Alibaba Cloud’s growth in Indonesia to bring new opportunities

It was only last month that Alibaba Cloud celebrated the opening of its second data center in Indonesia.

The company claimed the new facility will double its local capacity with high availability and bolstered disaster recovery capabilities to enable customers to deploy mission-critical workloads across a range of availability zones and switch between them in a matter of seconds.

Following this, IDC believes there will be a rise in data center consolidations and migrations in Indonesia, as there is an extensive shift in business priorities that is driving the local enterprises to adopt multi-cloud strategies.

Therefore, the demand for hosting infrastructure services will increase as more enterprises in Indonesia are investing in their digital transformation (DX) journeys.

"The demand for cloud services have increased across all verticals with the adoption of solutions such as AI, IoT and big data," says IDC Indonesia IT Services market analyst Meily Lisdiyanti.

"As these technologies are gathering big chunks of data in real time, it will require an infrastructure that is more agile and cost-efficient. IDC believes this is aligned with the local market strategies and goals to curtail IT spending, improve on IT agility and accelerate innovation. Therefore, local providers should re-package their services to be as competitive as the global players.

According to Lisdiyanti, the expansion of Alibaba in Indonesia will likely bring rise to new growth opportunities for local enterprises as the expansion of data centers in the country will address the demand for scalable and cost-effective cloud computing and provide local enterprises with the choice to build their businesses and workloads locally.

Besides that, the presence of global cloud service providers in the local market will enable the enterprises to examine their data center strategies to gain benefits from hyperconverged and hyperscale data center without worrying about data sovereignty.

IDC asserts that Indonesia has implemented an aggressive economic strategy with digital initiatives deployed across the country.

The country's progress has attracted digital ventures and led to the establishment of digital companies that have then worked to grow businesses and consumption in Indonesia. IDC says 80 percent of enterprises today have considered DX as a core strategy while the rest have recognised its importance to create one in the future.

IDC ASEAN head of services Sreenath Kandarpah says while analytics and cloud are perceived as the core technologies, emerging trends like artificial intelligence, machine learning, and IoT are key exploratory capabilities that will be enhanced by enterprises in indonesia.

"Data Centers are now the new business jewels for all enterprises as well as governments as they must rely on them to deliver business value much greater than their costs. It is the backbone that supports the growth of large enterprises, SMEs, and startup businesses. Indonesia is a market with strong government support for business, large population and a rapidly developing economy," says Kandarpah.

"This means that the emergence of Alibaba Cloud operation will simultaneously create competition which will only cause the local players to raise their game. To stay competitive in the market, local service providers should re-evaluate their approach towards enterprises by creating attractive pricing and add-on services as well as being committed to helping the country achieve its digitalisation efforts and boost the national digital economy.

With every technology adoption decision being made, IDC believes cloud technology is becoming increasingly important.

IDC says Alibaba Cloud's presence in Indonesia will increase the challenges for local data center service providers as many of them are struggling to sustain their business due to lack of efficiency, low utilisation and the special preference towards global data center service providers.

As a result, more local data centers will be consolidating and improving their facilities to match with global data centers. The local and global cloud service providers should be looking into ways to improve their operations, as the competition for cloud service providers focusing on the local market is expected to increase.