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Community Blog The Benefits of Using the Cloud over On-Premises in Malaysia

The Benefits of Using the Cloud over On-Premises in Malaysia

This article examines the pros and cons of using the cloud vs. on-premise in Malaysia.

By Avanti Kumar

Although the main difference between the cloud and On-Premises appears to be deceptively simple initially, forward-thinking business leaders soon realise that the ultimate choice is a deeply strategic affair, encompassing several key factors.

According to industry pundits, pivoting to digital transformation is inevitable. Your strategy demands a digital foundation using the right transformative choices to connect with opportunities in both local and global markets.

For example, the region's eCommerce market has boomed in the last two years, exacerbated by the pandemic. Statista predicts that by 2025, Indonesia will account for over 50% of the Southeast Asian eCommerce market due to a growing middle class and increased Internet access. Other growth markets include Malaysia, the Philippines, Thailand, and Vietnam.

Unsurprisingly, Malaysia's recent 2022 Outlook has reaffirmed digitalisation as a priority to drive future growth. The chief economist's report highlights that the nation's digital ecosystem has “helped prevent the economy from collapsing during the various lockdown iterations. Now, we must endeavour to digitally enable each and every Malaysian so they, too, can participate in the nation's wealth-building initiatives. This will help our #KeluargaMalaysia (a Malaysian family concept) future-proof itself to remain competitive, particularly through the MyDIGITAL initiatives.”

Announced in early 2021, Malaysia's MyDIGITAL plan envisions uplifting digital economy contributions to 22.6% of national gross domestic product (GDP) by 2025 and opening up 500,000 new job opportunities.

The lifeblood of the digital economy is data. The inherent value of data owes much to how data is securely stored, organised, backed up, and utilised to generate fresh insights. Within this scenario, business leaders and individuals are reviewing the best use of digital tools and services – whether to use On-Premises or offsite through the cloud and collaboration.

Tapping the Right Strategy

Leaders at local industry conferences often point to the following nitty-gritty factors that need to be considered when fine-tuning the balance between On-Premises and the cloud in their digital strategies.

When comparing the higher level of control and more secure handling of data on a company's servers and firewall, cloud computing's superior offerings of agility, scalability, and flexibility come at a cost. Before making any leap, parse through these key differences:

  • There has been a growing tide of agreement between IT decision-makers and analysts that say supplementing their IT architectures by leveraging cloud and software services will open up the space and tools required to do business in a post-pandemic, globalised market.
  • Data security and aligning with regulatory requirements will point the way forward for both IT approaches.
  • In an On-Premises environment, IT resources are deployed and maintained in-house by the company. Meanwhile, a pure cloud computing model required the company to only pay for the services needed.

Facing the Unexpected

When talking with local IT and business leaders in recent years, traditional thinking was used to turn to the advantages promised by the On-Premises path. For example, certain compromises need to be made if you turn to On-Premises storage for your company:

  • Additional IT Support is required to maintain On-Premises storage and services.
  • Meeting Industry Compliance Regulations: The responsibility of aligning to any regulated industry standards in a fast-moving scenario is solely yours.
  • Increase Capital Investment Costs: Setting up On-Premises equipment for your storage needs can be substantial.
  • An Uptick in Maintenance Costs: You will also need to maintain On-Premises servers, software licenses, and essential upgrades.
  • Loss of Data: As mentioned, data is the lifeblood of your business, and any loss can hamper (or halt) your business and draw reputational damage.
  • Constraining the Ability to Scale Rapidly: Scaling the business up to meet sudden spikes on-demand often demands additional space, hardware, and software upgrades.

With the advancement of technologies and best practices, today's scenario presents more potent possibilities.

The Quiet Revolution

Despite early concerns around security and a reduced level of control, the value delivered by outsourcing IT needs has fuelled a quiet revolution throughout the region over the last decade.

As cited in Why Should Malaysian Businesses Adopt Cloud Computing? Malaysia's public cloud market alone, which amounts to 3.63% of the total IT spending in the country, has already reached USD643.4 million, according to research site Twimbit. This makes Malaysia the second-biggest cloud market in ASEAN after Singapore.

