News Column

South African businesses rush to the cloud

April 25, 2014

Oliver Potgieter

South African business is poised for a massive adoption of cloud computing, with some 75% of all applications set to be in the cloud within two years. That's thanks to the fact that the promises made by the IT industry for cloud ring true.

For decades, IT has served its own interests and not that of the business. With cloud computing, a corner has been turned. Cloud delivers. It is secure, it is flexible, it scales - and South African companies, like those in developed countries, are ready to take to the cloud en masse.

Right now, cloud penetration is at around 10% to 15% of applications. Use of cloud services is low in some areas, such as infrastructure solutions, and high in others, such as email security and continuity services. But it is set for rapid growth, driven by the presence of experienced vendors in the local market, backed with the right Service Level Agreements (SLA), good technical skills, redundant connectivity and ample evidence of the value that cloud delivers.

Growth can be expected across the board

Furthermore, cloud growth can be expected across the board. It is being led by big business, but the mid-market and SMEs stand to gain as much or more by moving into the cloud.

On the basis of having spent a decade in the UK migrating some of the world's largest financial services companies into the cloud, it is clear that familiar patterns are emerging in the local market. Already, the environment has dramatically changed in the past two years, moving rapidly towards a state of maturity.

For example, when Alto entered the market, it was almost impossible to find a vendor with a credit-backed SLA; we even helped some to write their SLAs for cloud services provision. However, that's turned around completely; today, a good SLA is the rule rather than the exception.

More than that, cloud momentum depends on many parts of a complex ecosystem falling into place, which has, to a greater or lesser extent, already come to pass in South Africa. Among these elements are connectivity, local service provider capability and customer readiness. The tipping point for mass adoption comes as the market reaches around 15%. That's the point at which executives are playing golf and one says to another: We're doing this. It is happening right now.

There are international precedents, too. In the US and the UK, it took three years to go from early adopter phase - that's up to 15% - to 75%. From 2004 to 2008, cloud services came blasting through after questions around security and stability were settled.

Follower markets

In Australia, which can be seen as a classic "follower market", the ramp up to mass adoption was compressed to just two years.

South Africa is a follower market like Australia - and with the ecosystem in place, expect exponential cloud adoption.

In addition to answered questions around security and stability, there are case studies and reference sites aplenty, and cloud is no longer anything new. Cloud isn't "bleeding edge" or even leading edge. In economies where there is good connectivity and proven service providers, "does it work?" has given way to cloud being a standard way of doing things. In a global sense, cloud computing has been in the market for so long that any business using cloud is far from a trendsetter.

With the South African market at perhaps six years behind the leading market adopter, the US, the anticipations for growth are not rocket science and they are not way out there. While the local market is unique from a lot of perspectives, none of them are restrictive to cloud adoption.

And uptake will come from across the spectrum rather than any one vertical industry. In terms of customer size, the momentum is coming from mid-sized companies of 100+ IT users - and that's because the cost savings are real. If you save 40% to 50% on a R10 000 budget, it's pocket change. If you save the same percentage on a R1m-plus budget, it's real money that can make a difference to the bottom line.

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Source: Bizcommunity (South Africa)