Hyperscalers Are Finally Paying Attention To Australasian Cloud Market

Australian and New Zealand organizations are revisiting and refreshing their cloud strategies. Still, according to a new report from analyst firm Forrester, the market is defined by a lack of well-distributed data centers and regulatory experimentation.

The State of Cloud in Australia and New Zealand, 2023, report has been released, and it makes the point that organizations tightening their belts due to the economic environment are focused on optimizing investments.

This also means that most organizations surveyed by Forrester are looking to the cloud to help them become more efficient, ride out the economic volatility and position themselves for the next growth phase.

Australian enterprises, for example, are pushing legacy applications to operate in new cloud environments, and to do this successfully, modernization efforts become necessary.

In this context, 53% of Australian enterprise cloud decision-makers expect their organization to prioritize modernization with cloud and new computing architectures over the next 12 months. 

The report quotes some case studies from both New Zealand and Australia.

The report says that the Bank of New Zealand modernized two of its staff-assisted applications while it migrated the applications to Azure.

The resulting automated failover process and database deployment were reduced to 5 minutes instead of 2 hours.

In Australia, the University of Newcastle worked with Deloitte and its cloud operations partner, CSA, to migrate its applications to AWS.

It re-platformed 72% of its applications and refactored another 23%, allowing it to decommission a quarter of its legacy estate, cut infrastructure costs by 20%, and increase the rate of system changes from three weeks to half a day.

Continued investment

In its summary, Forrester says that while Australia has a history of being "cloud forward," forecasts in 2014 that Australia would become the next big cloud market and the second largest cloud hub in the world have not come to pass.

Despite this, “the cultural and business factors that drove that prediction, including the country’s fast-follower mentality, a vibrant startup scene, tech-forward citizens, and cultural ties to UK and US business communities, continue to drive investment.”

“For example, Amazon Web Services (AWS) recently committed AUD13 billion in local capacity and skills development to support its operations,” the report says.

According to Forrester's Infrastructure Cloud Survey 2022, 95% of Australian enterprise cloud decision-makers using public cloud say their organization uses multiple public cloud vendors, "demonstrating that multicloud is the predominant strategy.”

“Forecasts back in 2014 that Australia would become the second largest cloud hub in the world have not come to pass.”

At the same time, 94% use a hybrid cloud, and 54% use an internal private cloud as their primary cloud computing platform.

Forrester expects New Zealand’s adoption pattern to continue to mimic that of Australia, “although it will remain lower overall, given earlier, more restrictive regulations (which have now eased) and fewer cloud data centers (which are being supplemented).”

Most recently, AWS announced a NZ$7.5 billion investment to establish a data center operating in Auckland with three availability zones, while Microsoft has made similar commitments.

“These hyperscaler regions will allow firms to move their workloads from Australia to New Zealand, which could serve as an opportunity for transformation—or for a simple lift-and-shift,” the report says.

Public cloud

Across both markets, Forrester sees the public cloud continuing to support innovation objectives and that organizations are "reaching a new scale of public cloud usage."

On average, Australian enterprise cloud decision-makers whose organizations are migrating to a cloud computing infrastructure as part of their public cloud adoption say that 36% of their total application portfolio is in the cloud today, and they anticipate having migrated 46% in the next two years.

The report gives some examples from both sides of the Tasman.

The New Zealand financial firm MMC migrated its wealth administration platform to Azure.  

Australia’s Woolworths Group migrated 20 SAP applications, 75 terabytes of data, 135 database servers, and 435 application servers to Azure.

ANZ Bank is migrating much of its IT and application estate to AWS and the Google Cloud Platform.

Facilitating the evolution and maturity of the cloud in Australasia is an increased data center footprint in Australia, which is expanding as far as New Zealand.

All the hyperscaler cloud regions are based near economic centers in the Australian Southeast, such as Canberra, Melbourne, or Sydney, with AWS opening its new Melbourne region and Perth local zone in 2023.   

New Zealand doesn't have hyperscale data centers—but change is coming, as AWS, Azure and Google plan to open New Zealand regions shortly.

In the interim, New Zealand’s Catalyst Cloud and hyperscaler edge locations, such as Azure's in Auckland, Brisbane, and Perth, provide interim support outside Southeast Australia.

Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and the NextGenConnectivity editor. He remains fascinated with how businesses reinvent themselves through digital technology to solve existing issues and change their business models. You can reach him at [email protected].

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