Australia has experienced a spurt in the number of companies adopting the public Cloud Infrastructure-as-a-Service (IaaS) delivery model within the last 12 months, with 49 per cent of all Cloud computing users trying IaaS.
The statistics are contained in analyst Frost & Sullivan's latest Cloud computing report, A Strategic Analysis of the Australian Infrastructure as a Service Market 2011.
The report found that a growing number of local market participants plus an increase in the number of local datacentres were driving awareness of the benefits of infrastructure from the Cloud. This resulted in 38.3 per cent growth for the IaaS technology segment in 2010 and revenues of $27.5 million.
The IaaS market was expected to remain strong, growing at a compound annual growth rate of 49.8 per cent over the next seven years to reach a total value of $466.5 million by 2017.
The study defines IaaS as a provisioning model in which an organisation outsources the hardware used to support business operations. The service provider owns the equipment and is responsible for housing, running and maintaining it with the client typically paying on a per-use basis.
The two components of IaaS are Compute-as-a-Service (CaaS), which is sold as a combination of server computing, memory and storage; and Storage-as-a-Service which is primarily sold as standalone storage space in the Cloud.
IaaS' ease of use, particularly through Web-enabled self-provisioning, and the instantaneous provision of infrastructure were the major drivers encouraging adoption by Australian organisations, according to Frost & Sullivan.
Other positive factors included infrastructure scalability, the ability to turn IT infrastructure into an operating expense, the elimination of up front capital expense, a reduced requirement for internal resources, low barriers to entry and lack of long-term commitments.
The main restraints holding back market growth continued to be related to privacy and security, with organisations trying to understand the impact of regulatory compliance on data sovereignty issues.
The report also identifies the inability to precisely track the location of data in the Cloud as a high concern for business. High latency, reliability of service levels and data handling in the areas of migration, recovery and archiving are other areas of concern.
Frost & Sullivan suggested that public Cloud IaaS providers will need to deliver similar or equivalent service to that which organisations are familiar with in order to encourage greater adoption.
The most popular component of IaaS, accounting for 91 per cent of the Australian market, is Compute-as-a-Service, which is sold as a combination of server computing, memory and storage.
Frost & Sullivan said that given the low cost of trying out the service, many enterprises had taken the opportunity to experience the benefits and, being satisfied, had begun migrating sections of their infrastructure to the Cloud.
High organisational interest and significant cost savings are expected to drive demand for CaaS through to 2017, the analyst said.
The second component of IaaS – Storage-as-a-Service – is not witnessing the same level of interest due to the need for huge bandwidth to transfer the large amounts of data that organisations deal with today. Those companies that are turning to SaaS typically do so to augment their storage infrastructure due to increasing data storage requirements, or as a low-cost option to support their disaster recovery/business continuity strategies.
Frost & Sullivan APAC Research Director – ICT Practice, Arun Chandrasekaran, said, “Australian companies will continue to turn to IaaS in the short and medium term, driven by cost pressures, scarce in-house resources and an increasing need for business agility.
“The last few years have served as an important catalyst for adoption of Infrastructure-as-a-Service due to the stringent focus on cost saving. Australia is already the largest market in Asia-Pacific for public Cloud IaaS and we expect a huge increase in the number of domestic suppliers in the years ahead. Adding further impetus to the market, several global service providers have indicated that they will be setting up local data centres to capitalise on the burgeoning market growth.”
The report found the biggest adopters of IaaS were IT and telecommunications service providers who are turning to the services to meet fluctuating IT requirements and from a desire to achieve cost efficiencies. There was also strong demand from software companies that have developed Software-as-a-Service (SaaS) solutions.
Other vertical markets active in IaaS include government, the education sector, internet-based businesses such as gaming, social networks and Web portals, hospitality, retail and professional services.
Major findings of the analysis included:
- 43 per cent of organisations are now using some form of Cloud computing.
- 41 per cent believe that Cloud computing is a number one priority in the current year.
- Almost one third of IT decision-makers say that senior management is increasingly exerting pressure on IT to look at a Cloud alternative in order to reduce costs and increase business agility.
- 41 per cent of organisations believe that the risks associated with Cloud computing – such as security, privacy and reliability - far outweigh the benefits.
Frost & Sullivan's Strategic Analysis of the Australian Infrastructure as a Service Market 2011 examines current and anticipated future demand, major drivers and restraints affecting the Australian IaaS market.