Cloud-based solutions refer to on-demand services, computer networks, storage, applications or resources accessed via the Internet and through another provider’s shared cloud computing infrastructure. The benefits of cloud solutions to end users and businesses include increased capacity, scalability, functionality and reduced maintenance and cost for computer infrastructure or in-house staff. Additionally, cloud-based solutions can enable companies to focus on revenue driving initiatives rather than time-consuming, non-core business tasks. Industry pundits look at cloud computer pricing models, sites and applications, cloud providers, storage and how enterprises are adopting cloud computing on the African continent.
Despite the African continent accounting for only 1% of the global public cloud market and with a cloud penetration rate of only 15%, the market has doubled in the past three years and is expected to grow at a compound annual growth rate (CAGR) of 17 to 20%.
In the latest results, SAP’s cloud revenue for the EMEA region increased by 29%, and with Africa’s relative lack of legacy on-premise systems, the continent is primed for greater adoption of cloud technologies.
Cameron Beveridge, Regional Director for Southern Africa at SAP, said: “We are seeing the demand for cloud solutions from customers, especially in the mid-market space. Due to the impact of the pandemic and the continued disruption across most industries, cloud tools that help organisations eliminate uncertainty and enable new ways of engagement with customers, partners and employees will likely drive adoption trends.”
Beveridge said one of the most vibrant segments for cloud adoption is SMEs. “The sector is vital to Africa’s fortunes and in Kenya, for example, SMEs accounted for 98% of all businesses and created 30% of all jobs in 2017,” he noted. “For all organisations, the past two years have forced business leaders to re-evaluate their strategies and reframe the role of technology in their business models. The pandemic has been a catalyst for accelerated Digital Transformation and cloud services adoption.”
Beveridge explained that in a global survey conducted by McKinsey, executives stated that the pandemic had accelerated the digitisation of their supply chain, customer interactions and internal operations by three to four years. “One of the most obvious changes has been the shift to remote work in the early stages of the pandemic, and the subsequent formalisation of hybrid work models among a large percentage of African enterprises. This shift in the workplace has created a need for new tools to measure, manage and motivate the performance and productivity of hybrid workers, and forcing organisations to adopt new management styles,” he added.
Manish Mishra – Head, Middle East and Africa (MEA), Freshworks, said competitiveness today requires a digital agility that you cannot get outside a cloud-based environment. Mishra said because of the cloud’s architecture, you have this innate ability to pilot use cases easily and cheaply. “That allows businesses to take innovative leaps with less risk, and to subsequently scale rapidly and capitalise on new market opportunities,” he said. “The strongest adoption rates in Africa can be seen in telecoms, media, BFSI, and retail. Decision makers in all these industries are aware of the need to optimise digital experiences for customers and employees, which can only be done through rapid rollout cycles, hence the need for cloud.”
Given the appetite for cloud computing, what issues should CIOs pay attention to when considering a cloud move?
Firstly, said Beveridge, organisations need to be clear on the objectives of the shift to cloud. “A successful migration requires that organisations have a clear understanding of every business application, how it is used, and which ones can deliver greater value to the organisation if it shifts to a cloud environment,” he said. “Secondly, organisations need to set clear key performance indicators so they can measure success and identify areas of improvement. Aspects such as usage, cost, speed, availability and security all determine the success of the migration at different stages of the migration.”
He pointed out that once a cloud provider has been selected, organisations should have access to a number of tools that ease the migration process and do some of the hard work of moving systems and processes to a cloud environment.
At Synthesis, Dean Maier, Cloud Practise Lead, believes there are more advantages cloud solutions offer enterprises on the African continent.
Maier said perhaps the single greatest benefit of leveraging cloud solutions is flexibility and this cannot be understated and the whole premise of cloud is on-demand access to resources, and when leveraged correctly can mean that you can save a lot of money.
“This can be by using optimised instances, leveraging cold or archived storage to keep regulatory required data or by simply shutting down resources when they are no longer required. In cloud, you only pay for what you use,” he said. “Furthermore, you can respond to opportunities in the market faster by leveraging modern technology and rather focus on your business value than administrative burdens that slow down innovation.
According to Mishra, the great thing about the cloud is that it globalises technology advancement. “If a company in Tokyo develops new software for analysing efficiency on a production line, as soon as it goes live as a SaaS offering, firms in Cape Town, Nairobi or Kigali can use it the same day. By leaving behind the need to procure locally, African enterprises can innovate at their own pace,” he said. “Of course, this is also an advantage to ISVs around the world, who can expand into the continent digitally and then move to a physical presence when revenues hit critical mass.”
Maier explained that there is a misconception among CIOs that you must go ‘all-in’ on cloud to realise the benefit. “You certainly don’t. Leveraging phased migrations and building out proof of concept (PoC) environments will allow you to gather learnings first within your organisation to consider further usage,” he said. “Another pitfall would be ‘the great stall’. This is when a business case and PoC have been proven however there is no strategic initiatives or ownership to drive cloud adoption. Ensure that you equip an initiative owner with the ability to drive adoption as well as establish a cloud centre of excellence (CCoE) so that patterns and learnings can be evangelised through the organisation.
According to Maier, the greatest challenge would have to be local presence. “Naturally this is quite challenging in that there needs to be enough demand in a region to warrant local presence of a data centre or at least some form of co-located compute or networking resources. Besides demand, local presence is also impacted by factors such as physical security, geographic constraints, and electricity availability,” he noted.
With 2022 seen as the year that the industry will witness massive cloud solutions adoption in Africa industry pundits are pointing Digital Transformation strategies by organisations on the continent as the main driver.
Mishra pointed out that Digital Transformation has been proceeding at a steady pace across Africa for a while now. “The region’s telcos have been gradually putting infrastructure in place to deliver robust, highly available, scalable cloud services. Freshworks believes 2022 will be a period of accelerating momentum in this space,” he said. “Global hyperscale providers are taking notice of the emerging opportunities. Both AWS – a key partner for Freshworks – and Microsoft already have physical cloud data centres in South Africa, for example. As big players arrive, service ecosystems will spring up around them. And widespread cloud-based innovation will follow. It is an exciting time.”
SAP’s Beveridge agreed with Mishra on the pace of Digital Transformation in Africa and said with relatively low levels of legacy on-premise technology, African enterprises have an opportunity to leap ahead by adopting cloud technologies from the outset. Similarly, he added to how the continent largely skipped the broadband era and adopted 3G and other mobile connectivity options. “African enterprises could forego investment in on-premise technologies in favour of cloud technologies. In light of this and the broader shift to digitisation in the wake of the pandemic, we expect double-digit growth in the African cloud market in 2022,” Beveridge said.
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