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Singapore Business Report: The Rise of SME Cloud Adoption

The future is in the cloud. In late 2018, the Singaporean government announced a cloud computing five-year plan. The goal is to migrate information technology to become cloud-native.  

There were a few reasons for this. The government wanted to both speed up delivery while improving service quality. They also wanted to serve as an example to the Singaporean business community. 

This year, the government has doubled down on this strategy. They increased spending to 3.5 billion SGD (US $2.52 billion) to continue the push forward. The additional funding is to further fuel the adoption of digital technologies. Also to help businesses recover in the wake of COVID-19. 

As a leading cloud company, Vodien wanted to study the impact of cloud adoption. We want to look at a few key questions, including: 

  • What benefits do Singaporean SMEs enjoy by becoming cloud-native? 
  • What difficulties have Singaporean companies overcome with cloud adoption? 
  • What are the challenges businesses face when adopting cloud technology? 

While progress has been made, there is still a significant way to go. Here are some of the key highlights from our study.  

What do we mean by cloud computing?  

Cloud computing is a broad term. At its largest extent, it refers to everyday technology that we take for granted. Think, photo backups on your smartphone or saving your WhatsApp conversations on the cloud.  

The aforementioned examples of cloud computing applications are usually for personal use. But, we’re going to focus on how SMEs adopt cloud computing. 

Cloud-native adoption refers to shifting business practices away from local devices and into the cloud. 

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Four fundamental cloud layers play essential roles in moving towards these goals: 

The Four Cloud Layers

• Platform as a service (PaaS). This refers to complete operating system packages. PaaS allows developers to create and manage applications without building their own infrastructure. 

Examples include Amazon Web Service AWS, Oracle Cloud, and Microsoft Azure.  

• Software as a service (SaaS). The most common type among cloud services. These are usually business-grade software tools that function primarily as cloud-based apps.  

Examples include Salesforce, Office 365, Zendesk, etc.  

• Infrastructure as a service (IaaS). These are infrastructure tools, like using somebody else's storage space, security, or other resources. 

Examples include DigitalOceanLinode, Rackspace. 

• Function a service (FaaS). Serverless computing tools are similar to PaaS, except that they allow you to execute part of an application code instead of the whole thing.  

Examples include AWS Lambda, Google Cloud Functions, and Microsoft Azure Functions. 

Why is Cloud-Native Architecture Important?  

Cloud-native solutions empower businesses to shorten the path to business value. With these, you can deploy, iterate, test, and redeploy easily, quickly, and flexibly. It results to faster processes and smoother workflows. 

Let’s say you launched an eCommerce app. User feedback suggests people really want a “Buy it Now” function.  

In the old days, you’d have to go through an entire process to write the new feature, figure out the networking, deploy, and test it. 

With a cloud-native approach, you don’t need servers, networking, or operating systems. Anything can be instantly tested since it focuses on products instead of pipelines.  You can put the code front and centre to integrate to test and change the app. 

The same is also true for fixing errors, security vulnerabilities, or anything else you need to do. In short, you go from idea to execution in minimal time. That's why making this transition is integral for businesses. 

In The Race to Becoming Cloud-Native, Businesses Are Making Steady Progress  

Businesses are adopting cloud computing

Singaporean SMEs are broadly embracing cloud transformation. Over 80% of survey respondents have either fully adopted or are in the process of adopting cloud computing. 

Unsurprisingly, SaaS is the most common cloud layer application. 69% of Singaporean SMEs reported using SaaS apps. 

That makes sense. SaaS is such a large industry for a reason. It is the most straightforward and most relatable cloud layer to the average end-user. We all have experience with MS 365, Slack, or any other popular web app. 

What’s more interesting is that most SMEs have also adopted to more advanced cloud layers like PaaS and IaaS. 

the most common cloud layer

This also lines up with the government’s goal because there is only so much you can do with SaaS tools. Most SaaS is niche and focused on critical areas like productivity or collaboration.  Using other cloud layers signals a shift towards becoming fully cloud-native.  

While individual results vary, most SMEs have made progress towards fully transitioning to the cloud. 68% of companies will achieve this within 12 months. A further 22% are in transition, though a more extended timetable is needed to finish the jump. 

businesses plan to adopt cloud computing in 1 year

Businesses Embrace Cloud Computing’s Advantages  

The cloud offers “zero down time, on-demand resource allocation, ease of maintenance”

 - Survey Respondent 

Cloud computing provides numerous advantages to businesses. The first is long-term cost reduction. While there may be transition costs, these can be overcome quickly. One participant directly noted the “high cost of self-owned storage” as a reason to go cloud-native.    