Certainly, the accelerated demand for the cloud in the pandemic-related lockdowns has helped refresh Malaysia's drive to digitalisation:

  • MyDIGITAL reinforces Malaysia's digital nation digital agenda, with many updates, including a refreshed Multimedia Supercorridor Malaysia 2.0) (MSC) (now Malaysia Digital)) recently to attract foreign investors and digital leaders.
  • A central aspect of Malaysia's vision is refreshing its goal to become a data centre hub. To accelerate national cloud adoption, the government appointed several major cloud service providers (CSPs) last year, including Alibaba Cloud..
  • Alibaba Cloud will help boost cloud adoption and migration and fulfil the cloud-first strategy especially among the government and public sectors in Malaysia.
  • Meanwhile, Budget 2022 encouraged additional digital initiatives for entrepreneurship and businesses of all sizes.

In recent years, businesses of all sizes and in different scenarios that opted for cloud technologies have started to reap multiple benefits from customised solutions. Some of the proven advantages are detailed in the Why Should Malaysian Businesses Adopt Cloud Computing? article. Some of the benefits include:

  • Time Savings: With a near-immediate deployment of tools and services made possible by cloud computing infrastructures
  • Safe Spaces: Reduce or eliminate On-Premises resourcing and workspaces; everything can be stored online
  • Access: The robust and sophisticated management of accessibility regarding whom can do what to data is an important aspect of cloud computing.
  • Cost Savings, especially relating to the maintenance of the required digitalised systems
  • Productivity enabled by automation and more reliable monitoring of processes
  • Heightened Security is enhanced by the increasing use of machine and artificial intelligence as well as better alignment with and execution of compliance to required industry standards.
  • Given the flexible nature and speed of deployment, the cloud helps take business strategies into the ideal customised path.

The near-elastic capabilities of the cloud are typified by three broad approaches in the current market: public cloud, private cloud, and (the increasingly popular) hybrid cloud. Essentially, a public cloud service is delivered through the Internet and shared across an organisation, while a private cloud is an infrastructure built solely for an entity. A hybrid cloud is a deployment using a combination of public and private clouds.

Local companies pivoted to unlocking the cloud's practical potential. For example, since 2004, Senheng, Malaysia's biggest consumer electronics retailer, has continued investing heavily in digitalisation to uplift and upgrade its retail outfits. Established in 1989, the company's digital drive helped achieve an operating revenue of RM1.3 billion in 2020 and is expected to list on the Main Board of Bursa Securities in early 2022.

Its Executive Chairman, Lim Kim Heng, expressed delight in recently becoming one of the first companies in Southeast Asia to implement the Terminus B2B2C Solution provided by Alibaba Cloud. The latest initiative aims to help boost business for local SMEs by allowing them to tap into Senheng's three million-strong PlusOne member database with the B2B2C S-Rewards Centre. This cloud adoption will help streamline Senheng's business operations across online and offline commerce channels by integrating them into one online platform, creating an omni-channel approach for a distinctive customer experience.

Is It Safe?

Before moving on, let's take a current snapshot of cloud security, which remains a key discussion point for business leaders.

Gartner acknowledges that cloud security breaches make news headlines consistently but points out that many of those stories are linked to “vague explanations — a misconfigured database or mismanagement by an unnamed third party.”

The key issues of security, confidentiality, integrity, and availability, coupled with the need to use data ethically while complying with industry and regional regulations, have been supplemented by responsibilities to sustainability.

Leaders increasingly recognise that the delivery of all these elements has matured into the concept of building and maintaining Trust. Jeff Xie, IDC Asia/Pacific's Senior Market Analyst for Security and Trust Research, recently commented, “Asia/Pacific organisations understand the importance of integrating trust as part of their future strategic plans. Whilst building trust is essential, maintaining positive trust levels is the key challenge for Asia/Pacific organisations. Managing the various elements of trust creates trust outcomes that go beyond the individual entities, and Asia/Pacific organisations that leverage these predictions positively can gain a competitive advantage."*

Alibaba Cloud 7th Gen ECS became available at the time of writing this article to address the need for a trusted hosting environment and rising demand for computing power. Equipped with TPM chips, computing power has been boosted by up to 40%.

For example, AirAsia identified 90% of the traffic as Bots by implementing Alibaba Cloud CDN and WAF and working with Alibaba Cloud's security professionals. Now, Alibaba Cloud provides Air Asia with weekly security reports and regular updates.

Delivery latency problems, which usually arise by distribution, bandwidth, and server performance issues, are addressed. Cost-effectiveness was also assured through Pay-As-You-Go and other billing methods. Furthermore, security is assured by end-to-end security services utilising leasing AI technology. Essentially, the key differences between On-Premises and the cloud are where the software is installed.

