Many investors in cloud computing are currently floating on «Cloud Nine». It is no wonder that they are increasingly interested in this theme, Alex Fung of Vontobel Wealth Management Asia writes.

By Alex Fung, CEO Vontobel Wealth Management Asia-Pacific

For a long time, it was the norm that companies and institutions established their own IT infrastructure with servers and computers that were sometimes huge. By doing so, they put considerable financial and time resources into an area that is very important; but actually is strategically not very relevant.

In the meantime, however, many providers have come on the scene to take over this task from companies by offering cloud computing, often shortened simply to «the Cloud».

Rented as a Service

In a nutshell, this means that all the software, storage capacity and computing power can be used as required through a network such as the Internet, or as part of a Virtual Private Network (VPN).

As a result, the IT infrastructure, such as all the hardware and software applications, is no longer owned by the user, but is instead rented as a service from one or more cloud providers that look after its operation.

Enormous Amounts of Data at a Reasonable Price

Cloud computing offers diverse benefits. Lower costs are generally incurred for the IT infrastructure and software applications, since these services only have to be paid for when they are used. As scalability is so straightforward, capacity can be rapidly increased if necessary.

In addition, cloud computing provides simple software updates, greater computing power, mobility and in some cases also improved security. Cloud computing allows increasingly large volumes of data to be stored and then accessed at any time.

As such, this technology is both the driver and solution for dealing with big data. Many companies are unable to handle the constantly increasing demands for professional data management that must satisfy extremely high security standards. Transferring the company’s own data and applications into a cloud is the most efficient procedure in many cases.

Attractive Growth Market

According to estimates from the US market research company International Data Corporation (IDC), global spending for cloud services is set to increase in the current year by 18.2 per cent to around 44.2 billion dollars. Annual growth of almost 14 per cent is expected until 2020.

At the same time, the proportion of cloud solutions in comparison to traditional data centres is about to augment steadily. To manage this growth of demand, leading providers are currently investing billions in the development of new cloud infrastructures. Size is very important in this business, because the more computing capacity an IT infrastructure handles, the higher the relative cost savings are.

Numerous Possibilities for Asian Investors

Cloud computing is attracting many new providers and is hotly contested as a rapidly growing market. Careful selection is thus important to determine tomorrow’s winners.
Participation in the Cloud Computing market

There are numerous possibilities for Asian investors keen to participate in the potential of this growth market. Given the rapid pace of change in the market and the intense competition, the main skill for advisory firms is to be able to identify the winners of the future in the cloud computing market. Before making any investment decisions, it is therefore best to speak with experts who have the necessary expertise to pick underlying instruments in this technology segment.

Alex Fung is the Chief Executive Officer of Vontobel Wealth Management Asia, based in Hong Kong.