Cloud-based services are booming and hyperscale operators are looking for colocation partners for growth
In the Asia Pacific region apart from the two giants, China and India, Indonesia is one of the most exciting growth markets. It is the fourth most populous country in the world and the largest economy in Southeast Asia. It has a strong and growing cloud data center market.
For a pan-Asian internet infrastructure operator like the Princeton Digital Group (PDG), Indonesia was too good a market to ignore. In 2019, PDG entered Indonesia through a joint venture with the country’s second-largest telecommunication company, XL Axiata. This gave PDG a 70% stake in the data center portfolio of XL Axiata, with operating control and all associated land parcels. PDG gained access to five data centers located in Java and Sumatra. The data centers are in the booming cities of Jakarta, Surabaya, Bandung, and Pekanbaru.
To understand why the Indonesian market is so exciting, one needs to have a look at the numbers. With 276.5 million people and a gross domestic product (GDP) of US$1 trillion as in 2020 , Indonesia is by far the biggest economy in the Southeast Asian region.
The country’s working-age or productive population (that is those between 15-64 years) comprise as much as 66.5 percent  of the 276.5 million people, making it one of the world’s most exciting growth markets.
Thanks to a young and digitally savvy population, the country is undergoing deep digital transformation. The country’s e-commerce market is the largest and fastest-growing in the ASEAN (Association of Southeast Asian Nations) region. Worth US$27 billion in 2018 in GMV (gross merchandise value), the e-commerce market is expected to reach US$100 billion by 2025, growing at a compound annual growth rate (CAGR) of 49 percent. This translates to US$4 out of every US$10 spent on e-commerce in the ASEAN region .
Explosion of Internet users
As of January 2021, Indonesia had 202.6 million Internet users. The number increased by 16 percent or 27 million from the previous year  . Internet penetration in the country was 73.7 percent in January this year. Some estimates expect that the number of Internet users will grow to a staggering (considering the population size) 256 million  users by 2025.
According to research by Arizton , Indonesia has become a “hotspot” for hyperscale data center investment, driven by the rise in cloud adoption. The report says that the country is expected to get investments worth over US$1 billion in hyperscale data centers representing an annual growth rate of 11 percent between 2019 and 2025.
More than US$600 million in data center construction opportunities for contractors is projected during 2019-2025, while the colocation data center market has been calculated to reach around US$300 million by 2025 thanks mainly to the digitalization efforts of both large as well as small and medium-sized Indonesian enterprises, which resulted in the growing presence of hyperscale cloud services providers.
PDG is the only pan-country carrier-neutral data center industry player in Indonesia. This unique feature enables it to provide customers with flexibility and independence to choose their telecommunication provider. With world class data center services for hyperscale and enterprise markets, PDG is seeing strong market demand not only from the current customers but also from global firms looking for a toehold in the market. While the six dispersed data centers give PDG good reach, it is planning additional Greenfield builds in strategic locations.
The planned total capacity in PDG’s upcoming Cibitung expansion would be twice the existing capacity of the current data centers.
One of the first challenges faced by PDG after the joint venture with XL Axiata was to transform what were essentially telecommunications-oriented data centers, meant for internal use, into state-of-the-art colocation facilities.
Using industry best practices, PDG conducted a detailed business process assessment after taking over the operations. A part of that process included a GAP analysis to compare the existing state of operations with an ideal state or goals. This helped to identify and understand the areas which needed improvement to bring the operations in Indonesia to the level that PDG’s customers expect from facilities in other countries. Data center optimization and operational excellence were the ultimate goals of the management of the Indonesian facilities.
The GAP analysis allowed PDG to define the required standard business processes to achieve operational excellence in its Indonesian facilities. This included changing policies and performing change management in the new organization both internal, third parties, and for customers.
Some of the operational challenges faced after the acquisition included building the ability to operate the five facilities as one unified infrastructure. This was achieved with better automation tools that helped maximize monitoring controls and schedule preventative maintenance. All this was followed up with routine meetings with DC managers across from all five facilities.
Since the data centers started as XL Axiata’s captive units, it was a major challenge and necessity to increase network diversity in order for them to become carrier-neutral colocation data centers. PDG is currently running an expansion as part of its transformation project from a telecommunication data center into multi-functional data center operations. This is in keeping with its efforts to provide for the colocation needs of customers, especially hyperscalers.
Automation helps the company minimize human errors and define standard and simple business processes. PDG also ensures its operations team is updated with the latest in data center technology to ensure continuous process improvement.
PDG customers are happy with the fast response time from sales teams to assist with booking orders and additional requests, as compared with other data center operators. Considering the wide variety of customers who come with different needs, PDG has created an annual satisfaction program survey and has set up a self-service customer web portal for instant ticket requests for customers. By implementing this program, PDG hopes that customers across its existing facilities as well as the new ones that are planned, get real-time response based on their request. Customer satisfaction and feedback will help PDG improve services base on customer requirements. PDG believes that customer satisfaction is the real feedback that it requires to improve business processes.
Princeton Digital Group (PDG) is a leading investor, developer and operator of Internet infrastructure. Headquartered in Singapore with presence and operations in China, Singapore, India, Indonesia, and Japan, its portfolio of data centers powers the expansion of hyperscalers and enterprises in the fastest-growing digital economies across Asia.