Pandemic-driven digital transformation increases IaaS adoption in Australia

Australian organisations opt more for hyperscale clouds due to their visibility.

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The Australian infrastructure-as-a-service (IaaS) market has benefitted from a pandemic-driven digital transformation that saw organisations spend $1.4 billion on IaaS in Australia in 2020.

This is according to research firm Telsyte, which saw a 38% increase in spending on IaaS in 2020 compared to 2019’s $988 million. Research firm Gartner recently published similar data on the IaaS market; it saw a 40.4% increase in Australia in 2020, or more than $1.4 billion of venue compared to 2019’s $1 billion.

For 2021, Telsyte forecasts the IaaS market to reach $1.7 billion, a 28% increase from 2020, which the firm attributes to the 51% of businesses that have adopted the cloud and are planning to increase their cloud investment during 2021.

Hyperscale IaaS is Australia’s preferred choice

The forecast is that hyperscale IaaS will be responsible for 90% of revenue in Australia by 2025. Telsyte managing director Foad Fadaghi said the hyperscaler public cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud are consolidating their dominance in market by offering more complex services, such as machine learning and automation.

Pure cloud and managed services providers delivery models make up 55% of application workloads, with the majority of those using cloud having opted for hyperscalers due to their visibility. Fadaghi told Computerworld Australia that hyperscalers have a lot of momentum in market due to a combination of customer uptake, vendor marketing, and partner ecosystem. Hybrid cloud use is also high at 65%, as organisations shuffle a mix of workloads.

Priorities and challenges of cloud adoption

Hyperscalers are far from being the only option; others include private clouds, managed service provider (MSP)-hosted clouds and an array of smaller public cloud providers. Australian businesses have an average of three public cloud services in use, and close to four private cloud services in use.

But the high number of options could be hindering the use of the services and resulting in Australian organisations having complex and costly systems in house which aren’t always used. The Telsyte research found the average utilisation rate is 31%. The reasons for the low utilisation “ include the ease of deploying new cloud resources (can be automated), the propensity to keep things running ‘just in case’, and immaturity in uptake of services which help with cloud optimisation. Having multiple clouds in use within one organisation can also contribute to the problem,” Fadaghi said.

Security of data is one of the main challenges that local organisations face, along with cost of management and the lack of in-house expertise.

The study also found that developing new cloud products, migrating more workloads to the cloud, and implementing more security measures on cloud are the top three cloud priorities for Australian organisations.

Fadaghi said that managed service providers could help organisations navigate adoption decisions and help organisations to better utilise resources. The research firm found that 29% of organisations already engage with third parties to manage their cloud services, up 5% from 2019.

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