Competition in the cloud computing market is intense everywhere — and Asia Pacific is one of the most hotly contested markets for cloud vendors. OpenText has just entered that market with the announcement that it's opening its first data center in Australia.
For OpenText watchers, this should be no real surprise given the company’s stated ambition of becoming the biggest Enterprise Information Management (EIM) on the planet. To do that, the APEJ (Asia-Pacific Excluding Japan) market is a must, preferably before the likes of IBM or SAP have gobbled up so much of the data storage and cloud computing business that there is nothing left for anyone else.
There are a large number of indigenous IT companies in the region too that are already providing cloud services, but to really make it work and develop the cloud infrastructure, it needs global players, including the ones we come across daily here.
For OpenText then, Australia is an obvious target offering it access to the entire Pacific region as well as the lucrative Australian market, keeping in mind, of course that Australia, to a large extent, was untouched by the five year economic meltdown that both the US and Europe are currently putting behind them.
That said, OpenText has been a little bit coy about this investment. The $1.1 million data center was commissioned in the middle of January, but was only made public yesterday. According to CEO Mark J. Barrenechea, its purpose is to provide local users with high-performance EIM applications from local environments.
OpenText says it will offer information security, information exchange and social applications from the center, including Enterprise Content Management (ECM) and Digital Asset Management (DAM) solutions.
OpenText's investment in an Australian data center complements the existing nine data centers across the USA and Europe. From those services, it offers cloud solutions to over 3,000 customers globally, while the acquisition of GXS last month is expected to bring in more clients who are looking for integration cloud technology.
While OpenText has been expanding significantly in recent years — like other companies working in the cloud market — it needs to look at the growing problem of data sovereignty or in simpler terms where it stores its client’s data.
With increasingly rigid compliance regimes around the world, information management companies can no longer depend on data centers located in the US, for example, to keep information for companies operating in Europe.
For many enterprises working in legally or financial sensitive areas — both vertical where OpenText has a strong foothold regulations are forcing them to keep data inside the borders of the geographies they are operating in.
For OpenText, this means that without a data center located in the region, it would become increasingly difficult to operate as compliance regimes get tougher.
Development of Cloud Computing
Also worth noting here is that the Asia Pacific region is one of the fastest growing regions in the world for the development of cloud computing.
According to recent research from IDC over the next three years spending on public IT cloud services will grow almost fivefold, reaching $19.5 billion by 2016. Additionally, spending on cloud computing will be augmented by enterprise adoption of private cloud technologies and by enterprise and service provider consumption of IT professional services, resulting in cloud services delivering growth excess of 30 percent from 2012 to 2016.
Already, the really big market players are lining up to cut a slice of the pie with IBM announcing that it will open data centers in Australia, China, Hong Kong, India, and Japan as part of the $1.2 billion investment in the cloud that it announced last month.
It is also worth noting here that according to Forrester’s Forrsights Combined Budgets and Business Decision-Makers Survey, Q4 2012, 61 percent of Asia Pacific organizations are currently using or actively planning to implement software-as-a-service (SaaS) for collaboration, which puts Asia Pacific adoption ahead of both North America and Europe.
A year later there is no figure yet available for this, but the rate adoption has been exceptional, and it’s bound to be a lot more important than it was this time last year.
Unlike other regions, though, it appears to be verticals like banking that are leading the charge to the cloud. Michael Barnes of Forrester in a blog post at the end of December point out that cloud adoption is a priority for most banks in the Asia Pacific region:
In fact, contrary to popular belief I’d categorize cloud adoption as nearly mainstream among banks in many parts of Asia Pacific. But adoption drivers vary based on the cloud approach. Private cloud initiatives, for instance, centered on data center transformation to drive improved operational efficiency and cost savings. Public cloud initiatives typically focus on expanding mobile banking capabilities and other customer-facing systems of engagement — the key to customer retention and overall growth."
This is the market OpenText has put its stamp on with the Australia data center. While the initial investment appears relatively small, it is unlikely, given the rate of growth here, that this is the last we will hear of OpenText in the region.
Title photo by Stock.xchng.