With Technology At Helm, South Korea Ready To Contribute To Global Innovation

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With AWS’s Seoul Data Centre region going live in January 2016 and Microsoft announcing plans in May 2016, all eyes were set on IBM and Google.

While the latter is yet to make any announcement on this topic, the former announced its new Data Centre in Pangyo, South Korea on 25 August 2016. Per IBM’s official statement, this is the company’s 9th Data Centre in the Asia Pacific including Japan (APJ) region (part of its Global network of 47) and an outcome of its collaboration with SK Holdings C&C.

These announcements concur with the outcomes of a recent Greyhound Research Global, Independent study titled, Global Cloud Adoption Index 2016.

Per the study, 95% respondents in the Asia Pacific including Japan (APJ) region confirmed their plans to use Public Cloud in some manner between 2016 and 2017.

For reference, as part of this study, we reached out to over 2,500 respondents including Independent Software Vendors (ISVs), System Integrators (SIs), Startups, Enterprises and Government. Of these, 1,000 were from the APJ region.

While Cloud’s role in delivering IT is evident, CEOs of Korea-based orgs (and Globally) expect Digital Transformation to be a frontrunner in their agenda over next 36 months.


Per another recent Independent Greyhound Research study titled, Global CEO Priorities 2016, over 93% Global CEOs cited Digital Transformation as a key topic of discussion in meetings with their Board and other senior management.

This compares to 77% CEOs of South Korea headquartered orgs who also noted an increasing role of Digital Transformation over the next 12 to 36 months. Interestingly, while Korea based orgs cited Cloud as the key driver (91%) of their Digital Transformation agenda, it was closely followed by Mobile (88%), Analytics (86%) and Internet of Things (77%).

Albeit a mature technology market, South Korea still has pockets where Digital Transformation can help traditional industries.

With home broadband penetration at 98.5% and mobile broadband penetration at 85.5% (Source: OECD), South Korea is without doubt one of the world’s most technology advanced nations. Having said that, not all are using internet and mobility to its fullest – per OECD statistics, only 46.4% individuals in South Korea use internet for internet banking. While this exemplifies the opportunity for BFSI orgs to use disruptive technologies like Blockchain, Greyhound Research believes other traditional industries like Manufacturing, Retail, Healthcare and Education can also significantly gain by using Cloud, Mobility, Big Data Analytics, Internet Of Things (IoT) among others.

On a side note, move away from the traditional Ajumma culture and recent Startups success is helping the country participate in Global Innovation.

Compared to traditional times, the young Koreans are no longer keen on joining the Ajumma brigade – they don’t only want to get educated, get married and then work for the chaebols. Take for instance Yoon Ja-young, CEO of image-sharing app StyleShare who chose to move away from this tradition and build her own startup. She is not alone. The nation is also experiencing an influx of American Koreans who are returning to participate in this startup wave. Even foreign nationals are flocking in to ride on this wave and the Venture Capital community including SoftBank, StoneBridge among others are keen on investing.

Separately, the Korean Government now recognises and is supporting these Startups. Barely months ago (April 2016), the Ministry of Science, ICT and Future Planning (launched by President Park Geun-Hye in 2013) announced its decision to nurture 100 global SaaS firms by 2018. The Ministry has also expressed interest to collect ideas on Internet Of Things (IoT) and how it can help solve city-related problems. To help foster this ecosystem, the Government is adding both financial muscle and easing restrictions on local regulations.

At Greyhound Research we believe such moves will further help Korea based startups deliver Cloud-based products not only for domestic consumption but also export them to Global markets.

Per our estimates, Korea-based SaaS startups currently generate Global revenue of USD 5 billion and this is expected to cross USD 10 billion by 2020. There are other signs of success as well. Per our ongoing tracking, Korea already has it’s own ‘Unicorn Club’ with at least 10 Startups as members.

South Korea is at the cusp of change and vendors like IBM, AWS, Microsoft and Google are keen to participate and support. But then, not one will win it all.

Taking into account recent announcements by global vendors like IBM, AWS, Microsoft and Google, the South Korea opportunity is evident. While each of them have placed their bets on this change and been vocal about their investment plans, not one will win it all. Greyhound Research believes while each of these vendors has its own pockets of strengths, learnings from global markets and past experiences, simply replicating those in South Korea won’t do the trick.

The Public Cloud war in South Korea is brewing and will hit the big league in 2017.

Albeit Google is actively working with local startups, it currently does not have a local Data Centre nor has it made any announcement about it. Furthermore, while Microsoft has announced plans for a Data Centre region, it is yet to launch its facilities.

Hence, Greyhound Research believes the tug of war currently and for next 12 months is between IBM and AWS.

Per our ongoing tracking of the market, while AWS has been actively selling on the ground, a bulk of its local revenue accrues from the large enterprise segment. With such heavy reliance, the market is open for IBM. The company has announced plans to focus energies on startups and developers to help them nurture opportunities in Internet of Things, Big Data, Cognitive Analytics and Blockchain. While the outcomes from each of their efforts is hard to predict as of date, what’s evident is that both AWS and IBM are beginning to choose their battlegrounds in South Korea and the war between these two is now officially on.

How can Traditional Korean Organisations and Startups Make the Most of These Local Investments.

While the value of Technology and the need for Innovation is well understood and world-class vendor options are now available, how you benchmark and choose your partner in this journey is pivotal to your success. While there are commonalities in vendor benchmarking practices which both traditional organisations and startups can use, one must take into account factors which are specific to your organisation. More specifically, traditional metrics of benchmarking Data Centre vendors do not necessarily apply to Cloud Service Providers.

To know more about how to benchmark vendors, what potential costs to look out for and other crucial factors to consider and learn about Greyhound Research global, annual Buy-side and Sell-side trackers, please write to our Client Centricity Team at connect@greyhoundgroup.com.

Lead Analyst:

Sanchit Vir Gogia: Sanchit is the Chief Analyst & CEO of Greyhound Research, an Award-Winning, Global, Independent IT & Telecom Research & Advisory firm. He also serves as Chief Futurist, Founder & CEO of Greyhound Knowledge Group, a Global, Multi-Disciplinary Research & Advisory firm. Given his expertise and passion for Technology, Sanchit also doubles up as the CIO for Greyhound Knowledge Group companies and is building a technology-led Research & Advisory business. In his another avatar, Sanchit is an Advisor To The Board (for IT & Business decisions) of a US$100 Million+ organisation in the Metal Industry. To read more about him, click here.

Contributing Analyst:

Anshoo Nandwaani:  Anshoo serves as a Vice President and Principal Analyst with Greyhound Research, an Award-Winning, Global, Independent IT & Telecom Research & Advisory firm. She also serves as Chief Human Resources Officer (CHRO) of Greyhound Knowledge Group, a Global, Multi-Disciplinary Research & Advisory firm. In her current role, Anshoo leads the research agenda for The Empowered Workforce theme. As part of this theme, she studies the impact of vertical-specific processes and workforce-centric technologies on workforce lifecycle and overall business alignment. At Greyhound Research, we refer to this as the Workforce Empowerment Systems (WES). To read more about her, click here.

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