific GDP by 2024, as well as contribute to the region’s economic recovery following the outbreak of COVID-19.
According to the International Data Corporation (IDC), APAC could add between US$10.6trn and US$14.6trn to its GDP by 2024 with as much as 25% could be attributed to the digitalisation of SMBs.
Commissioned by Cisco the study revealed that more digitally mature SMBs receive twice as many benefits when it comes to revenue and productivity compared to those that are indifferent to digitalisation. In addition the study highlighted that 70% of SMBs in Asia Pacific are accelerating digitalisation of their businesses due to COVID-19, with 86% believing digitalisation will help develop resilience against crises such as COVID-19.
“SMBs suffered the hardest impact in the current crisis but are expected to bounce back the fastest. This is not just because most of them have had to rely on technology to continue to deliver to their customers but also because of their agility and adaptability to innovate. As the region starts to emerge from the pandemic, this trend will play a pivotal role in the economic recovery. Cisco is committed to work with SMBs to help them emerge stronger with the right digital solutions and strategy,” said Bidhan Roy, Managing Director, Small Business, Asia Pacific, Japan and China, Cisco.
Further results from the study showed that 15% of SMBs value cloud as a top technology investment priority in Asia Pacific, followed by security (12%) and the purchase or upgrade of IT infrastructure software (12%).
However, there are challenges. Respondents from the study also reported a shortage of digital skills and access to talent as a top challenge (17%), followed by the lack of necessary technologies to enable digital transformation (14%).
“SMBs have an unprecedented opportunity. However, for them to derive the greatest long-term value, all stakeholders need to come together to address the key issues faced by the industry. This includes government, educational institutions, large corporations, and industry bodies. No one entity can solve these alone. At Cisco, we are proud to be playing our part. From a talent perspective, the Cisco Networking Academy has trained over 2.5 million students across Asia Pacific, Japan and China in various ICT skills since its inception. On the technology front, we have launched a series of curated products and solutions specifically for the SMB sector under the Cisco Designed portfolio,” Bidhan added.
Despite the challenges, SMbs continue to process in their efforts to digitalise their operations. The study reported that 16% of SMBs in the region are at the advanced digital maturity (stages three and four), with just over half of SMBs in the second stage and 31% in stage one.
“Digitalization is no longer an option for SMBs – it's a matter of survival. COVID-19 has forced them to move to digital-first, becoming more dependent on technologies to ensure business continuity and resiliency. As SMBs rethink processes, operations, and customer engagements, they are looking at cloud services and cybersecurity first, but have also increased their focus on customer experience, video conferencing and AI/Analytics solutions. Given the rapidly changing market conditions and speed of technology evolution, SMBs should work with the right industry partners to ensure they can maximize their technology investments and thrive in their digitalization journeys,” said Daniel-Zoe Jimenez, AVP, Head Digital Transformation & SMB research at IDC.
Why Alibaba Cloud is doubling down in Southeast Asia
Alibaba has announced expansion of its cloud business within Southeast Asia, with the introduction of a digital upskilling programme for locals alongside acceleration of its data centre openings.
This doubling down of its cloud business in Southeast Asia comes as the company faces stiff competition at home in China from rivals including Pinduoduo Inc and Tencent and seeks to up its game in a region considered to be the fastest-growing in cloud adoption to compete with leading global cloud providers AWS, Google and Microsoft.
Alibaba Cloud, the cloud computing arm of Chinese e-commerce giant Alibaba and second biggest revenue driver after its core e-commerce business, finally turned profitable for the first time in the December 2020 following 11 years of operation, thanks largely to the pandemic which has spurred businesses and consumers to get online.
Southeast Asia growing demand for cloud
In 2020, there was a noticeable increase in interest towards cloud in SE Asia, with the population embracing digital transformation during the pandemic and SMEs across the region showing increased demand for cloud computing.
Such demand has led to the expectation that Southeast Asia is now the fastest-growing adopter of cloud computing with the cloud market expected to reach US$40.32bn in Southeast Asia by 2025 according to IDC.
And there are plenty of players vying for a slice of the cloud pie. While AWS, the cloud arm of Amazon, is the leading player in Southeast Asia (and across all of APAC apart from China), Microsoft and Google are the next two most dominant players in Southeast Asia with Alibaba coming in fourth.
“There is no doubt that during the past year we have seen the acceleration of digital transformation efforts across all industries,” explains Ahmed Mazhari, President, Microsoft Asia. “Asia now accounts for 60% of the world’s growth and is leading the global recovery with the digitalization of business models and economies. Cloud will continue to be a core foundation empowering the realization of Asia’s ambitions, enabling co-innovation across industries, government and community, to drive inclusive societal progress.”
Alibaba’s commitment to Southeast Asia
At its annual Alibaba Cloud Summit, the Chinese company announced Project AsiaForward, an initiative designed to upskill local developers, small-to-medium-sized companies and connect businesses with venture capital. Alibaba said it would set aside US$1bn over the next three years to develop digital skills in the region, with the aim of helping to develop 100,000 developers and to help grow 100,000 tech startups.
But that’s not all. The company, which recently opened its third data centre in Indonesia, serving customers with offerings across database, security, network, machine learning and data analytics services, also announced it would unveil its first data centre in the Philippines by the end of 2021.
Furthermore, that it would establish its first international innovation centre, located in Malaysia, offering a one-stop shop platform for Malaysian SMEs, startups and developers to innovate in emerging technologies.
“We are seeing a strong demand for cloud-native technologies in emerging verticals across the region, from e-commerce and logistics platforms to FinTech and online entertainment. As the leading cloud service provider and trusted partner in APAC, we are committed to bettering the region’s cloud ecosystem and enhancing its digital infrastructure,” says Jeff Zhang, President, Alibaba Cloud Intelligence.
What other cloud providers are pledging in the region
This pledge by Alibaba to upskill both individuals and businesses follows Microsoft’s announcement in April that it was planning to upskill Malaysia’s population and would invest US$1bn over the next five years to build a new data centre centre in Malaysia.
This is the latest in a long line of pledges to the region by the US tech giant, which is fast accelerating the growth of its cloud datacenter footprint in Asia, expanding form seven 11 markets, and recently adding three new markets across Asia – Malaysia, Indonesia and Taiwan. Back in February, it announced plans to establish its first datacenter region in Indonesia and to skill an additional 3 million Indonesians to achieve its goal of empowering over 24 million Indonesians by the end of 2021.
And recent research by IDC shows that Microsoft’s most recent datacenter expansions in Malaysia, Indonesia and Taiwan alone are set to generate more than US$21bn in new revenues and will create 100,000 new jobs in the next four years.
Also last month, Tencent announced it has launched internet data centres in Bangkok, Hong Kong, Tokyo to add to its second availability zone opened in Korea last year and plans to add an internet data center in Indonesia, and Google has also been pushing into the enterprise space in Southeast Asia for several years now.
Expanding data centers allows cloud providers to boost their capacity in certain countries or regions.