Why African business is building its cloud budgets

A recent survey has revealed that as cloud is becoming more affordable and accessible, a bigger portion of African IT budgets is being allocated to it, allowing them to deploy complex business models at a fraction of the cost.

Cloud computing is reaching ubiquitous adoption among enterprises in Africa. Shrinking IT budgets and increasing pressure to ‘do more with less’ is making cloud computing an attractive option for businesses that want to scale their operations and digitally transform their infrastructure. As the cloud is more affordable and accessible than ever before, a bigger portion of African IT budgets is being allocated to cloud computing spend.

This was one of the key findings of Cloud Africa 2018, a research project conducted by World Wide Worx and F5 Networks, across Kenya, Nigeria and South Africa earlier this year, where we asked decision-makers at 300 medium and large organisations about their cloud computing usage, benefits, and intentions.

Budgets aim for the sky

These were the biggest take-outs from the research when it came to cloud budgets:

·       Nine out of ten (90%) companies in South Africa increased spending on cloud computing last year, and 83% will increase these budgets in 2018.

·       In Nigeria, 78% increased budgets last year, and 94% will increase their spending this year.

·       In Kenya, 74% of companies increased cloud budgets in 2017, rising to a massive 98% in 2018.

·       Not more than 2% of organisations in any of the countries surveyed decreased cloud spending last year.

·       Only 5% of South African respondents said they would decrease cloud spending this year, the majority of which were in the engineering sector. No companies in Kenya or Nigeria will decrease spending this year.

These spending trends are in line with global forecasts from the IDC, which expects spending on public cloud to increase from $67 billion in 2015 to $162 billion in 2020. Worldwide, cloud computing spending has grown at 4.5 times the rate of IT spending since 2009 and is expected to grow at more than six times the rate of IT spending from 2015 through 2020.

Hard-to-ignore benefits

The Cloud Africa 2018 research found that one of the biggest reasons for the increased spend on cloud computing is that African organisations are starting to realise the benefits and impact of cloud computing on everything from business innovation and market share, to customer experiences and brand perception.

Organisations are also starting to understand the value of cloud computing in enabling more complex business models and orchestrating better integration and collaboration across their infrastructure deployments. Higher levels of trust in cloud computing means organisations are more comfortable virtualising mission-critical business processes and applications.

This has seen many businesses in Africa – which are not as hampered by legacy infrastructure investments as their counterparts in developed markets – pursue a cloud-first strategy as they prioritise increased automation and management of cloud services without vendor lock-in.

Apps become cloud native

Another trend fuelling growth in cloud computing is the migration of applications and workloads from on-premises data centres to the cloud, as well as the development of cloud-ready and cloud-native applications. This leaves African organisations with little choice but to invest in cloud computing if they want to remain relevant and make use of new digital technologies.

Our research found that organisations in South Africa and Kenya expect 26% to 50% of applications to be cloud native by 2021, from around 1% to 25% today. In Nigeria, half of the respondents estimate that over three quarters of applications will be cloud native by 2021.

Along with the Internet of Things, artificial intelligence, virtual reality and 3D printing, cloud computing is still making the biggest and most measurable impact on businesses all over the world. With the continued roll-out and investment in supporting infrastructure – like fibre connectivity – organisations in South Africa, Kenya and Nigeria are not only unlocking access to global markets and innovation through the cloud but are also well-positioned to tap into the growing demand for outsourced cloud services from businesses that want the advantages of scalability and flexibility without the massive upfront investment.