The two largest international hyperscale cloud providers, Amazon Web Services and Microsoft Azure, are expanding their presence in New Zealand.


The two largest international hyperscale cloud providers, Amazon Web Services and Microsoft Azure, are expanding their presence in New Zealand.

Microsoft’s spend on their two Azure data centre in Auckland is estimated to be already over $300 million. And in October, AWS announced their plans to invest $7.5 billion over 15 years in their New Zealand data centre region, expected to be operational in Auckland by 2024.

This is an ideal time for New Zealand organisations to take stock of how these major technological changes in infrastructure can help their current business models, and plan to take advantage of these significant investments in the years to come. Let’s discuss what hyperscalers mean for New Zealand business.

Find out about New Zealand’s Changing Cloud Landscape in the Leaven and Spark Business Group Webinar: watch here.

What is a hyperscale data region?

Hyperscale public cloud regions are a group of physical data centres for providing cloud services while tapping into efficiencies of scale. Hyperscale public cloud technology, in these regions, has the ability to scale up, down, and out to meet any load requirement. Services are built from hyperscale technology, usually coming in the form of digital services, applications, virtual machines, or storage – all of which are available to users remotely.

There’s often more than one data centre in any hyperscale region, to avoid redundancy and ensure tolerance should faults arise. AWS has announced three availability zones with at least three data centres – potentially supporting millions of virtual servers.

What are the business advantages?

The arrival of hyperscalers in New Zealand will likely bring about more rapid cloud transformation than New Zealand has ever seen.

Up until now, New Zealand organisations have been quick to embrace public cloud services, with IDC estimating that the market size of public cloud services in this country will grow from NZ$1.8B in 2020, through to NZ$4.4B in 2025 – that’s a compound annual growth rate of 19.4%.

With the hyperscale providers in market, it’s not unreasonable to believe the rate of adoption will accelerate further. New Zealand organisations will have rapid access to newer products and services, and sovereignty and latency restrictions will be reduced. How will organisations benefit? There are several key ways organisations can take advantages of the services on offer:

  • The ability to scale quickly: Hyperscale data centres enable the ability for IT infrastructure to respond to rapidly changing demands. Horizontal scaling provides the ability to add more servers to the network. Vertical scaling provides the ability to add more compute or memory power. As business dynamics change, the pace of market demand can fluctuate significantly. Think of websites catering to online bookings that vary with seasonal demand or sales on an e-commerce website. Projects that had been expected to be completed in years – as part of long-term business plans – will now be able to be completed in months as technological limitations are minimised.
  • Energy-saving efficiencies: Hyperscale data centres are contributing to the reduction of carbon emissions by using the latest technologies, such as liquid cooling and AI, and leveraging sustainable energy sources to optimise energy usage. They can also lead to an overall reduction in energy consumption, given that customers only pay for what they use.
  • Resilience: With the increased dependence on online presence, a single moment of downtime is a risk for any organisation. Hyperscale data centres are designed to minimise server failure. For example, if a server does fail, the application or workload can be instantly shifted to another server, or if a workload encounters a significant spike (seasonal or even DDOS attacks) it can be auto-scaled horizontally. Also, due to the standardisation of technical components, data centre operators can easily replace individual physical parts within systems.
  • Automation: Organisations are under pressure to use more complex IT infrastructure than ever before. Increased volumes of data and constantly changing IT environments make the task more challenging. Hyperscale data regions are increasingly powered by advanced AI using pattern-based learning. The regions also use self-healing infrastructure and databases to quickly recover from failures or network outages without human intervention. Platform management tools within the ecosystem provide greater visibility, insights, and proactive action, whilst open APIs and delivery tools drive greater automation and efficiency into your operations and deployment processes.
  • Digital platform: Hyperscale data centres provide access to latest digital technologies enabling organisation to leverage the likes of AI, Machine Learning, IoT, and even Satellite services to quickly innovate and solve complex business problems, driving true digital transformation.

Unique to local context

Locating hyperscale regions locally has significant benefits, although delivery models are best created in line with the business and market context they are aimed towards. Hyperscalers are equipped to provide heightened, up-to-date, products and services, as well as internationally established protection against external threats from malicious attacks and data breaches, and from internal security risks such as misconfigured access management policies.

Using the hyperscale capabilities brought more securely, faster and at higher quality, and working with proven partners, New Zealand organisations will have the ability to architecture their cloud presence in bringing New Zealand value to the local – and then global – stage. Locating hyperscalers locally will also remove data sovereignty and other compliance challenges related specifically to the New Zealand context.

Opportunities for the New Zealand workforce

Data centres are often perceived as isolated buildings full of stacks of servers set in remote locations. In fact, hyperscale regions need to be located closely to highly skilled engineers and technicians. This is likely why Microsoft is locating their data centre in Auckland, one of our main cities, which improves the likelihood of accessing highly-skilled, talented people. Similarly, Amazon recently claimed their data centre would create 1,000 new jobs.  Cloud products and services are human-led processes. Even with greater automation, emerging technology investment constantly needs to develop new talent. As people are trained, and internal staff cycle to other areas, more jobs will open up.

An exciting opportunity for New Zealand

The hyperscalers offer significant gains in innovation opportunities for New Zealand business. With fewer limits on cloud technology access and reliability, they are offering New Zealand business the opportunity to compete on a global stage. Now when Amazon and Azure launch new services overseas, they’re almost guaranteed to launch in the NZ region as well. So, for the first time users can have instant, competitive access. Of course, there’s a flipside: Overseas businesses are going to be able to bring their services here and get access to highly competitive advanced cloud platforms here in NZ.

As global, scalable, resilient, and secure platforms the hyperscalers will undoubtedly become integral to the New Zealand cloud environment.

However, it is important to remember that the fundamentals haven’t changed. We’re undergoing a seismic digital and cloud shift, so strategy and business alignment is key. Understand your unique business and technological needs, and what it’ll take to move to the cloud. Ensure your business is aligned on why and understand the impacts and opportunities on different areas and functions. Get your portfolio assessments underway.  In most instances, just lifting and shifting everything you’ve got to the cloud isn’t going to enhance your business outcomes. You take the same problems with you. 

Remember technology adoption, whilst complex, is the easy part – ensure people and process change is planned for and new governance, operating models, and ways of working considered. Understand your capability and capacity to adopt and transform – invest in your people and seek good partners who can guide and enable you. Take time, and seek advice, to align your business strategy with your cloud strategy to maximise the extraordinary benefits that the cloud, and the hyperscalers offer in enabling your digital future.

For those looking to kickstart their cloud journey, the Cloud Kickstarter offer is a sure first step – log your details here and let us help you get started.