The biggest obstacles in the way of mainstream African cloud uptake – high speed access, affordable data and reliable connectivity – are fast being cleared, paving the way for mass adoption of cloud-based computing across Africa.
The scene is set for African cloud uptake to soar over the next few years. After a slow start, organisations are showing keen interest in the opportunities presented by cloud.
Multinationals expanding across the continent are doing so on the back of cloud-based infrastructure. For Africa’s proliferating SME sector, cloud-based services provide affordable access to enterprise-grade infrastructure and applications. While for African governments seeking more cost-effective and efficient service delivery, cloud-based services offer a compelling value proposition.
Improved internet access has played a key role in cloud’s growing popularity. A highly mobile and youthful population now relies almost entirely on mobile for digital services, including financial services and other business services and opportunities.
This emerging population of digital natives, characterised by entrewpreneurial spirit, is moving direct to cloud-based business.
At the same time, new terrestrial fibre networks are rolling out rapidly and telcos are looking to generate higher returns on their network investments by bundling fixed and mobile internet and cloud offerings to their vast subscriber bases.
In addition, a groundswell of new entertainment streaming services is driving consumer demand for high-speed and fixed-line connectivity, with inevitable impacts on organisational cloud services uptake. In fast-developing regions across Africa, including East Africa and the SADC region, the cloud is likely to get a significant boost by public sector digitisation and e-services initiatives.
Cloud journey gets underway
Analysts expect to see a major uptick in access and cloud growth across Africa in the next few years, with Cisco’s Global Cloud Index putting Middle East and Africa cloud computing infrastructure growth at 42% per year from 2014 to 2019.
Jon Tullett, Research Manager of IT Services Africa at International Data Corporation (IDC), says: “Across Africa, the cloud has been underplayed, and was slow to take off – often due to lack of infrastructure, data protection concerns and conservative investment strategies. Now, concerns about security and data sovereignty are starting to fall away in the face of consumer cloud acceptance and the advent of stricter legislation.”
According to Tullett, most of the larger African economies where cloud is viable have some data protection regulations in place or in the pipeline: “In most cases, these data protection frameworks will be aligned with international and EU regulations. This regulatory certainty will give more certainty to business about what will be allowed, and will help vendors make inroads.”
However, adoption rates vary considerably by region. “In East Africa, countries such as Kenya and Uganda are seeing good growth as large organisations expand in the region. For them, cloud is an important part of their build-out, whereas in West Africa, where economies are under pressure, there is less excitement around cloud,” Tullett says.
In South Africa, IDC research has found that up to 93% of companies are developing a cloud strategy and are either in the implementation or planning phase of their cloud journey.
“In South Africa, Software as a Service (SaaS), for example, is growing 35% year-on-year. But this is off a low base, and currently, cloud is still dwarfed by on-premise computing,” Tullett says.
Driving the uptake across the continent are factors such as time to market and agility. Cloud is heavily marketed as offering cost savings, but in reality, organisations risk disappointment if they migrate to cloud for cost savings alone. “However, cloud does deliver on its promises around speed and agility,” Tullett adds.
The expansion of multinational organisations into new regions across Africa is also supporting the growth of cloud computing: “A number of local manufacturers, transport and logistics services and retailers are currently expanding into new regions – particularly in East Africa –and they do not want to have to build out new infrastructure and data centres, so the cloud is a logical move,” says Tullett.
Threats and opportunities
The imminent arrival of content and cloud provider data centres on the continent are expected to have a significant impact on the pan-African cloud market.
Microsoft has announced plans to deliver Microsoft Azure from data centres in Johannesburg and Cape Town next year, while Amazon Web Services (AWS) has opened an office in Cape Town.
“We are now at the point where some customers are ‘diving in with both feet’, while some are only dipping a toe in the water.”
Francis Hook Regional Research & Consultimg Manager, IDC
“There will be an impact on local service providers when giant competitors start landing. There are cloud opportunities for them too, but they will have to keep reinventing themselves, keep adding value and go to market more aggressively. Currently, we are not seeing enough realistic investment by local service providers, who are about to discover what it’s like to face a giant multinational competitor,” Tullett says.
Another area where African companies stand to miss the boat is around cloud-related skills and services.
“The availability of the necessary skills is a concern, and we are not seeing a lot of upskilling by local organisations,” says Tullett.
In fact, the growing demand for next-generation IT and cloud skills in Africa is turning into an opportunity for overseas service providers. “African organisations ought to be taking this opportunity to develop a local skills base,” warns Tullett.
Public, private or hybrid?
Pioneered by Facebook and Google, hyper-scale computing – the use of distributed computing environments that efficiently scale from a few servers to thousands of servers – is being increasingly used for enterprise storage in the US.
Steven Ambrose, analyst and CEO of Strategy Worx Consulting, believes the argument for true hyper-scale cloud computing is a ‘no brainer’. “The benefits of scaled off-premise environments is that they can bring supercomputer type processes to businesses that could never afford it alone,” he says.
However, several factors are holding businesses back. “In research we conducted in South Africa last year across banking, mining, retail and financial services organisations, we found that while all respondents were interested in true cloud capabilities, few had actually transitioned to it or implemented it in any coherent form,” Ambrose says.
With the exception of financial services, 80% of organisations surveyed by Strategy Worx said the cost of data, and technical issues around where and how the data would be stored, were holding them back from widely deploying cloud solutions. “The cloud barriers they cited are no longer valid, considering the fact that we now have world class Tier 1 and 2 data centres in the country,” he says.
However, all the companies surveyed by Strategy Worx were using some form of hybrid cloud at some level – for example, integrating Salesforce into their CRM operations. Most are bolting cloud products onto existing operations, and many smaller organisations are using Google and Microsoft mail services, but few have fundamentally transformed their core systems to any hyper-scale cloud environment.
