Cloud services, which can be divided into the three basic service models software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS), have become more important for the Japanese economy in recent years. By making investments in additional personnel, equipment, and space superfluous, the adoption of cloud services can help companies in coping with labor shortages and increasing their cost-effectiveness. In addition, the scalability of these services makes it possible to react more flexibly to changing market situations. Since more and more companies have shifted from on-premises to cloud-based systems, the
, which in this case refers to PaaS and IaaS, reached a value of 1.94 trillion Japanese yen in 2023. As it is expected that companies will continue to replace legacy systems and invest in digital transformation (DX) solutions to increase their competitiveness, the market is forecast to reach a size of 3.8 trillion yen by 2027.
Cloud adoption among Japanese companies
According to an annual survey, a majority of business enterprises in Japan are
already using cloud services to varying degrees. The survey findings also show that cloud services are more widely adopted by larger companies than by smaller ones, and that industries such as telecommunications and finance have higher adoption rates than industries such as manufacturing and transportation. One of the factors that pushed the adoption of cloud computing in recent years was the COVID-19 pandemic, which led to an increase in
remote work and made it necessary for companies to adapt to a new work environment. In the coming years, the integration of
artificial intelligence (AI), such as generative AI, as a cloud feature is expected to create new business opportunities for user companies, which in turn will likely lead to further growth of the market.
Government cloud and cloud security
One big issue with regard to cloud computing is the question of
information security. This is especially apparent in the case of government cloud providers, which have to ensure that data such as family registers, pension records, and tax payments do not get leaked or manipulated. As Japanese municipalities are currently migrating their data to government clouds, the
government cloud market is expected to grow strongly in the coming years. To ensure the security of government clouds, the Japanese government established the Information System Security Management and Assessment Program (ISMAP) in 2020. This program conducts an audit process to check whether cloud providers fulfill the necessary security standards. As the guidelines made it difficult for domestic companies to compete with large American providers, which was seen as undesirable from an economic security perspective, the government revised the rules in 2023 so that providers can now work together with other firms to meet all of the necessary criteria.
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