Think about it like this. A 1 TB hard drive’s estimated cost is $50-100. You now get the same amount of cloud storage for $12/month. And this comes bundled with extra software and the ability to access the data from anywhere.  

Further, flexibility and scalability are enormous benefits of cloud adoption. Cloud tools allow businesses to scale up and down according to demand. During the ebbs and flows of the last few months, this has been absolutely vital. Companies with cloud tools can easily manage the boomerang effects of the pandemic. 

top things considered before going cloud native

Finally, participants noted an array of other advantages. These included security improvements and adapting to the latest requirements. 

Security is a huge challenge nowadays. Cyber-attacks have been on the rise in Singapore. And, they’re becoming increasingly expensive. The average attack now costs 1.7 million SGD in damages. 

Cloud migration shifts away the burden of security maintenance from individual companies. Instead, cloud providers who typically have much stronger defense handle it. 

But more than encryption and advanced tools, the greatest benefit is the prevention of downtime. With no or minimal local assets, SMEs can keep their doors open even if a breach does occur. 

Cloud Adoption: Challenges and Disadvantages of Falling Behind  

“Falling behind competition, getting affected by situations like the current Covid where remote working is the norm” 

- Study participant reflecting on losing competitive edge

The vast majority of Singaporean SMEs understand the importance of adopting the cloud. Of those we surveyed, only four stated they did not plan to adopt the cloud at all. But the reasons are compelling. They shed light on overall cloud issues SMEs must consider.  

reason why businesses don't adopt to the cloud

The biggest issues for SMEs are privacy and data confidentiality. There are also general cybersecurity worries. These fears aren’t limited to just those who aren’t migrating to the cloud. 

62% of all respondents cited privacy as a top concern.  At the same time, 41% acknowledged cybersecurity as a major issue.  

RECOMMENDED: 7 Cybersecurity Basics and Their Importance to Your Biz

top concerns for cloud computing

There is no exact one-size-fits-all approach to cloud adoption. The internet is still a Wild West. You can never fully guarantee safety. 

Data confidentiality and security mostly boils down to specific providers.  These factors are outside of local control. Still, most Singaporean SMEs agree that the disadvantages of not shifting to the cloud outweigh these fears. 

And there are some big ones. Above all, businesses are afraid of losing the competitive edge. 

downsides of not adopting cloud computing

Interestingly, there is a mirror image to data security in the cloud. Many respondents were worried about cybersecurity risks if they didn't transition. 

One survey participant hit the nail on the head. They said, "there’s a certain 'danger factor,’ meaning wherever the data is being stored, if anything were to happen to it, it could get really pricey to recover. 

Ultimately, most Singaporean SMEs entrust their data to their cloud provider’s hands over themselves. 

RECOMMENDED: What Happens When You Forget to Backup your Website and Email?

Other valuable SME perceptions on cloud computing’s impact 

We also explored other reasons why cloud computing adoption is on the rise.  This revealed interesting motivations. 

The majority of businesses concurred that cloud adoption results in the following benefits:  

  • Gained competitive advantage 
  • Increased employee productivity 
  • Reduced costs 
  • Increased revenue 
  • Increased customer satisfaction  
  • A better understanding of customer needs 

advantages of cloud computing

85% of respondents agreed cloud adoption will help them gain and maintain a competitive advantage. This is really important. It shows SMEs recognise how the cloud can be used in many ways to drive better business outcomes. 

The government can definitely pat themselves on the back for this one. 3 in 5 of the respondents were aware of the government’s initiatives. Further, a whopping 90% were either “slightly” or definitely driven by government policies”. Better yet, 60% of those being “definitely driven”. It is very likely that the large number of businesses wouldn’t have come so far without the government’s campaign.  

cloud adoption is influenced by government initiatives

Web Hosting: The Most Accessible Cloud Layer 

“As of now, the current hosts are adequate for the company's needs. Yet if the time comes where it fails us, we might consider switching to a more reliable one.” 

- Survey Respondent 

Shifting gears, we then wanted to examine two integral components of cloud computing: web hosting and email hosting. 

Success and challenges have a massive impact on overall business health.  

top factor when choosing a web host

We asked our respondents to list the factors they consider before choosing a web host. 61% of respondents listed cost as a top concern. Other high-ranking factors included server performance, flexibility, and backups 

Most participants report satisfaction with their current web host. But this may be more a sign of intransigence than genuine satisfaction. Only 15% of respondents listed reliability as a reason for happiness, while just 9% listed speed. With the growing demands of the cloud era, this may signal the potential for a shakeup.  

Singaporean companies are clearly ready to make a move. 77% are slightly or extremely likely to switch to a different web host that better suits their business needs.  

people consider switching to better web hosting provider

The key takeaway here is businesses recognise how important this moment is. They are ready to make whatever transformation necessary to embrace cloud-first advantages.   

