Telsyte found that Australian organisations spent $1.36 billion on IaaS in 2020, up 38% from the $988 million* spent in 2019 and is on track to exceed $3 billion by 2025.
The IaaS market benefited from the pandemic-driven digital transformation rush and 1 in 3 (33%) Australian business leaders said COVID-19 is a driver for digital transformation strategies, and almost half now have a ‘cloud first’ policy.
Telsyte forecasts the total market to reach $1.74 billion in 2021, a year-on-year increase of 28% as half (51%) of businesses that have adopted cloud are planning to increase their cloud spending in 2021.
The Telsyte Australian Hyperscale Cloud Market Study 2021 found the big six global hyperscale clouds – AWS, Azure, Google, IBM, Oracle and Alibaba Cloud – continued to dominate the Australian cloud market with a combined $1.16 billion in IaaS revenue in 2020, or 85% of the market, up from 82%.
Telsyte forecasts hyperscale IaaS will capture nearly 90% of revenue in Australia by 2025.
“The hyperscaler public clouds are consolidating their dominance in market by offering more complex services, such as machine learning, automation as well as a growing list of other services,” Telsyte managing director Foad Fadaghi says.
Multi-cloud usage the norm, cloud sprawl still a challenge
Public clouds are now mainstream amongst Australian businesses. According to Telsyte’s public cloud maturity measures, 39% of organisations are in the development phase, including investigating and developing cloud services as cloud and hosted models replace on-premises applications.
With pure cloud and MSP delivery models making up 55% of application workloads, the majority of those using cloud have opted for hyperscalers’ cloud solutions, which are the most visible starting point.
Amid so many options, Telsyte’s research found businesses on average have 3.3 public cloud services and 3.8 private cloud services in use, with multi-cloud use rising with the size of organisation.
Telsyte says this is slightly down from four in 2020, but cloud “sprawl” is still an issue and hybrid platforms need to have consistent management across infrastructure.
Telsyte found hybrid cloud use is high (65%) as organisations shuffle a mix of workloads, and going forward, hybrid cloud use and intentions are very high (85%) as CIOs select the most appropriate hosting architecture.
Disruptions creating opportunities for managed services
Despite the strong cloud uptake, the study found utilisation remains a challenge. The average utilisation rate is only 31%, creating opportunities for cloud providers and managed services to assist organisations to better-utilise resources.
The top three cloud priorities for businesses include developing new cloud products, migrating more workload to cloud and implementing more security measures on cloud.
The latest research also found the top three challenges businesses are facing when it comes to cloud adoption are security of data, cost of management and the lack of in-house expertise. Telsyte believes cloud managed service providers are in the box seat to help businesses navigate in adoption decisions with growing appetite for cloud.
In fact, over 1 in 4 (29%) of organisations already engage with third parties to manage their cloud services, up 5% from 2019. The same research also found that 82% of businesses see benefits to engage cloud brokers or 3rd parties, especially to up their cloud skills (31%) and manage services (30%).
With 37% of organisations reporting they lack cloud security skills, AI and machine learning is now highly sought after by corporates (30%).
Nutanix head of technology strategy ANZ, Matt Maw said of the report, "While Telsyte estimates that hyperscale infrastructure-as-a-service will capture nearly 90 percent of revenue in the Australian cloud market by 2025, ultimately, the COVID-era rush toward a digital economy will demand organisations stretch their workloads to wherever environment makes the most sense. Increasingly, we’re seeing this manifest with enterprises adopting multiple clouds, including private and public, depending on the application in question.
"Along with this, enterprises are asking for a framework or platform that recognises different applications and enables them to shift workloads and data seamlessly between their public and private clouds. COVID-19 has also proven the crystal ball no longer exists, so businesses are looking to overcome changes in demand with the flexibility to keep sensitive and business critical data in the privacy of their own cloud infrastructure, while still using public cloud to accelerate deployment and scale resources up or down as needed.
"What matters most is that businesses have the tools and a platform that remove the complexity of managing the security, operations, and provisioning required for the multiple clouds they have under their belts, enabling them to focus on their strategic imperatives because infrastructure should never get in the way of innovation.
