Malaysia to see massive spike in cloud services

Market research reports project that cloud computing market revenue in South-East Asia is estimated to reach US$40.3bil by 2025.

BUSINESS leaders have learnt one important lesson since Covid-19 broke out: to ensure that they have access to flexible and scalable IT infrastructure.

Instead of scurrying around trying to buy new software and hardware to adjust to the new norm such as remote working, the ability to rent these services from reliable vendors on a pay-as-you-use model is clearly the smartest option.

In essence, that is what cloud computing services firms offer and that is why they have already been growing by leaps and bounds even before the pandemic.

“Companies that have adopted cloud computing were able to reap the rewards during the MCO period as they responded in an agile manner such as controlling costs or scaling up usage quickly, ” noted the head of technology for a local manufacturing company.

Hence technology experts reckon that there is a fast growing realisation among company leaders that the transition to using cloud services has to be accelerated or they risk being left behind.

The cloud computing market continues to grow internationally and locally. One of the major drivers of cloud services is its lower total cost of ownership. Furthermore, concerns about data security have significantly subsided as both the underlying technology and market understanding has matured over the years.

The top five Internet cloud services providers globally are Amazon Web Services (AWS), Google Cloud, Microsoft Azure, Alibaba Cloud and Tencent Cloud.

All five have seen tremendous growth over the past few years; Tencent Cloud in particular is growing the fastest.

According to global research and advisory firm Gartner, Tencent Cloud which is ranked fifth in the world is growing the fastest among the top five cloud players, hitting a growth rate of 111% every year.

Interestingly, South-East Asia is fast becoming a hotbed for fierce competition among cloud services providers for one simple reason: the cloud market here is far from saturated.

‘Cloud computing gives us an upper hand to offer better and comprehensive solutions to our customers, ’ said Puan.

According to a recent report in the Financial Times, the competition saw a frenzy of investment, with Amazon, Google, Alibaba, Tencent and Microsoft increasing their data centre footprint in the region by almost 70% over the past three years.

Global market intelligence firm International Data Corporation (IDC) states that investment in cloud infrastructure in Asia hit US$98bil last year.

Other market research reports project that cloud computing market revenue in South-East Asia is estimated to reach US$40.3bil by 2025. This is a result of increased demand for cloud computing among SMEs.

Closer to home, the cloud computing market in Malaysia is expected to be worth US$3.7bil in 2024, growing at a compounded annual rate of 13% from 2020.

What cloud services entail

There are three basic offerings that cloud services present: infrastructure as a service (IaaS); platform as a service (PaaS); and software as a service (SaaS).

IaaS is the most basic product which provides physical and virtual servers for storage and processing power.

PaaS provides an environment for users to build applications and software without having to worry about matters like middleware and operating systems.

SaaS is a model whereby vendors provide the software or applications over the Internet and customers are only required to pay what they use.

All cloud services are said to be of significant benefit to businesses especially SMEs. Using cloud services means users do not have to worry about issues related to operating the necessary software.

In addition, data storage and security is taken care off by the cloud provider. Most importantly, it eliminates the need for businesses to purchase, develop and operate infrastructure and applications which typically require significant upfront investments.

A good example of how businesses benefit from the SaaS model is video conferencing tools. The Covid-19 pandemic has forced businesses to accept remote working and subsequently adopt video conferencing tools such as Zoom and Microsoft Teams.

The ease of subscribing and deploying these tools across the whole organisation has helped businesses to understand the promise of cloud services and in particular, SaaS.

Notably, Green Packet Bhd is one technology player which has been building up its SaaS offerings since venturing into fintech and proptech a few years back. Its SaaS offerings include the white labelling of ewallets.

This is where Green Packet, through its KiplePay unit, builds and runs the entire ewallet infrastructure for third parties, leaving the provider of the service to focus on areas such as their branding and widening their own product offerings.

KiplePay also provides payment gateway services to help organisations with their digital transformations.

Business leaders are realising that the transition to cloud services usage has to be accelerated or they risk being left behind.

Another SaaS offering by Green Packet is its facial recognition-powered visitor management system to commercial and residential buildings.

What is also interesting is that Green Packet recently announced a significant partnership with Tencent Cloud to provide eKYC (electronic Know Your Customer) services in Malaysia. It is likely that Green Packet’s offering, dubbed “kipleID-eKYC”, is a precursor to the group looking to offer a full-fledged cloud offering in Malaysia.

eKYC is a fundamental component of account registration in regulated industries such as banking and telecommunications. As account openings and other transactions in banking and telecommunications are increasingly being done over the Internet, eKYC is crucial to be in place to eliminate fraud.

Hence the collaboration between Green Packet and Tencent to provide eKYC services is noteworthy as it is widely expected that there will be an explosion of demand for eKYC in the next couple of years.

This is because the market anticipates Bank Negara Malaysia to issue its official eKYC guidelines and initiate digital banking licence application towards the second half of this year. Given its strength in providing SaaS applications, it is not surprising that Green Packet announced its intention to diversify into cloud computing business.

Last week, Green Packet made a filing to Bursa Malaysia that it is seeking to diversify its business into the provision of cloud computing, which it expects to become a new income stream for the group.

Green Packet group MD and CEO C.C. Puan said his company is already offering Saas products on the cloud such as its KipleID-eKYC and KiplePay e-wallet.

“It is a big advantage for Green Packet to diversify into the cloud computing business as it gives us an upper hand to offer better and comprehensive solutions to our customers, ” he said.

According to industry insiders, the market is speculating that Green Packet will be partnering one of the global cloud providers for its cloud business.

If true, this will be another major win for the company as it will be riding on the next wave of cloud adoption in Malaysia, which should cement its position as one of the leading technology companies in South-East Asia.