Australia's cloud market booms as productivity benefits unfold

05 August 2019 5 min. read
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Cloud technology has proven to be just as popular and effective in Australia as it has across the globe, according to new analysis from Deloitte Access Economics. According to the firm’s calculations, the integration of cloud technology within operations across Australia has boosted the economy’s productivity by nearly $9.5 billion over the last half a decade.

Not only has cloud adoption enhanced key areas of business operations in the country, but in some cases it has driven the emergence of entirely new business models that centre on innovation, flexibility and security. Cloud is also a ‘gateway’ technology of sorts, which opens the door for a number of other digital enhancements.

Combining the positive effects of cloud integration, the Australian economy has had an injection of pace over the last half a decade, and this appears to be just the start. The productivity benefit from cloud technology has been increasing annually, building a substantial cumulative benefit over the last half a decade.

Growth in cumulative productivity benefits from cloud

The $9.4 billion that cloud technology has generated as a cumulative benefit comes when less than half of the businesses in Australia currently employ paid cloud computing services. The figure is a reflection of progress rather than growth, given that the cloud market has recorded remarkable growth in recent years.

Between 2017 and 2018, the number of businesses using paid cloud services in Australia more than doubled from 19% to its current level of 42%. Among those who have adopted cloud technology, many are still feeling their way around its uses and discovering the potential that it holds for their operations.

This is evident from the progression in priorities within firms that have been in existence for up to three years, and those that have been around for longer. Some basic motivations for adopting cloud technology remain constant irrespective of business age, the biggest one being cutting down on operational costs.

Technology drivers for adopting cloud services, by business age

Other seemingly universal benefits of cloud include the capacity that it provides to launch operations across a broader geographical scope in real time, and the added dimensions that it provides to business operations. The gateway that cloud technology offers to other digital enhancements is also a feature of common appeal.

Nevertheless, younger firms that have been around for less than three years appear to value the agility and elasticity that cloud technology gives their operations, much more than older firms. Younger firms are looking to develop their business and are still in a phase of experimentation, to which end flexibility on the cloud is invaluable.

Cloud technology also allows for fluctuations in the level of resources available, which is also significantly useful for the relative instability that characterises younger firms. For older firms, cloud represents a means to improve their substantial existing operations, by way of making it more reliable and personalised.

Business use of cloud services

Older and larger firms also look to cloud technology as a storage solution, which facilitates the large repositories of data that contemporary businesses tend to accumulate. Younger firms prioritise these features as well, although to a lesser extent. Within these broader benefits, Deloitte zooms in on more specific use cases for cloud.

For instance, most businesses are using cloud for customer relationship management, invoicing, marketing, storage and accounting, among others. However, according to Deloitte, the uses extend far beyond these features. The Big Four accounting and advisory firm itself has been investing in its innovative capabilities in the cloud domain recently.

Last year, Deloitte Australia acquired CloudTrek, which allowed it to support clients better with Amazon Web Services, while similar capabilities were extended to the New Zealand market through the acquisition of CloudinIT earlier this year.

“To some degree, these are basic uses of cloud services, reflecting the early stage of cloud use by businesses in Australia. There is significant scope for cloud services to be used for more advanced purposes, including hosting bespoke applications, enterprise resource planning, or enabling next-wave technologies. These can enable changing business models and improved efficiencies in line of business operations and their supply chain,” state the report’s authors John O’Mahony, Kevin Russo, Ric Simes, Michelle Mountford and Jenny Kang.