According to the Infocomm Media Development Authority of Singapore (IMDA), only 30% of Singaporean businesses are on the cloud and they reported higher productivity growth. Over the next 3 to 10 years, IMDA expects to see growing adoption of cloud computing given its elasticity over traditional IT solutions.
This is lower than the 37% adoption rate for US businesses which is expected to soar to 80% in 2020. Before we look into the ‘why’, let us understand more about the allure of cloud computing. Cloud computing is one of the key trends which would affect business cost and service delivery. Cloud computing started with Amazon in 2006 and its growth has been exponential over the past decade.
This strong growth of 22.8% compounded annual growth can be set into context with the performance of the greatest value investor of our time, Warren Buffett. Even the sage of Omaha can only manage a 19% compounded annual growth rate for his investment portfolio over 52 years where $19 would grow to $172,108.
DBS is cheering on the cloud computing industry. DBS predicted that demand for cloud computing in Asia will accelerate and catch up the US this year. As a business, it would mean that you cannot avoid exploring how you can incorporate cloud computing into your business process. Past perception might just be hindering your adoption of cloud computing and it would erode your competitive advantage.
Previous bad reputation on security corrected
If your company had not adopted cloud, there could be a good reason for it: security. So how did cloud become associated with poor security in the first place? That was because Dropbox dropped the ball. You might recall the days when Dropbox got hacked twice in July 2011 and August 2012. Due to its own internal security breach, Dropbox data were available first to any random person who knows a dropbox email and later to a group of hackers that knew the password to the account.
Dropbox had since corrected these security mistakes but it takes time for such worries to fade. Experts now say any resource which can be accessed remotely share the same risk of being hacked. It doesn’t matter if it recedes in your own company server or with a service provider such as Amazon Web Services (AWS), hackers can still come knocking on your virtual door. They will still test your vulnerability for financial gains and your company servers will experience more brutal attacks than those of the cloud’s service providers.
One of the reason is that service providers such as AWS have dedicated experts which had created over 1,800 security controls as demanded by their clients. Every time there is a security update, there are more security controls available for users to choose. Even a conservative (security-wise) US bank, Capital One, had given up on operating its own data centre and outsourced it to AWS. Such security measures require specialized experts and they add a big chunk to your payroll cost. The company with the larger budget will win over time.
Cloud endorsement by leading brands
When the cloud first emerged on the scene, the public perception was that cloud was fit only for start-ups and individuals. In July 2008, notable tech portal Gigam produced an article that listed 10 reasons why large corporations would never jump on the cloud bandwagon. Fast forward to 2017, we have a new breed of well-known publicly listed companies who openly identify themselves as AWS users:
The 10 reasons that were so convincingly stated in 2008 melted away in 2017 after these large corporations found that reputable cloud services helped them save time and money. Cloud provided them with a wide range of features that makes their jobs easier and their company more profitable. These 10 reasons against cloud might have influenced your decisions one decade back but the time has come for you to re-look at the issue.
Cloud acceptance by service providers
The last reason why you might have to consider using cloud is that your vendors might already be on the cloud. Vital service providers such as accounting firms are also embracing the cloud solution. Singapore’s leading accounting network, 3E Accounting International Network, which has 1,200 staff in 79 offices around the world is using Xero to service their corporate clients.
3E Accounting accepted Xero because its cloud technology allows real time access to financial information and provides critical services such as automatic bank reconciliation. The founder of 3E Accounting, Mr. Lawrence Chai noted the importance of cashflow for SMEs which is being tracked in real time by Xero. This functionality is the motivation behind his push for cloud-based accounting which added to the explosive cloud acceptance in 2017.
After more than 10 years, the value proposition of cloud computing has been proven and it has spawned established players such as Amazon, Google, Alibaba, and Microsoft. If your business is not on the cloud, then it is crucial for you to ask why. It would be too late if you find out that your competitor can produce the same product or service at half the price and time. Don’t let past perception of the cloud hinder your future.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Ong Kai Kiat is the founder of TextInAsia, a Singapore-based independent source of insights in the fields of finance and technology. He had years of experience in contributing articles to various reputable websites. TipRanks had ranked him internationally as a four-star blogger for his work in finance.