Authored by: Karolis Macionis, Regional Director, APEX – APJ & GC, Dell Technologies
Digital technology drives nearly all aspects of business and our daily lives. Technology has enabled businesses to not only adapt to rapidly changing market conditions, but to also innovate and grow.
However, as technology continues to advance, companies must also address the challenge of increasing infrastructure complexity. Over 50% of businesses in Singapore are overwhelmed by complex technologies. Many are concerned that they won’t be able to keep with technological change, according to the recent Dell Technologies Breakthrough study. Moving forward, how organisations manage their IT infrastructure will be as important as the modern systems that power it.
In addition, many major economies are expected to see increased economic pressures whilst we are currently experiencing high inflation and rising interest rates across the globe. These factors are causing customers’ financial expectations to shift, forcing a migration from CapEx to OpEx-based models. At the same time, data is still growing rapidly, and the compound annual growth rate (CAGR) worldwide for the next 3 years on IT spend is nearly 50%, with the highest growth rate expected to come from Private infrastructure-as-a-service (IaaS) at nearly 80%. We see this trend further intensifying across majority economies in Asia Pacific & Japan and Greater China regions.
Why is this so important? Private IaaS is where we lead our customers through their aaS transition, helping them invest, innovate and gain competitive advantage in an unstable economy. Businesses are increasingly taking an “everything-as-a-service” approach to IT. The benefits of an as-a-Service (aaS) model are clear: increased IT team agility, simplified digital transformation, and decreased low-value IT work.
In today’s cloud computing era, there are numerous reasons to take an as-a-service approach in any company’s modernisation efforts.
#1 Saving Capital and Innovating Smarter
The pandemic forced companies to reshape budgets quickly and drastically, with many having to reduce overall spend. An aaS model allows businesses to consume IT on an as-needed basis, making it easier to track which projects are or are not working according to plan. In turn, this helps companies know where and where not to commit additional funds.
In Singapore, similar trends prevail. Many businesses had to find ways of running their businesses “light” while obsessively focusing on their customer needs. One of the obvious choices was to lean on consumption-centric financial models where customers would only consume what is required for their aaS needs and pay in line with their consumption patterns. That not only allowed them to avoid excessive CapEx investments but also enabled them to align their costs with their revenue base, further improving their competitive positioning.
Additionally, an aaS model can help businesses fast-track their digital transformation journey through holistic budget planning. The scalability and flexibility of an aaS model means that companies can approve spending for successful projects more easily, without the need to make a case for large capital expenditure. This enables them to adopt new technologies and expand their capabilities while freeing cash flow, reducing CapEx and enhancing profitability.
#2 Gaining More Data Access on the Edge
From digital healthcare in hospitals to smart manufacturing, edge deployments are incredibly diverse and increasingly common in Singapore. The Dell Technologies Global Data Protection Index 2021 revealed 23% of organisations globally are prioritising Edge as-a-Service.
An aaS approach helps remove limitations from edge deployments. Companies finding value in the data they access outside of their data centres are also trying to figure out how to make the most use of it. This has led to businesses beginning to face challenges in gaining actionable insights from the data that they have.
From a commissioned study conducted by Forrester Consulting on behalf of Dell Technologies, 72% of businesses in Singapore said that they are gathering data faster than they can analyse and use, yet 74% said that they constantly need more data than their current capabilities provide. However, the same study revealed that 53% of Singapore businesses believe that with an aaS model, they would no longer be held back by outdated IT infrastructure. With aaS, companies have the flexibility to put their infrastructure where they get the most value from, access data as needed, better control in analysing their current data and utilising only the resources they need.
#3 Pay-for-use Resources Make Variable Workloads Less Challenging
It is common for companies to have workload variability. For example, some workloads will follow a daily work schedule like virtual desktop infrastructure (VDI), HR systems and identity access and management systems, which are utilised most during employee working hours. On the other hand, log processing tends to happen at night when employees are offline.
Another variable workload is cyclical utilisation, where systems recognise trends around weekly, monthly or yearly cycles. For example, accounting and sales systems have heavy loads at the end of each month, quarter and fiscal year. These workloads can be highly utilised, straining resources during their critical cycle time.
We see an explosion of variable workloads all across Southeast Asia. However, more and more workloads are no longer suitable for a traditional public cloud multitenant environment. There is an increasing demand, both from technical and business stakeholders, to stay closer to the data as the need for data privacy, data residency, and low latency are becoming critical to their legislative posture or ability to execute. That said, given the variability of the workloads, customers are no longer willing to continuously purchase and overprovide in their IT environments. There is a clear preference for a flexible arrangement to meet the uneven demand, pay for what has been consumed, and yet keep the infrastructure and the data within the safety of their data centre and the security protocols.
In both cases, average utilisation is often well below ideal. Adopting an as-a-service model and paying only for the resources used makes it more effective running variable workloads while optimising infrastructure utilisation. It takes the guesswork out of planning and the risk of being wrong.
#4 When IT is Agile, so is the Business
IT teams are no strangers to the “do more with less” game. It can be painful for teams who spend precious resources only to keep systems up and running. Managed services help IT free up resources to innovate and work on new projects that benefit customers, like improving SLAs and increasing SLOs. With IaaS, IT can also minimise environmental impact, meaning that IT teams do not have to deal with decommissioning old hardware as the service provider owns the hardware.
In Singapore, we see a strong trend of employing aaS technologies in B2B partnerships too. The majority of managed service providers (MSP) or cloud service providers (CSP), and aaS providers, focus on “up the stack”, where most of the knowledge, experience and competitive advantage lie. However, they have a decreasing appetite for the foundational IaaS offerings as the market is getting highly commoditised and poses further challenges in monetising the investments. The growing trend shows that most IT services providers are seeking partnerships with on-premise IaaS providers and leaning towards a shared risk model, rather than just a “sell – buy” approach. That allows the partners to focus on specific areas of expertise, further enhancing the competitive positions and mutual business success.
Having the ability to map computing resources to projects accurately helps eliminate much of the routine “keep the lights on” type of work that IT experiences, and makes it easier to scale teams. Businesses are increasingly looking at expanding aaS adoption to focus on what matters most for their business: delivering business outcomes and value to customers.
It is safe to say that the aaS model is the future of the modern enterprise. The four benefits outlined above are just a preview of what’s achievable when taking an OpEx versus a CapEx approach to IT. We will continue to see increased adoption of IaaS in business strategies over the next decade as companies build flexibility and identify opportunities for innovation in their businesses.