Corporate South Africa looks to the cloud for IT services

Large organisations in South Africa are increasingly adopting cloud computing as they realise it doesn’t always pay to own their own information technology systems.

November 16, 2011

Large organisations in South Africa are increasingly adopting cloud computing as they realise it doesn’t always pay to own their own information technology systems.
 
The concept of accessing processing power, data storage facilities or software on tap has been around for years. But a lack of affordable bandwidth and experienced service providers made it a potentially risky business.
 
Now South Africa’s bandwidth boom has already allowed 46% of large local businesses to adopt some form of cloud computing, and by 2013 more than half will have taken the plunge.
The findings come in IP EXPO Corporate Cloud Survey 2011, a new report by World Wide Worx commissioned for the IP EXPO technology trade show.
 
“Out of 100 large JSE-listed corporations that we interviewed, 46% are already using cloud computing,” said World Wide Worx MD Arthur Goldstuck. “Another 6% plan to introduce it next year and another 4% the year after, so it will be close to 60% by 2013.”
 
The early adopters are pleased with the results, with 80% of the companies using cloud computing saying they were satisfied.
 
“While companies are starting to embrace the technology, there is definitely no herd mentality around cloud computing, which is a positive indicator,” says Goldstuck.  “Those who have adopted it have given it much thought and looked very carefully at how cloud computing can meet their needs. When a company takes that kind of considered approach, it is more likely to be satisfied with the results.”
 
Only 13% of the total sample said cloud computing was not important for their business as they didn’t see any benefits. Another handful cited poor infrastructure or security concerns, but most companies that still shun cloud computing are inhibited mainly by a lack of understanding, Goldstuck says.
 
“The problem is that IT administrators are out of their comfort zone. Decision-makers are not aware of what the cloud can do for them because they are not getting the right information about the benefits – in plain English.”
 
Cloud computing has massive advantages as it removes the cost of buying, installing, maintaining and upgrading hardware and software, lets companies pay for services on demand, and creates economies of scale if a third party specialist handles the equipment for them. Goldstuck believes all companies should now be assessing it – if it offers clear benefits to their businesses. 
 
For companies already using it, the most popular business model is to outsource their server operations to a third party specialist and access processing power, storage and software services over a private network. That saves them the headache of operating their own equipment.
 
A more conservative and slightly less popular model is to retain ownership of the servers, and buy only the software as a service. That, however, can limit the possibilities of greater savings achieved by companies that no longer run their own IT infrastructure.
 
Since companies don’t want to run sensitive data over the public internet, some have created a private cloud but have it hosted by a third party specialist.
 
“The problem with cloud computing is that it is literally a vaporous concept,” Goldstuck says. “Some companies don’t even want to start considering it because it seems so nebulous, but once you start using it you become a convert. When small and medium sized enterprises (SMEs) see the benefits in terms of security, reliability and never having to worry about what’s happening on their own machines for the integrity of their data, their attitude changes completely. SMEs see the benefits more quickly than large corporations because you can easily and quickly get a financial saving from the public cloud.”
 
Goldstuck believes that every company, from the largest JSE-listed corporation to SMEs, should already be exploring the benefits. By 2013, when more than half of South Africa’s largest corporations are reaping the benefits and early doubts have been dispelled, it will reach a tipping point that will encourage every other company to embrace it, he says.
 
Which operations should be moved to the cloud first varies with each organisation. A bank, for instance, should ideally not put customer data into a third party data centre.
 
One lingering problem is a current lack of standards, however, as that discourages many potential users. Big industry players like Microsoft, VMware, Apple and IBM should devise clearer standards for the benefit of the whole industry, Goldstuck says.
 
Lizelle Christison, manager for IP EXPO, said the trends being seen in corporate South Africa were mirroring trends first seen by IP EXPO’s sister show in the UK. “We are mirroring the UK trends, although local adoption rates are lagging behind by two or three years,” she says.
 
* The full results of the IP EXPO Corporate Cloud Survey 2011 and analysis of its findings were presented at the IP EXPO conference on 15 November 2011.  The research was conducted with 100 JSE-listed companies each employing 200 people or more.