This article first appeared in The Edge Malaysia Weekly on December 18, 2017 - December 24, 2017

WHEN Pat Gelsinger took the stage at VMworld 2017, he was welcomed with thumping music and flashing lights, and received the undivided attention of 20,000 delegates. And if the VMware Inc CEO was a figurative rock star of the IT world, his hit song at the conference would have been the company’s tie-up with Amazon Web Services (AWS).

It marked an important milestone in the convergence of private and public clouds and the growing importance of hybrid solutions that allow companies to leverage both seamlessly and efficiently.

“VMware Cloud on AWS offers our customers the best of both worlds. This new service will make it easier for customers to preserve their investment in existing applications and processes while taking advantage of the global footprint, advanced capabilities and scale of the AWS public cloud,” Gelsinger said in his keynote speech at the event in August.

On top of the AWS tie-up, Gelsinger also announced collaborations with Microsoft, Google and, of course, the group’s long-term partner, IBM.

Moving past the technicalities of the tie-up, what does the convergence between private and public clouds mean for emerging markets like Malaysia?

For one, it could be a catalyst for more investment in the public cloud as businesses shift data and processes away from conventional on-site solutions to hybrid solutions that harness the public cloud as well.

“Yes, there will be a substantial increase in Malaysia-based public cloud providers to power digital transformation,” VMware Malaysia Sdn Bhd country manager Alex Loh tells The Edge.

And this could be big business. Loh points out that IT spending in Malaysia is forecast to reach US$14.4 billion (RM60 billion) this year, a 7.1% year-on-year increase.

“As software applications allow more organisations to derive revenue from digital business channels, there will be an increasing need to automate and launch new applications and functionality,” says Loh.

“At VMware, we are witnessing an increased appetite among businesses to modernise their data centres and move to a virtualisation platform as organisations’ needs continue to expand or change. Cloud adoption is taking place across all industries, especially healthcare, education and telecommunications, and both the private and public sectors, including governmental agencies and large multinational corporations.”

It is important to note that Malaysian businesses currently have a bias towards reliance on private or on-site cloud solutions. Public cloud is provided by third-party players off site.

“Larger enterprises and government entities have access to their private networks and have moved faster into cloud, but with a model biased towards private cloud rather than public,” explains Chris Morris, IDC’s vice-president for cloud and services in Asia-Pacific ex-Japan.

He points out that Malaysia is a relatively small market as far as IT expenditure is concerned and big public cloud vendors like Microsoft and AWS have not been able to justify in-country data centres despite the government’s requirement for local data hosting.

“And local independent software vendors and managed service providers could not afford to scale up to be viable alternatives to these big vendors. The result was a bias towards private cloud,” explains Morris.

He points out that based on IDC research, Malaysia’s adoption of public cloud has been relatively slow, but on a par with developing countries like Indonesia and the Philippines.

“A shared inhibitor is the telecommunications infrastructure; cloud really needs reliable high bandwidth connectivity to deliver the sort of benefits it promotes,” says Morris.

While the factors mentioned may have held back investment in public cloud infrastructure, there are some promising signs.

Loh points out that the Asia Cloud Computing Association Index, which ranks countries and details readiness for cloud, revealed that Malaysian businesses are more cloud-ready than those in Singapore.

“Local entrepreneurs are better poised to adopt cloud technology than their counterparts in Asia, not including Japan. Cloud adoption is continually increasing and has mainstreamed as a technology to be benefited from,” he explains.

Loh points out that Malaysia has the necessary ingredients needed to support investment in public cloud capacity — ample land, good infrastructure and a large talent pool to tap into.

“Many of the global network providers are already set up in Malaysia, which means that international network connectivity is established. Prices are competitive as well, compared with other countries in the region like Singapore and Hong Kong. Finally, there are ample government initiatives and support to strengthen the local data centre industry and market Malaysia as a regional data centre hub,” he says.

The benefits of public and hybrid clouds

Scalability and flexibility — these are the two main selling points for public cloud solutions. To put it simply, conventional in-house data and procession resources can take too much time to deploy and are oftentimes underutilised.

In contrast, today’s solution providers are able to leverage public cloud resources to not only store data but also run processes off-site.

The benefits of this flexibility can be further enhanced by hybrid solutions that leverage the strengths of both private and public clouds.

Loh points out that it is possible to isolate processes that have lower security sensitivity and less demanding latency requirements to the public cloud, freeing up resources in on-site data centres.

Coupled with the quick scalability that the public cloud offers, it provides an avenue for businesses to roll out new applications to consumers faster, he adds.

“There are many reasons and benefits as to why hybrid cloud is slowly becoming the definitive model for businesses going forward. Hybrid cloud allows businesses to keep the core of their operations on premises, yet have the flexibility to extend into the cloud when the need arises,” explains Loh.

“Such a strategy can be supported by a hyper-converged infrastructure stack that allows businesses to build a modern, service-oriented and responsive data centre that has the agility to keep pace with changing business demands, without compromising on security or overhauling existing operations extensively.”

Loh points to AmBank as an example. “Having grown its customer base to more than six million individual and corporate customers across Malaysia and the region, the bank needed to move fast to cater for spikes in customer demands. The solution was to move into a completely virtual environment where it reduced server footprint from six servers to two, cut infrastructure costs by 25 times and freed up its IT team to focus on handling more complex requests,” he says.

“Today, AmBank can provision new services in under a week, making it more agile and responsive to consumer demands.”

Against this backdrop, it is important to note that VMware’s tie-up with AWS is still restricted to the US at this point and will only be opened up to markets like Malaysia late next year.

In the meantime, it remains to be seen if smaller players will be able to drive both the deployment and adoption of public cloud infrastructure in the country. After all, there seems to be a strong case for it — someone just needs to get the ball rolling, and it may not need to be the big boys like AWS and Microsoft.

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