Data Center Business: Because Anything Can Create Clouds

Data centers have an essential role for companies, especially those engaged in technology. Because Indonesia is predicted to be the fastest digital economy country in Southeast Asia, this has made global technology companies rush to invest in establishing a data center business.

The amount of funds they spend is unmitigated. The latest news comes from Microsoft reportedly ready to pour funds up to $ 1 billion to build a data center. competitors, Amazon set up $2,5 billion (build three data centers will be operational early 2022) and Google will soon release a center in Indonesia, after being announced in 2018.

Alibaba Cloud already established a data center in 2018, eight months later released both locations.

Why are they all aggressively building data centers in Indonesia? The answer is practically to meet business needs. From a regulatory perspective, Indonesia is considered more relaxed and open to innovations that come from outside.

From a technology standpoint, the user experience will be much better due to low latency, much more cost at home, there is a guarantee compliance and security, compute and processor features, and as a disaster recovery alternative (disaster recovery). The closer they are to the customer, the better the service for their needs aftersales.

The company can also bring other product variations to the country to match the demand in the market. Because when examined further, the data center business is increasingly diverse. In cloud computing, there are several types of data storage from public, private and hybrid. Each one requires a different character and risk.

Then, there are those who focus on cloud business process services (BPaaS), cloud application infrastructure services (PaaS), cloud application services (SaaS), cloud management and security servicesand cloud systems infrastructure services (Ias).

Not only that, the service is now equipped with certain technologies as features to suit the company's needs. For example AI, analytics, IoT, and edge computing. All of these innovations, on average, have been developed by global players in order to serve all segments.

Strategically, these three companies from the United States compete with each other. According to Catalys report, all companies around the world spent $107 billion to build cloud computing infrastructure in 2019, up 37% from last year.

Interestingly, almost a third of this portion is controlled by AWS as the leader in the cloud computing market with a market share of 32,3% of the total spending they have spent. The second position is occupied by Microsoft Azure with a market share of 16,8%, followed by Google Cloud 5,8%, Alibaba Cloud 4,9%, and another 40%.

The others include IBM, VMware, Hewlett Packard Enterprise, Cisco, Salesforce, Oracle, SAP, and local players from across the country.

Red carpet for foreign players

When chairing a limited meeting on data centers at the Presidential Office on Friday (28/2), the President said a data center focused on being developed in Indonesia would bring many benefits to local startup companies, which currently still use data centers abroad.

The President does not want Indonesia to be only a market and spectator for the industry. Investment in data center development, according to him, must provide added value and transfer knowledge for Indonesia.

"Prepare regulations, including those governing data center investment that wants to enter Indonesia. We must also ensure investment data center in Indonesia provides added value both in training digital talents, developing research centers, collaborating with national players as well as sharing knowledge and technology," he said.

The President's statement came out after his meeting with Microsoft CEO Satya Nadella who came to Indonesia during the Indonesia Digital Summit 2020. The President promised within a week to formulate simple regulations that support investments related to data centers.

In more than a week, despite falling short of the target, the Minister of Communications and Informatics Johnny G. Plate published Draft Regulation of the Minister of Communication and Informatics (RPM) on the Governance of Electronic System Operators (PSE) in the Private Scope has been completed and is ready to be submitted to the Coordinating Minister for Political, Legal and Human Rights for the process of drafting further legislation.

This rule will be a reference for investors in the field of data and cloud computing. All of its contents regulate more technically than PP 71/2019 concerning Electronic System and Transaction Operators (PSTE). In the RPM, it regulates technical rights and obligations, mechanisms and procedures for licensing, duties, obligations, rights, including sanctions.

For the record, the PP is the result of a revision of PP 82/2012. One of the articles mentioned is that private PSTEs may manage, process, and/or store electronic systems and data abroad. This controversial article is considered to tarnish the spirit of data sovereignty.

"The data in the public sector is only 10 percent, meaning 90 percent of our data is in the private sector. This means 90 percent of our data goes outside Indonesia. If that's the case, how can we protect and enforce our data sovereignty when the data is out of jurisdiction," explained Chairman of the Indonesian Cloud Computing Association (ACCI) Alex Budiyanto.

Local players rebuff

Alex also questioned the convenience provided by the government for Microsoft and foreign companies, whether it was because Indonesia had become a capitalist country.

"We were quite surprised how easily the President of the Republic of Indonesia accommodated a request from Microsoft even promising less than a week the requested regulation would be completed. We have never seen the same support given to local players," he was quoted as saying. CNNIndonesia.

Alex hopes that Jokowi should first think about the fate of players in the data center and cloud computing business in Indonesia. Supposedly, the President should make a regulation that makes the conditions of the business field fair (a level playing field).

"Don't let the presence of global players in Indonesia actually make 'own children' die."

In Private Scope PSE RPM draft, defines that Private Scope Electronic System Operators are Electronic System Operators by individuals, business entities, and the public.

Registration must meet some criteria, one of which is regulated/supervised by the Ministry or institution based on the provisions of the legislation; have a portal, site, or application on the internet network that is used to provide, manage, operate trade in goods and/or services, and other functions.

The application for Private Scope PSE registration is done through: Online Single Submission (OSS). This provision also applies to foreign PSEs conducting business and/or activities in Indonesia.

According to the draft, they only need to submit information about the identity of the Foreign Private Scout PSE, the identity of the company leader and/or the identity of the person in charge, and a certificate of domicile and/or the company's deed of establishment. The legal requirements are simply translated from a certified translator.

The draft also does not mention the article regarding the obligation to pay taxes for foreign PSEs in accordance with the rules of doing business in Indonesia, nor the obligation to record and report the income they get from Indonesia.

In other words, the content of this draft is very simple, as stated by the Minister of Communication and Informatics Johnny G Plate. At that time, he said, the Ministerial Decree would be made as simple as possible to smooth out investments by global technology companies that want to build data centers in Indonesia.

Nevertheless, parties Kemenkominfo opened a public consultation to solicit comments and input for the improvement of the manuscript until March 26, 2020.

Finally collaborating

DailySocial requesting a response from similar players in the country to ask for their response regarding this policy. Biznet Gio Cloud CEO Dondy Bappedyanto is reluctant to explicitly give his views.

In fact, he views from a business perspective, the presence of regional players such as Amazon, Google, and Microsoft is an opportunity for collaboration because the data center and cloud computing market has a business model. hyperscale.

hyperscale refers to a system or business that far outperforms competitors. This business is known to be the delivery mechanism behind most of the cloud-powered web, which makes up 68% of the infrastructure services market.

This service includes many cloud services that hosted and private, there are IaaS and PaaS. They operate large data centers, with each running hundreds of thousands of servers hyperscale.

"Because hyperscaler market and we actually intersect. Some have their own slices, some share slices," said Dondy.

Since this year, Biznet Gio has entered into a partnership with AWS and Google Cloud. He admitted that the results that have been obtained so far are quite good for the new service. "Actually more towards expansion market than survive. [If] can market Then why don't we just partner up?"

He continued, by taking this position, Biznet Gio is complementary. Not as a direct challenger because he is aware that there is a huge difference in the scale of the business. So that with partnerships, companies can dig deeper into the solutions needed by cloud users so that they can provide appropriate solutions.

Another strategy is to improve services so that users remain comfortable using Biznet Gio services. "Use cloud initially intended for efficiency, can be a waste if the way to use it is not right. Trap'pay by the hour sometimes it gives rise to the desire to use technology or configurations that are not really needed."

"Here, we will act as usage consultants cloud that are appropriate for customers, from the experiences we face every day," he concluded.