Hyperscalers continue to dominate
SYDNEY, AUSTRALIA – Cloud applications and generative AI are the key drivers of Australia's soaring Infrastructure as a Service (IaaS) market, a new report from Telsyte, an Australian emerging technology analyst firm, reveals.
The report, titled Telsyte Australian Hyperscale Cloud Market Study 2024, shows that Australian organisations spent $4.4 billion on cloud infrastructure in 2023, a remarkable 25 per cent increase from the previous year.
The report also highlights the continued dominance of hyperscaler cloud providers, which accounted for an estimated 90 per cent of the IaaS market in 2023.
Telsyte predicts that the total IaaS market in Australia will reach $8B in revenue by 2027, propelled by growing cloud spending. Nearly half (40%) of Australian organisations plan to boost their cloud spending by 20 to 70 per cent in 2024.
Microsoft, through its partnership with OpenAI, is the leading Generation AI technology provider in Australia, with a solid presence in cloud services and productivity tools.
Generative AI, which can create novel content such as text, images, code, and music, is mainly delivered as a cloud service and fits well with most cloud applications. Natural language processing, code generation and reviews, and other use cases can be powered by cloud services.
Telsyte's research also shows that improved data analysis and insights are the top benefits that organisations expect from Gen AI.
In 2023, more than half (55%) of Australian organisations had already tried or implemented some form of Generative AI.
Cloud adoption high, but not yet mature
Cloud adoption and spending are high, but Australian IT leaders still face security and governance issues.
The study finds that cloud demand is high, with three out of four organisations considering private and public options, and only one in ten using public cloud services for less than two years.
Telsyte's cloud maturity index indicates that most of the market (71%) is shifting to more production workloads in the cloud, following the initial adoption phase.
A key finding of the study is that business units are now pushing for cloud adoption for their workloads. This is the main driver of cloud adoption, as business units do not want to wait for in-house IT to provide the infrastructure they need.
Cloud benefits such as access to new technologies and faster time to market are among the top five reasons for adoption.
Cloud challenges persist
Cloud is bringing many operational advantages to Australian organisations, but Telsyte research finds that almost all (97%) have at least one challenge with cloud.
The biggest challenges are "shadow" cloud, where business units buy cloud services without IT oversight; security; cost; and lock-in.
There is an opportunity for cloud consolidation, as two-thirds of Australian organisations use two to three different clouds, and a high 27 per cent use four to seven.
"Australian organisations have been early adopters of cloud, but in 2024 we expect to see more improvements in how cloud is used, with more maturity, more app development, and more focus on consolidation," says Telsyte Managing Director, Foad Fadaghi.
Cloud native apps gaining traction
The study shows that virtual servers are the most common IaaS application, but new areas such as serverless compute and storage are gaining popularity.
Infrastructure-as-Code (IaC), or deploying cloud infrastructure with code-level consistency and automation, is attracting high interest.
"The public clouds have enabled a new era of service automation for Australian enterprises, and there is a range of tools in use or being tested for Infrastructure-as-Code," Fadaghi says.
IaC is expected to be crucial for Generative AI deployments.
Hybrid cloud here to stay, skills needed
Telsyte's hybrid cloud research has been tracking adoption for eight years and shows that hybrid cloud is now mainstream in Australia, with eight in 10 organisations either testing or using it. Only 8 per cent have no plans for hybrid.
The preferred hybrid architecture is mainly cloud to on-premises, with cloud "bursting" also in use.
Telsyte's study also finds that there is a skills gap in Australia, with cloud networking skills in high demand and traditional database and security skills lacking in cloud.
For further information on the study or media enquiries contact:
Alvin Lee
Senior Analyst
Tel: 1800 313 142
Email: alee@telsyte.com.au
Foad Fadaghi
Managing Director
Tel: 1800 313 142
Email: ffadaghi@telsyte.com.au
The Telsyte Australian Hyperscale Cloud Market Study 2024 is a comprehensive study which provides subscribers with:
Market sizing and forecasts of the Australian cloud infrastructure services market
Analysis of market share and hyperscale performance
End-user trends in cloud computing
Strategic analysis of market opportunities for cloud infrastructure and MSPs
Telsyte’s study also includes profiles of the leading cloud vendors
Hyperscale profile: Amazon Web Services
Hyperscale profile: Google Cloud
Hyperscale profile: Microsoft Azure
Hyperscale profile: IBM Cloud
Hyperscale profile: Alibaba Cloud
Hyperscale profile: Oracle
Where VMware fits into the hyperscale clouds
Tier-2 clouds challenge hyperscalers: Telsyte forecast the rise of tier-2 clouds 3+ years ago. They offer low-cost scalability and growing range of hyperscaler features
In preparing this study, Telsyte used:
An online survey of 200 IT decision makers across Australian organisations with 20 or more employees. More than half of respondents were from large organisations (>200 employees)
Annual reports released by market participants
Interviews and discussions with cloud providers, third party service providers and carriers
On-going monitoring of local and global market trends
About Telsyte
Telsyte is Australia’s leading emerging technology analyst firm. Telsyte analysts deliver market research, insights and advisory into enterprise and consumer technologies. Telsyte is an independent business unit of DXC Technology. For more information visit www.telsyte.com.au
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