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PANDEMIC BOOSTS DEMAND FOR DATA CENTRES AND CLOUD SERVICES

PANDEMIC BOOSTS DEMAND FOR DATA CENTRES AND CLOUD SERVICES

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The COVID-19 pandemic has accelerated digital adaptation among Thai organisations and citizens as they increasingly turn to online tools for healthcare, remote working and business transactions. The trend has driven a demand for data centres and cloud services which has been underpinned by changes to the global business environment and compliance with new legislation aimed at improving the efficiency and security of Thailand’s digital economy.

Mobile applications and online platforms have proven extremely useful in helping the government communicate and deliver services during the pandemic, with people registering for vaccinations, and the Ministry of Public Health and hospitals connecting their databases through an integrated backend system. Government agencies and businesses also effectively adopted work-from-home measures, while the spending of Thai consumers on e-commerce, ride hailing, and food delivery services further bolstered the demand.

 

High Internet Penetration a Boon

As lockdown restrictions also led consumers to stay at home and spend more time on mobile devices or computers, a growth was recorded in the purchase of goods and services online.

According to the Global Digital Report 2021, released by We Are Social in collaboration with Hootsuite, 70% of Thailand’s population were internet users in 2020, an increase of 7% from the previous year. With some 99% of the country’s population owning a smart phone device, Thai people also spend an average of 8 hours and 44 minutes on the internet each day. The report showed that Thailand was ranked third in the world for product purchases made through e-commerce, with 84% of the country’s population making such transactions, placing Thailand behind only Indonesia and the United Kingdom but above the global average of 77%.

Thailand was ranked fifth globally for using QR codes, with a 60% penetration of the country’s internet users in December 2020. According to the report, Thailand also recorded the highest number of transactions through mobile banking and financial transaction apps in 2020, possibly due to the government’s digital co-payment scheme as part of a relief package for people affected by the pandemic.

Meanwhile, e-Conomy SEA 2020, report jointly conducted by Google, Temasek and Bain & Company1, estimated a significant number of Thais tried new digital services in 2020 when 30% of all digital service consumers were new, with 95% of these new consumers intending to continue their behaviour post-pandemic. The research also estimated Thailand’s internet economy to be valued at US$18 billion in 2020, having grown by 7% year-on-year and predicted to reach US$53 billion in 2025.

Mobile banking is also popular among Thai consumers with many banks having promoted their online banking services. The Bank of Thailand has also launched a cashless society campaign as part of a policy to save costs for concerned parties and the economy as whole. This contributed to a jump in financial transactions online which forced commercial and state-owned banks to expand their service capacity.

 

Government Uses Online Tools for Services

Apart from the private sector, government agencies also contributed to the growth of cloud and data centre markets as government agencies adopted online services under the e-government policy. The government has also implemented many relief packages since 2020 when the pandemic hit Thailand hard.

These measures include, for example, the co-payment of goods and services, cash-handouts for lower income groups, and a state welfare card scheme, all of which require huge data traffic as millions of people are eligible for receiving state assistance.

The government requires people to register online and then provides financial assistance via applications.

Promising Market of Colocations

On top of the growing use of online platforms significantly driving the demand for data centres and cloud services, the trend of Thai businesses preferring to migrate to cloud solutions and data centre colocations as opposed to building on-premise data centres will also boost the demand in the industry.

This trend comes into play when the Thai public and private sector move forward the advancement of digital transformation through the use of big data and analytics, AI and machine learning.

According to a study by ST Telemedia Global Data Centres2, Thailand’s datacentre market is growing at the compound annual growth rate of 16% during 2016 to 2022 in terms of operational square feet. In terms of demand, the market is growing consistently at the compound annual growth rate of 14% during 2016 to 2022.

The outlook for the digital economy and technological innovations in Thailand indicate ample room for more investment in data centres and cloud platforms, especially from hyperscalers who provide the speed, scalability, global reach and agility.

The report also identified how financial businesses and telecommunications are the majority buyers of multi-tenant data centres. However, a change does seem to be taking place in the Thai market, with tech companies and IT service providers springing up over the last several years to become important buyers of colocation space, along with e-commerce companies and over- the-top (OTT) media companies.

Kasikorn Research Centre estimates that Thailand’s cloud solution business was worth US$ 523 million in 2020, up 20% from the previous year and building on the 22% year-on-year growth in 2019.

The surge in the demand for cloud services in Thailand in 2019 was attributed to an increase is businesses’ dependency on online platforms. Financial institutions, energy companies and food delivery businesses were among those making the largest contributions to the growth of cloud services in 2019.

KResearch forecast cloud business to grow by more than 8 % to US$ 570 million in 2021 in line with the ongoing uptake of digital tools.

The reasonable cost of could services in Thailand also allows SMEs to access the services, increasing their competitive edges. As a result, the IT capacity of SMEs no longer falls far behind that of large corporations.

As Thai businesses take on the challenge of offering a better service to their customers or end-users who have higher expectations, they are increasingly expected to adopt big data and analytics to help them differentiate their products and services from those of competitors.

For example, restaurant operators can use big data to advise customers on special dishes which match their tastes, and they can also calculate precise-waiting times for food deliveries.

Thailand’s booming data centre and cloud service market has already attracted significant investment, with more backers expected to invest in new data centres in the country over the coming year.

 

Source: Bangkok Post 

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