RECOMMENDED: 5 Smart Ways to Optimise Your Web Hosting Resources

Email Hosting: Another Vital Cloud Computing Application for SMEs  

Email hosting followed similarly in terms of participant response. Most participants are satisfied with their current host. They likewise selected cost as a top factor for choosing a particular host.   

top factor when choosing email host

But once again, right underneath the surface reveals room for change. Less than 10% of participants selected reliability as a top-factor. Speed and security were also just at 8% and 6%, respectively. 

74% of Singaporean SMEs are also ready to make a move, with 42% extremely likely to do so. 

people consider switching to better email hosting provider

Despite challenges associated with making a switch, individual respondents identified key advantages: 

  • “To improve the overall efficiency and ROI of the business” 
  • “To improve productivity and storage" 
  • “Need better service and responsiveness”  

We found in these first two major cloud computing areas—web and email hosting—a lot of room for cloud providers to capture new customers. This is provided they can deliver secure, reliable, and affordable services. But these areas may be one of their best entry points to more extensive service delivery. 

They can sell customers now on more straightforward services and demonstrate their capabilities.  This not only creates new revenue streams, but also a built-in audience for upselling now and in the future. 

Going Cloud-Native: Singaporean SMEs and the near future  

This is just the start of the cloud journey.  Singaporean firms still have concerns and challenges in making the transition. 

Security remains a top worryeven for those who are committed to going cloud-native. In some ways, only time will remedy this. But cloud providers should take these concerns to heart and harden security now. 

Concurrently, education should remain a key priority for both the government and SMEs. It doesn't matter if firms use external or internal teams to make the transition. Educating staff on both cloud opportunities and risks should be a key priority for SME decision-makers. 

For these reasons, we put together a list of essential tips to help Singaporean SMEs become cloud-native.

1. Assess your needs and the resources available

Becoming cloud-native is not something you do overnight or even in a year. Depending on your organisation’s size and your specific needs, the transition can take a long time. 

Netflix is the most famous cloud-native pioneer. It took them 8 years to plan and execute a successful migration! 

Here’s a quick checklist to help you get started: 

  • Start with individual projects and company applications 
  • Evaluate all your current applications  
  • Break down into categories what can be migrated quickly and what needs refactoring  
  • Consider containerisation  
  • Avoid vendor lock-in until you have a road map in place

2. Be Security-First 

This advice applies whether you are transitioning to become cloud-native or not. It is impossible to overvalue the importance of security. But during cloud transition, it’s easy to create security vulnerabilities inadvertently. Your staff may not be used to new environments and applications. This creates opportunities for cybercriminals to strike. 

Now is a pivotal time to educate team members on the essentials of cyber hygiene. This includes requirements like: 

  • Secure all accounts, both professional and personal, with unique, lengthy, and complex passwords 
  • Use two-factor authentication, biometrics, and other account security tools 
  • Lock all devices with passcodes, and enable theft/loss prevention apps 
  • Protect your internet connection with VPN, firewalls, and browser security 
  • Keep an eye out for suspicious emails and websites 
  • Scan all files and links before you click on them 
  • Encrypt data both locally, in cloud storage, and especially before transferring it anywhere 
  • Back up data often 
  • Follow and enforce cybersecurity rules with coworkers, employees, staff, and visitors 

RECOMMENDED: 7 Tips to Establish a Strong Information Policy in Your Org

3. Adapt, Innovate, and Prosper 

Moving to the cloud creates opportunities. This is a moment to pivot and capture new leads, approaches, and efficiencies. Use the transition in your favour to “cut the fat” and optimise whatever you can. 

For example, let’s say you’ve moved to MS 365. Congratulations on having an on-demand Office software.  

You’ll find many cost-saving moments like this. Most SaaS tools are far more comprehensive than initially meets the eye. For example, email marketing tools often include landing page builders and popups, removing the need for other software. 

The same is also true with other cloud technologies. This is again why you need to invest time in learning about these technologies and platforms to maximise the value you can drive from them. 

Your largest focus should be on automation. In what ways can you leverage new tech to build efficiencies? Again, you don’t have to do this overnight, but work toward this over time. This will make your organisation more agile and flexible. 

RECOMMENDED: Top Five Reasons to Get Office 365 for Your Small Business

Cloud Integration 2020: The Bottom Line 

Going cloud-native is the largest Singaporean industry transformation in recent history. It’s a massive change that will position Singaporean businesses not just for the present, but the next 10-20 years. 

Whether you have made the leap or not, now's the time to investigate what being cloud-native can do for your business. 

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Singapore Business Report: The Rise of SME Cloud Adoption


Singapore Business Report: The Rise of SME Cloud Adoption