Strategy Worx research in South Africa found that the lack of momentum in South Africa related to broader strategic issues, including political uncertainty and a stagnant economic environment. “All large companies we looked at had invested heavily in embedded platforms and the IT departments running them. These assets were being sweated, and companies were delaying any revolutionary changes in their business.”
The danger of this approach, Ambrose says is that much of the rest of the world is moving very rapidly to opex, on-demand models with access to hyper-scale computing. “This is revolutionising the way businesses operate across the board. True cloud brings applications and processes that were never before possible. In South Africa, this move is not happening at scale yet, but it is a strategic conversation that needs to be had.”
Building on virtualisation
Virtualisation has played an important role in whetting the appetite for cloud services across Africa.
“Five years ago, organisations were focused on consolidating infrastructure and making enterprise applications readily available to employees from anywhere, so a move to virtualisation began,” says Francis Hook, Regional Research & Consulting Manager International Data Corporation (IDC) East Africa. Virtualisation and cloud firms entered Africa with new solutions that illustrated the potential and capabilities of cloud.
“This laid the groundwork for appreciation of what cloud could do since cloud is essentially virtualisation to the nth degree,” says Hook. At the same time, high-speed infrastructure rolled out across the continent, making the cloud proposition viable.
“Thanks to a confluence of factors, including high-speed infrastructure, new solutions coming to market and efforts to stabilise power supplies in the region, we are now at the point where some customers are ‘diving in with both feet’, while some are only dipping a toe in the water,” he adds.
Across East Africa, organisations moving to cloud are primarily investing in private cloud infrastructure for core systems, with only nonsensitive workloads shifted to the public cloud. In part, this focus on private cloud is due to regulations on data protection and uncertainty around future regulations on data hosting, says Hook. “In some sectors, such as the highly regulated banking sector, hosting certain types of information outside of the country could prove a risk and compliance challenge. In Kenya, for instance, the regulator, which is the Central Bank of Kenya, has issued cybersecurity guidelines that look at risks posed by the use of third-party services including cloud providers.”
“There are instances where cloud computing had enabled companies to innovate and disrupt in ways that are just not possible with on-premise infrastructure.”
David Behr, Group Chief Product Officer at Liquid Intelligent Technologies
East African public sector organisations are moving rapidly to cloud, with a focus on private cloud due to the fact that they are the custodians of a vast amount of citizen information. “The governments of Kenya, Uganda and Tanzania are now leaning toward a model similar to the one adopted in South Africa through the State IT Agency (SITA) – whereby a state agency provides data centre services, cloud hosting and connectivity services for all public sector departments, as well as building out the infrastructure for citizen facing services,” says Hook.
SMEs stand to benefit the most from new cloud services and SaaS productivity applications. Given the nature and size of their businesses, they simply do not have the budget for IT infrastructure and skills resources. With the arrival of new cloud-based services, SMEs are able to roll out infrastructure rapidly and within budget.
While cloud uptake across Africa looks set to soar in the years to come, one challenge facing regions such as East Africa is fragmented strategies, policies and regulations around cloud services and hosting locations. “Some sectors need clarity on the legislation around cloud, and a clear regulatory framework before they will shift sensitive workloads to the cloud,” adds Hook.
Moving to managed services
Cloud computing in Africa is about to ‘cross the chasm’ in the technology adoption curve, from early adopters to early majority, says David Behr, Group Chief Product Officer at Liquid Intelligent Technologies.
“As a whole, Africa has lagged the world in terms of cloud adoption, mainly because of a lack of connectivity and later, due to the high cost of connectivity,” says Behr.
“Cloud is typically billed as a cost efficiency driver, but it is no good if any cloud cost savings are gobbled up by the cost of connectivity.”
However, dropping data costs and the arrival of advanced fibre networks and multinational data centres are changing the environment. “We’ve seen niche cloud adoption and a growing number of start-ups built as native-cloud companies, with early adopters finding cloud most effective where the computing power has been the biggest part of the workload. Now, the stage is set to move more workloads and we will soon see the ‘early majority’ workloads in the cloud.”
There is a compelling case for managed services for African organisations seeking to control costs, achieve scalability and harness new technologies such as the Internet of Things (IoT), Big Data analytics and machine learning through Artificial Intelligence (AI). “There are instances where cloud computing has enabled companies to innovate and disrupt in ways that are just possible with on-premises infrastructure,” he says.
In the African context, key drivers for cloud adoption go beyond opex vs capex. “Security is a very strong driver. It’s not just about physical security, but about knowing your data is housed in a location with 24-hour power guaranteed, with a 24-hour operations centre manned by highly-skilled resources. When your systems and data are in the cloud, you can access them from anywhere in the world, no matter what local problems are being experienced at the office.”
Cloud services are able to achieve greater efficiencies from a limited pool of highly skilled resources, Behr notes.
“On the other hand, the IT teams who have been running systems on-premises no longer need to do so once systems and data are moved to the cloud. Organisations planning a cloud migration could face some kick-back from IT teams concerned about the change. The opportunity here is to upskill these teams, who will then be able to carry out more valuable work for the organisation, such as business intelligence and analysis.”
Companies planning their cloud journey should research their options thoroughly, and call in expert consultants from service providers, such as Liquid Intelligent Technologies, to assess needs and workloads appropriate for the cloud, and prepare a cloud roadmap. “One challenge is that companies need to calculate the full cost of ownership of on-premises systems in order to compare onpremises and cloud costs,” says Behr.
“Companies might find on-premises appears more cost-effective if they fail to include hidden costs such as power, cooling, insurance, skills, scalablity and the cost of potential outages. When a full total cost of ownership and flexibility assessment is carried out, cloud becomes an obvious choice.”
