Published on the 28/06/2023 | Written by Heather Wright

As local organisations get ahead of the game…

Australian and New Zealand organisations are proving themselves to be ahead of the curve when it comes to cloud investment in AI and AR/metaverse technologies and cloud maturity.

Tata Consultancy Services’ (TCS) survey of senior executives found that globally, business leaders are doubling down on cloud as a catalyst for innovation, AI-powered transformation and sustainability, despite macroeconomic headwinds and recent slowing growth in global cloud spending. That slowing growth saw aggregate public cloud growth dropping to 19 percent in Q1, down from 32 percent a year ago, but it’s not denting executives’ enthusiasm for cloud and they’re putting their money where their mouth is, with cloud a long-term investment priority.

That’s especially true in Australia, where 86 percent of senior executives surveyed identified cloud as an investment priority – well ahead of the global average of 70 percent.

“Reconciling these two realities is a challenge and a necessity.”

The Australian figures (sorry New Zealand, Kiwi figures haven’t been revealed), show 81 percent of local organisations have achieved most, if not all, of their cloud-based goals for critical apps and workloads, compared to just 65 percent globally.

The majority of Australian executives – 79 percent – surveyed report cloud is ‘crucial’ as a catalyst for innovation for their organisation’s future, again, well ahead of the global average of 59 percent.

Innovation has long been a key selling point for cloud. McKinsey notes that while it’s easy to think of cloud as merely a way of optimising IT, 75 percent of cloud’s predicted value comes from boosting innovation with innovation-driven growth, faster product development and hyper scalability key.

Synergy Research Group’s Q1 cloud spending data shows robust growth continues for cloud infrastructure, with cloud infrastructure services spend for Q1 exceeding US$63 billion worldwide, up well over US$10 billion from the same time last year.

“There is no doubt that the current economic climate has constrained some growth in cloud spending, but the market continues to expand at a healthy rate despite those short-term challenges,” Synergy Research says.

When measured in local currencies, Synergy Research says APAC grew ‘by well over 20 percent year over year’ – a growth rate that while slower than the hyper growth previously seen is a rate most companies would be happy with in the current economic environment.

The TCS report, Connected Future: How Cloud Drives Business Innovation, shows that while cloud was initially seen as an opportunity for cost-cutting, resiliency and scaling reasons, motivations for cloud are now broadening. Companies are viewing cloud investment as laying the foundations to experiment and start innovating with artificial intelligence and machine learning – two technologies that are dependent on access to large amounts of data and scalability.

Eighty-one percent of Australian enterprises say they invested in AI and machine learning technologies in the past two years, versus 75 percent globally. That investment shows no sign of stopping with 84 percent of Australian respondents saying they plan to invest in this area in the coming two years and TCS says 30 percent of Australian enterprises and 63 percent of Kiwi enterprises have increased their cloud investment in AI.

Interestingly, the survey also found that 16 percent of Australian enterprises and 13 percent of Kiwi enterprises have increased their cloud investment in augmented reality/metaverse.

Meanwhile, more than half of companies globally, and 58 percent of Australian companies, say they’re using cloud for innovative ways to connect and engage employees – a potential side effect of the need to quickly roll out hybrid workforce models or the more recent talent wars, TCS suggests.

One key stated innovation goal for companies both globally and locally, was the creation of new business models, with Australian companies reporting more robust progress in those goals: 40 percent say they’ve made progress there, ahead of the 37 percent globally.

The report also reveals an environmental motivation to the use of cloud for many local organisations, with the majority (70 percent) of Australian enterprises using cloud to achieve sustainability goals, just ahead of the global average of 67 percent.

“Transparency is key; enterprises are increasingly using cloud to track critical data indicators of sustainability, and they are demanding the same visibility form their cloud service providers.”

On that front, however, they are less happy, with 40 percent saying they have difficulty in understanding the carbon footprints of cloud service providers.

A lack of critical cloud skills, including FinOps and DevOps was also hampering local companies, while a gap between desire and reality when it came to cloud decision-making was also causing issues for a small number who said they have issues with clearly defined cloud ownership. A larger number (29 percent) said a lack of alignment between IT and business requirements was an obstacle.

As cloud has matured, stakeholders outside of IT have steadily acquired a deeper role and while business problems largely determine which technology to orient toward, connecting business and IT requirements – and the stakeholders – can lead to a quagmire of decision making and ownership.

But while most said they had largely avoided those pitfalls, below the surface the study reveals more ambivalence among business and IT stakeholders.

When asked which department currently had responsibility for decision making, ‘mostly IT, some business’ came out on top at 40 percent. But when asked who should have responsibility, there was a near-even split between ‘50:50 split between business and IT’ and ‘mostly IT, some business’

Vikram Singh, TCS Australia and New Zealand country head, says cloud is a frequent source of short-term ROI anxieties, but growth and transformation is a long game.

“Reconciling these two realities is a challenge and a necessity, but fully achievable with the right strategy and planning.

“This is critical, because cloud is now the unifying digital fabric of every enterprise, fuelling powerful technologies, from generative AI to edge and quantum computing, and is ushering the next wave of innovations.”