Facing the Unexpected

Turning disruptions into opportunities is often cited as one of the hallmarks of innovative leadership in the digital age. According to analysts, the rate of change is increasing.

Moreover, the cloud and digital technologies open up avenues for new products and markets for organisations of all sizes and sectors. Alibaba Cloud is 100% compliant with local standards. Alibaba Cloud is empowering businesses to refresh and connect to new growth opportunities with its dual data centres in Malaysia. Cloud networking services provide a stable, low latency, and high speed network with flexible hybrid cloud connections. Content Delivery Network (CDN) is a scalable and high-performance content delivery service that allows accelerated content distribution to users worldwide.

With the rise of data as a prominent asset in the digital era, backing up this valuable resource is a critical business priority. Organisations are opting for services delivered by trusted providers to ensure maximum security and efficient handling of their data. Incidentally, eight (8) key reasons are often cited for this strategic move. (Further details can be found by visiting this link.)

Since its inception in 2009, Alibaba has evolved to embrace and innovate in other sectors and levels.() Today, Alibaba is actively engaging with and supporting national digital transformation drives by offering the cloud and other technologies. Their contributions inspire startups and small businesses to connect with global opportunities.

Pivoting to a New Era

As the world grapples with sustaining growth and improvement, essentially, the decision to migrate to the cloud is about cutting costs and sustaining and innovating new growth opportunities securely.

Immediate new growth opportunities are easily accessible through the cloud and are part of a tidal wave of new opportunities as the world learns to overcome recent challenges.

According Gartner, worldwide end-user spending on public cloud services would grow 23.1% in 2021 to total $332.3 billion, up from $270 billion in 2020.

Sid Nag, Research Vice President at Gartner, said, “It is important to note that the usage and adoption of the cloud that served enterprises well during the ongoing crisis will not look the same in the coming years. It will further evolve from serving pedestrian use cases, such as infrastructure and application migration, to those that combine the cloud with technologies, such as artificial intelligence, the Internet of Things, 5G, and more. In other words, the cloud will serve as the glue between many other technologies that CIOs want to use more, allowing them to leapfrog into the next century as they address more complex and emerging use cases. It will be a disruptive market, to say the least.”

In Malaysia, the clarion call from the government's Outlook 2022 report says, “We must mobilise the nation towards a digitally connected economy – including via 5G, where appropriate – in line with the Fourth Industrial Revolution (4IR) to support, among others, new working and learning norms; better disaster and pandemic management through real-time data; and more cost-efficient processes.”

This is also in line with the country's ongoing structural reforms over the medium term, outlined in initiatives, such as the National Investment Aspirations (NIA) and the Perkukuh Pelaburan Rakyat (PERKUKUH) initiative to support medium to long-term sustainable economic growth, improved socio-economic inclusion, and enhanced environmental sustainability.

Today, achieving the right balance between the cloud and On-Premises solutions are being considered to provide agile pathways for businesses to become resilient, sustainable, and future-ready. The balance is shifting noticeably away from legacy On-Premises solutions to cloud and technology partnerships.

The new hybrid normal way of working and living is reducing the need for On-Premises infrastructure and opening the space for more flexible productivity.

The successful Malaysian uses cases cited above to actively demonstrate the opportunities enabled by robust access to secure and trusted cloud services in today's dynamic world.

In an InfoQ interview, Guan Tao, Head of the Alibaba Cloud Intelligence and the universal computing platform, set the tone for moving forward. Pointing to the continued explosion of data usage in today's globalised market, he emphasised the critical value of elastic computing in the form of a scalable cloud platform to meet rapidly shifting business needs.

Speaking to security concerns, Guan Tao noted that Alibaba Cloud has made massive security efforts and investments, including kernel vulnerability repair, Anti-DDoS, proactive vulnerability scan, permission management, and privacy protection. Alibaba Cloud provides much higher security than self-built data centres can achieve.

Indeed, there is an upsurge of companies taking the strategic decision to migrate their systems and services to the cloud to sidestep legacy limitations.

In Malaysia, Alibaba has crafted an infrastructure capable of delivering advanced and comprehensive cloud services embracing elastic computing, database service, networking, security, and middleware to analytics and digital intelligence services. This will help answer the migratory challenge of achieving the right balance between cloud and legacy On-Premises computing for your workloads and help Malaysians benefit from the ongoing digital revolution known as the 4th Industrial Revolution (4IR).

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