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Every day, millions of Indonesians rely on datacenters without even realizing it. Whether it’s checking a bank account balance, booking a ride-hailing service, or tracking an online delivery, datacenters ensure these processes run seamlessly.
Beyond personal convenience, datacenters are also critical to Indonesia’s largest industries. Financial institutions depend on them to process millions of secure transactions daily, manufacturers use them for real-time production analytics and predictive maintenance, hospitals rely on them for secure cloud-based patient records management, and even airports are powered by them to schedule flights and route optimization. In short, datacenters essentially power the systems that keep Indonesia running.
As the world’s fourth most populated country in the world1 and Southeast Asia’s largest digital economy2, Indonesia reliance on datacenters will only continue to grow. According to Mordor Intelligence, Indonesia’s datacenter market is projected to grow at a compound annual growth rate (CAGR) of 14%, reaching USD 3.98 billion by 20283.
To meet this growing demand, Microsoft is building Indonesia Central, a Cloud Region designed to support the country’s digital infrastructure needs. Yet, despite their critical role, many datacenter-related terms or jargon remain unfamiliar. For example, what is a Cloud Region and how does it relate to datacenters? What exactly is a hyperscale datacenter, and why is latency so important for businesses and consumers?
This article explores three essential concepts shaping the future of Indonesia’s digital transformation in the era of AI.
1. Cloud Region – How Does It Differ from Datacenter?
A cloud region is a specific geographic area where a public cloud provider’s datacenters are located, allowing users to deploy and manage resources close to their end-users. Think of a cloud region like a network of courier service’s transit offices in different cities. Each transit office (datacenter) is strategically located to ensure that package (data) can be delivered quickly and efficiently to nearby residents (end-users). Just as you would choose the nearest transit office to send or receive packages faster, cloud regions allow you to deploy and manage resources closer to your end-users for better performance and reliability.
Microsoft is currently building a cloud region in Indonesia called Indonesia Central. This cloud region includes three availability zones, with each zone consisting of sets of datacenters that are close enough to have low latency connections to other availability zones but are far enough apart to reduce the likelihood that more than one will be affected by local outages or weather. The region also meets the same stringent security requirements as other cloud regions that Microsoft builds across the world. Including here is physical access to datacenters, network security, and hardware- and software-layer security throughout the entire Microsoft Azure environment. Once live, Indonesia Central can help organizations meet their data residency and compliance obligations, as well as reducing the latency of their workloads-enabling better user experience through higher application performance.
2. Hyperscale – Is Hyperscale Merely the Size of a Datacenter?
The term “hyperscale” is frequently mentioned in the datacenter industry, especially as the demand for cloud computing and generative AI continues to surge4. According to International Data Corporation (IDC), a datacenter can be classified as hyperscale if its physical area is at least 10,000 square feet5 or 929 square meters – equivalent to two-full sized basket courts. Meanwhile, Synergy Research Group says the hallmarks are not just size but ability to scale up on demand and use energy efficiently. This means hyperscale datacenters are designed to handle massive workloads with extreme scalability, processing hundreds of terabytes of data efficiently.
All datacenters in Microsoft’s Indonesia Central region are built with hyperscale capabilities. Once live, Indonesia Central—which has taken approximately 5.4 million work hours to establish—will empower businesses across scales and industries to process cloud and AI workloads securely and in real-time, according to their operational needs.. Whether it’s state-owned enterprises who need to host scalable public services website and apps to meet different public demands, national banks who needs to simplify and standardize customer service responses in all its branches across provinces, or oil & gas companies who needs to discover new oil reserves, the ability to scale cloud and AI workloads efficiently will be key to unlock Indonesia’s USD 243.5 billion in economic production capacity – equivalent to the country’s 2022 GDP6.
3. Latency – Why Is Your Internet Slow?
With the introduction of Cloud Region and Hyperscale infrastructure, another critical term emerges: latency. Latency plays a crucial role in both everyday digital experiences and business operations. To understand latency, think about a time when you have been on a video call where audio lags behind, or tried making an online payment for it to take too long to process. These delays can happen because of high-latency. Latency refers to the time it takes for data to travel from a user’s device to a datacenter and back. The further away the datacenter that processes your data, the longer the response time. Low latency ensures real-time communication with no delays.
In the context of businesses such as manufacturing—the largest industry contributor to Indonesia’s GDP—latency is the time it takes for data to travel between machines, systems, or sensors and be processed. Low latency allows for faster communication and response times, which are important for efficient operations. Thanks to the timely data processing, it also helps with predictive maintenance, preventing unexpected breakdowns and extending equipment lifespan.
To provide low-latency (and high-bandwidth), Indonesia Central will be connected to Microsoft’s global wide area network (WAN), which provides connectivity across Microsoft’s global network of datacenters that has reached more than 60 regions and 300 datacenters worldwide. Connectivity to other Azure regions internationally will be empowering Indonesia’s businesses to achieve faster; providing more reliable cloud services for streaming, gaming, and financial transactions—both locally and internationally.
Learn more about Indonesia Central at aka.ms/indonesiacloudregionplaybook.
Commitment Towards Indonesia Emas 2045
Cloud Region to latency are beyond jargons; they are crucial elements that must be put into practice to fully unlock the potential of a datacenter.
“With the right infrastructure, Indonesia can accelerate its digital transformation, honor data residency, and unlock new economic opportunities. This transformation is a visionary step toward making Indonesia not just a technology adopter but a leader in the data-driven digital economy, especially in today’s new era of AI,” stated Dharma Simorangkir, President Director Microsoft Indonesia.
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1Indonesia Population, Worldometer (2024).
2Indonesia’s Digital Economy Still on Growth Track, Business Indonesia (2024)
3Mordor Intelligence Report, published in Investor.id.
4Hyperscale Data Centers Hit the Thousand Mark; Total Capacity is Doubling Every Four Years oleh Synergy Research Group
5A primer on hyperscale datacenters oleh Techtarget.com
6Microsoft, Access Partnership, and ELSAM Report
Featured Image: Ensuring digital infrastructure can support the data-based economy safely is crucial. This illustration was created using Microsoft Designer.