South African businesses rush to the cloud, expect 75% penetration in 2 years

South African business is poised for massive adoption of cloud computing, with some 75% of all applications set to be in the cloud within two years. This bold assertion comes from cloud computing services specialist Alto Africa, which says 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 is 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,” says Alto Africa director Oliver Potgieter.

Right now, he puts cloud penetration 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.”

Furthermore, he says cloud growth can be expected across the board. “It is being led by big business, but the midmarket and SMEs stand to gain as much or more by moving into the cloud.”

Having spent a decade in the United Kingdom migrating some of the world’s largest financial services companies into the cloud, Potgieter says familiar patterns are emerging. “The local environment for cloud has already dramatically changed in the past two years, moving rapidly towards a state of maturity. 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, he says cloud momentum depends on many parts of a complex ecosystem falling into place. 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’,” Oliver remarks.

There are international precedents, too. “In the USA and the United Kingdom, it took 3 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,” he says.

In Australia, which can be seen as a classic ‘follower market’, Oliver says this ramp 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,” he states.

In addition to answered questions around security and stability, there are case studies and reference sites aplenty, and cloud is no longer anything new, continues Potgieter. “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.”

He puts the South African market at perhaps 6 years behind the leading market adopter, the USA. “Our anticipations of growth are not rocket science and they are not way out there. The local market is unique from a lot of perspectives, but none of them are restrictive to cloud adoption.”

And he expects uptake to come from across the spectrum. “Interest isn’t limited to any one vertical industry. In terms of customer size, the momentum is coming from mid-size 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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South African businesses rush to the cloud, expect 75% penetration in 2 years