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Why FinOps Still Has a Long Way to Go in Hong Kong

by Steve Schechter, Velocity Technology

As cloud adoption accelerates around the world, FinOps is increasingly recognized as a critical component of successful cloud management. The Asia Pacific region remains a slightly different story; locally based companies have traditionally been more conservative in adoption of new technologies, often lagging several years behind their western counterparts, and that’s as true with cloud as it was with everything that came before.

Cloud adoption is slow and FinOps adoption has barely begun to take off.

I have been managing technology projects and support throughout the Asia Pacific region for the past 25 years. I have focused on cloud operations for the past seven years, with an emphasis on cloud cost optimization for the past two years. Trying to sell FinOps engagements into this market is challenging, to put it mildly.

With all that said, what are the barriers to FinOps adoption in Hong Kong?

The Business Landscape Is Different

Hong Kong is a unique global financial center. Many multinational corporations are represented here by regional offices, which often means that technology decisions are made elsewhere. In terms of the locally based giants, there are six conglomerates that essentially “own” Hong Kong.

While these heavily-diversified companies can trace their origins back to the trading hongs established during the 19th century Opium Wars, today they are family-run businesses at heart. The older generations are conservative in terms of technology adoption and their diversified nature results in unexpected barriers.

Take Jardine Matheson as an example. Jardine’s owns housing developments, hotels, shopping malls, car dealerships, shipping and logistics companies, and retail companies. Their Dairy Farm division operates a large supermarket chain and a major pharmacy chain as well as holding the local franchises for 7-11 and IKEA. Amazon is one of their chief competitors and as a result, unofficially at least, their technology teams were not allowed to use AWS. Microsoft Azure was okay, but Microsoft has a very different culture from AWS, almost laser-focused on quarterly revenue growth. In my experience, talking about “cost optimization” at Microsoft Hong Kong is discouraged.

The Cloud Landscape Is Different

Most Hong Kong companies look to mainland China for future business growth. Cloud infrastructure spend in China is growing rapidly, with most of the market share going to homegrown hyperscale providers who offer far better coverage of the country’s 3.7 million square miles.

AWS offers only two regions in China – Beijing and Ningxia. Microsoft Azure also offers only two regions, Beijing and Shanghai. On the other hand, Alibaba Cloud has 11 regions in China, with 43 Availability Zones. That is a non-trivial differentiator.

Overall Alibaba Cloud has 41% of the cloud infrastructure market share in China. Huawei Cloud, Tencent Cloud and Baidu AI Cloud together account for another 39%.

In China, data centers, like many other businesses, cannot be foreign owned. Both AWS and Microsoft are minority partners in what are smaller scale operations that do not offer the full set of products offered by either vendor. Google regions can only be found in Hong Kong and Taiwan.

Alibaba Cloud may be huge in China and a significant player in the rest of the Asia Pacific region, but globally their market share is around 6%. As a result, it has not been a priority for the major Cloud Management Platforms (such as CloudHealth, Cloudability, Densify – Flexera introduced Alibaba support in October) to roll out support for the Chinese cloud vendors. The lack of tools hinders FinOps adoption. I believe that tool availability helps drive methodology adoption.

The Hong Kong Advantage

In a meeting with one of the largest system integrators in Hong Kong last year, I was told something blindingly obvious: If a company is only spending $10,000 a month on cloud, they’re not going to spend $50,000 to find out how they can save $3,000 a month. The slower pace of cloud adoption means that companies haven’t experienced sticker shock from monthly cloud invoices.

That points to an advantage that Hong Kong companies have that they are not even aware of. As they ramp up their cloud usage, they have the opportunity to get governance in place on day one, to have a Cloud Center of Excellence and proper controls before things get out of hand. That points to an important area in which the FinOps Foundation can contribute – the open sharing of experiences, the successes and the horror stories, provides the kind of detailed information that may help convince Hong Kong companies why adopting FinOps now represents the most responsible course of action they can take.