Cloud services companies play the roles of an innovator, disruptor, enabler, and adapter in our I.D.E.A. framework
Chief Investment Office, Yeang Cheng Ling10 Jun 2022
- Cloud computing is as an important element in the global trend towards digital transformati
- The industry’s TAM is projected to reach USD1t in the next few years
- Cloud computing fits well in our I.D.E.A. framework
- Valuations are looking attractive, therefore presenting a window of opportunity
The stronger-than-expected earnings in the latest quarter by Salesforce.com demonstrated the resilience and constructive outlook of the cloud computing industry. The admirable results were achieved despite muted expectations and a mixed operating backdrop.
Over time, cloud solutions have emerged as an important element in the global trend towards digital transformation. Cloud services companies play the roles of an innovator, disruptor, enabler, and adapter in our I.D.E.A. framework, and we believe this development has a long runway ahead (Figure 1).
Cloud access means using the Internet as the ubiquitous mode to utilise applications without the necessity to download. This saves users the operational hassle and the financial burden of having to maintain an infrastructure of hardware and software. Instead, these applications are hosted on networks of cloud ecosystems where the vendors own the servers, manage the applications for users’ access, and run daily business functions on a real time basis.
Common types of cloud solutions include: enterprise resource planning (ERP), front-mid/back-office processes, accounting, procurement management, customer relationship management (CRM), risk tracking, supply chain management, enterprise performance management (EPM), and data analytics; to name a few.
Given its long-term growth potential, cloud services are among the secular growth themes in the CIO’s barbell strategy and I.D.E.A. Fund.
Figure 1: Strong revenue uptrend
Source: Bloomberg, DBS
The global cloud computing market is expected to reach USD947.3b by 2026 and will soon surpass the trillion-dollar level in the later part of the decade, from USD445.3b in 2021, as the world continues to transform towards digital engagement.
Time and again, cloud networks have been used as key tools in this era of remote and timely access to information that facilitates greater collaboration, transparency, and reliability.