AI, IoT and big data to drive data center growth in Indonesia

19 Feb 2019

The launch of new data centers in Indonesia indicates that 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 digital transformation (DX) journey.

IDC foresees the expansion of Alibaba in Indonesia will potentially create new growth opportunities for local enterprises as the rise in data centers in Indonesia will address the demand for scalable and cost-effective cloud computing and provide Indonesian enterprises a 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 re-look at their data center strategies to gain benefits from hyper-converged and hyper-scale data centers without worrying about data sovereignty.

Indonesia has been aggressive in economic development, including in digital innovation and initiatives across the region. The country’s potential has attracted digital ventures and led to the establishment of digital companies that grow businesses and consumption in Indonesia.

IDC research suggests that 80% of enterprises have considered DX as a core strategy while the rest have recognized its importance to create one in the future. While analytics and cloud are perceived as the core technologies, emerging technologies such as AI, machine learning and IoT are key exploratory capabilities that will be enhanced by enterprises in Indonesia.

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

“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 believe this is align with the local market strategy and the goal 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,” she observed.

IDC believes cloud technology is becoming increasingly important with every technology adoption decision that is being made. Alibaba’s Cloud 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 utilization and preference of enterprises to host with 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 re-strategies themselves as the competition for cloud service providers who focuses on the local market are expected to increase.

According to Sreenath Kandarpah, head of Services IDC ASEAN, 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, SME and startup businesses.

“Indonesia is a market with strong government support for business, large population and a rapidly developing economy. 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 an attractive pricing and add-on services as well as be committed to help the country to achieve its digitalization efforts and boost the national digital economy,” he concluded.

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