Time to get your head in the cloud

According to a recent report, the South African business sector, including government, is divided into three equally-sized cloud banks: those with their head in the cloud, those planning to get their heads in the cloud, and a third group keeping their feet on terra firma.

This is according to the recent “Cloud Computing Market Dynamics in Middle East and Africa (MEA)”” report, compiled by Springboard Research on behalf of Microsoft. The report found a “”surprisingly high”” awareness of cloud computing in the region, compared to other growth markets such as Asia Pacific.

Cloud computing is a collection of IT-enabled resources and capabilities that can be delivered via the internet or an internal network as a service.

Two-thirds of South African businesses are either currently using, or planning, cloud computing initiatives, according to Springboard Research lead analysts Michael Barnes and James Erickson. The cloud laggards – those companies and government entities not employing cloud services at all – are waiting for improved bandwidth and lower costs before they even consider moving into the cloud. However, the massive technology investments made before the World Cup have left the country with a fairly robust ICT infrastructure, which should act as the catalyst for increased growth within the sector.

Storage is currently the most widely used cloud-based solution in South Africa, with email a close second (albeit 12% lower than the regional average). Disaster recovery is generally used by bigger enterprises, with more than 1 000 employees, rather than smaller organisations, while the telecoms / media sector, manufacturing and the public sector make most use of cloud-based email.

South African organisations are bullish on the cost savings potential of cloud. Approximately 56% of respondents view cloud computing as primarily a cost-saving initiative. Just over a third (36%) of South African respondents view cloud as a strategic investment, although Microsoft’s Desmond Nair says this figure is “”increasing daily”” as companies become more confident with cloud solutions.

The report found that small and medium-sized businesses (SMBs), particularly in the 100-299 employee range, are the most aggressive adopters, with 71% currently using or actively planning to adopt cloud-based solutions.

Meanwhile, 63% of large organisations are currently using or actively planning cloud initiatives.

“”One of the ‘easy wins’ of cloud computing is that that it frees up significant resources within a business’ technology infrastructure almost immediately, that can be redirected to other areas,”” said Nair.

“”Once those savings are rolling in, though, companies start looking at ways of using the cloud to innovate around their core business processes. “”Nair said that although there were significant opportunities for industries like telecoms, finance and the public sector to take advantage of the cost-saving potential and flexibility presented by the cloud, many were still in the early stages of adoption. The report suggests that public sector (81%) and telecoms/media (75%) consider cloud most relevant to their organisations.

The report highlighted lack of knowledge and security are the primary cloud-related concerns in South Africa – but a large percentage of respondents (45%) believe that cloud computing is either more secure than, or just as secure as, on-premise solutions.

There are early cloud success stories. The local government-owned Cape Town Broadband Fibre Optic Network, which went live in May 2010 and is worth around US$17 million, is successfully linking 50 municipal buildings, giving those connected more than 1 000 times the bandwidth they had before.

In the private sector, Medi-Clinic Hospital Group’s Cloud solution is set to save the group around US$650,000 by avoiding a bandwidth upgrade for sites within their network and increase download speed by up to 80%.

Springboard sees bandwidth as an ongoing inhibitor to cloud uptake in South Africa. Many cloud applications are still too bandwidth intensive to be fully utilised by South African SMEs. They generally use a DSL connection, which gives at best a 4MB download and 640k upload speed – not enough for most cloud applications.

However, this is changing rapidly, says Microsoft’s Nair. Submarine cable projects such as SEACOM, WACS, EASSy and others will greatly improve broadband capacity and affordability, and added to ongoing telecommunications infrastructure improvements being undertaken by the likes of Ericsson, MTN, Neotel, Huawei, Cell C and others, South Africa’s capacity for working in the cloud is “”improving by the day.””

The report was based on interviews with 40 small, 30 medium and 30 large enterprises in South Africa. Respondents consisted of approximately 83% IT decision-makers and 17% business decision-makers in banking/financial services, telco’s & manufacturing, oil & gas, public sector and 19% other businesses.

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