(Dec 13): The Singapore government recently released its National Artificial Intelligence (AI) Strategy, which if fully implemented, could lead the way for AI implementation in the region if not globally. To realise this enticing vision, Singapore will need to accelerate its adoption of the public cloud. Not only is the cloud a digital transformation enabler, providing easy access to AI and machine learning, along with nearly-instant data analysis – the crux of the National AI Strategy, it is an economic transformation enabler too.
In a Boston Consulting Group (BCG) study of public cloud adoption in six Asia-Pacific markets, commissioned by Google Cloud, we found that cloud adoption is expected to add about US$31 billion ($42 billion) to Singapore’s economy between 2019 and 2023, a sum equivalent to 1.7% of the annual GDP or about 15% of the financial services industry’s annual GDP contribution. In addition, it should be a catalyst for about 43,000 jobs altogether, equivalent to 1.2% of the current workforce.
Not surprisingly, Singapore came out as the one of the most advanced when it comes to public cloud use among the six countries (Australia, India, Indonesia, Japan, South Korea, and Singapore). Singapore has become a hyper-scale cloud regional hub thanks to its favourable policies, and importantly, Prime Minister Lee’s advocacy for using the public cloud in the government’s own agencies, sending a signal to the domestic and regional private sector that the public cloud is secure, cost effective, and a gateway to innovation.
Singapore’s business sector has seen how important the cloud is to new advances and innovations that fuel growth. Digital native businesses are the largest users. Financial services institutions, retailers, media companies and manufacturers are among the industries that are adopting the public cloud for such purposes as providing digital services, driving personalisation, and running advanced analytics.
The public cloud will be a key component to realising Singapore’s Smart Nation initiative and National AI strategy. When the Smart Nation Digital Government Office (SNDGO) says that a robust data architecture is essential for secure management and exchange of the information and algorithms that are the backbone of AI, they intend to use public cloud. GovTech is leveraging multi-cloud to deploy its National Digital Identity programme, a key Smart Nation initiative.
All of this sounds positive—yet the impact on the GDP and jobs could be even greater. Our study finds that with just a few supportive policies, Singapore’s average annual public cloud adoption rate could be as fast as 23% over the next five years, with a total economic impact of as much as US$43 billion ($59 billion), or about 2.2% of GDP, resulting in some 79,000 new or up-skilled jobs. Achieving this scenario would take a combined commitment from hyper-scale cloud service providers, the government, and businesses to optimise Singapore’ cloud use.
For one thing, many businesses need a clearer roadmap for migrating their data to the cloud or expanding their use in ways that will transform Singapore into a fully digitalised society. For example, there is a need to develop transparent, standardised guidelines and public cloud maturity indices to show companies where they stand compared to industry peers, since a true assessment of the starting position is critical to a successful transformation journey. Similarly, providing information on best practices and timeframes for moving ahead, including transparent information on the initial costs, will go a long way in generating comfort with the public cloud.
In addition, there is an urgent need to train the next generation of public cloud experts who can help lead the digital transformation. There will be a shortage of cloud-trained talent all over the APAC region in the next five years unless training steps up. Singapore can help alleviate this gap and serve as a regional talent repository by accelerating its current skill-building programs - in line with its National AI Strategy.
These efforts are particularly important when you consider a downside scenario—that public cloud growth could slow to around 14% a year if Singapore were to lose its status as a regional digital hub. This is a potential risk as neighbouring countries enshrine data localisation policies, train their citizenry in cloud technology and incentivise businesses to use cloud services out of their domestic data centres.
The stakes are high. As Prime Minister Lee wrote in the forward of the National AI Strategy: “Countries and cities that succeeded in exploiting technology have surged ahead and prospered; those that failed have languished and fallen behind.” For a brighter economic outlook, now is the time to make sure that Singapore’s public and private sector have the resources to ascend to the cloud.
The writer is a managing director and partner with the Boston Consulting Group based in Singapore and a leader of the firm’s technology and telecommunications practice
