Cloud Computing is sustaining remarkable growth in South Africa, as companies undergo Digital Migration and seek to maintain Competitive Advantage.

The cloud computing market in South Africa continued to experience impressive growth of 38% in 2022, supported primarily by multinational hyperscaler cloud providers expanding their presence in the region. According to BMIT’s latest Cloud Market Report, this trend is expected to continue, with a projected compound annual growth rate (CAGR) of 27% over the next five years. By 2027, the cloud computing market in South Africa is predicted to reach a value of R79.7 billion.

“Cloud computing is seen as a key enabler of digital transformation initiatives. It allows organisations to modernise their IT infrastructure, adopt new technologies like artificial intelligence and machine learning, and innovate more rapidly,” says Christopher Geerdts, Managing Director of BMIT.

Cloud adoption has significant potential to save costs in many cases, but it also presents a set of new challenges in cost management and optimisation. Organisations are finding they must carefully manage their cloud resources to maximise efficiency and ensure optimal utilisation.

Data analytics has become a key driver for decision-making and revenue generation. By leveraging cloud-based data analytics platforms and services, businesses are finding they can extract valuable insights from their data and make informed, data-driven decisions. The cloud also offers opportunities for data monetisation and improved revenue streams.

The hybrid cloud deployment model continues to be the preferred choice for organisations. “Organisations in South Africa are continuing to adopt a hybrid cloud strategy, leveraging multiple cloud service providers and combining public and private cloud environments,” notes Geerdts, emphasising the flexibility and control provided by the hybrid cloud approach.

However, challenges exist in the adoption of cloud computing. Migrating existing applications, databases, and workloads to the cloud requires careful planning, resource allocation, and potential application refactoring. Compliance and governance requirements specific to industries and regions also pose challenges for organisations adopting cloud solutions. Additionally, legacy workloads which are resistant to migration necessitate innovative approaches to application modernisation while minimising disruption for customers.

These challenges represent opportunities for local cloud service providers to add value to their customers. Another important challenge that service providers are addressing is the escalating number and severity of cloud-based security attacks. The industry is also facing severe skills shortages, which represents both a challenge and an opportunity for providers of managed services.

Looking ahead, BMIT notes several trends that are shaping the cloud computing landscape in South Africa. Automation and AI are revolutionising various aspects of organisations, including cloud management, security, and skills development. Cloud-native development is gaining traction, as applications designed specifically for cloud platforms offer enhanced manageability and ease of updates. BMIT is seeing successful new businesses being built entirely in the cloud environment – in digital banking and other financial services, for example.

Cloud marketplaces are poised to become the go-to platform for cloud solution providers, particularly in the SME sector. These marketplaces provide guidance to end customers who may be unsure where to start their cloud solution journey, simplifying the adoption process.

Finally, edge computing solutions and the integration of IoT with 5G are emerging as crucial considerations. Processing and analysing data closer to the source or edge devices, rather than sending it to a centralised cloud data centre, allows for faster insights and improved performance in specific use cases.

BMIT’s SA Cloud Market Report 2023 outlines key industry and market dynamics, as well as providing market sizing and projection estimates. As South Africa embraces cloud computing, organisations can unlock new opportunities for growth, innovation, and competitiveness. “By overcoming challenges and capitalising on emerging trends, businesses can transform their IT landscape and thrive in the digital era,” concludes Geerdts.