Up in the cloud

New Zealand is becoming more attractive as a base for cloud computing, attracting data centre investments from the world’s largest technology firms, writes Graeme Muller.

Amazon Web Services has announced it will be building a data centre in Auckland because of the city’s telecommunications connections and skilled workforce.

AWS will spend $7.5 billion building world class computing infrastructure in Auckland, creating 1,000 jobs and contributing $10.8 billion to New Zealand’s GDP over the next 15 years.

Meanwhile, following an announcement in 2020, Microsoft has already started building three data centres in Auckland.
This sudden burst of data centre capacity is a reflection of the growth of cloud services and video gaming being produced by New Zealand firms.

Cloud computing, or the delivery of different services through the internet, is growing rapidly in New Zealand, providing many benefits.
Research from international market tracking firm, IDC, shows that public cloud services drove more than $12.7 billion of business revenue (for suppliers and customers) in 2020.

Before Covid, Xero commissioned the New Zealand Institute of Economic Research to research how leveraging cloud technology could help grow New Zealand’s productivity.

The report found a 20 percent increase in the uptake of cloud computing could increase New Zealand’s annual GDP by between $3.5 billion and $6.2 billion.

The report highlighted benefits to business of cloud computing uptake – such as freeing up time for management to spend on strategy and innovation – along with barriers to uptake such as the skill and knowledge development required to adapt and use cloud-based tools.

The growing success of New Zealand cloud software is attracting international investment.

Tauranga based LawVu, which helps in-house lawyers track their workload through a cloud-based project management system, successfully raised $17 million in August 2021 to help it expand globally.

Christchurch cloud software company, Partly, which provides a cloud platform for buying car parts, recently raised funding making it the largest pre-series A valuation for a start-up in New Zealand, now valued at $46 million.
 Raising the funds for growth is the first step, however these funds are primarily for employing the skills and talent needed to drive growth to the next level.

Ongoing Covid border restrictions are forcing New Zealand’s high growth companies to employ teams of people outside of New Zealand to meet customer demand.

The downside of this is that these roles are not likely to return to New Zealand and with them goes millions of dollars of lost income and company tax for the government.

New Zealand’s game development sector, another cloud-based offering, is also growing rapidly.
The New Zealand Game Developers Association says the industry grew by 34 percent in 2020 to almost $300 million in revenue, of which 96 percent is from overseas.

 The growth of New Zealand’s leading game developers has accelerated during Covid and this sector is on track to become a billion-dollar industry within a few years.

Cloud computing is now a mainstream wave of technology for people, organisations, companies and governments to access more services for less cost. The abundant supply of information technology capabilities at a low cost offers many enticing opportunities.  

Graeme Muller is the chief executive of NZTech, a NFP organisation which brings together 20 tech associations and more than 1600 member organisations.


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