Cloud services demand is flying high but many are flying blind
The South African cloud computing market continued its remarkable growth last year, with the Cloud Services sector expanding by an impressive 31%, according to BMIT’s recently released SA Cloud Market Report. This surge underscores the increasing adoption of cloud technologies by businesses across various industries, driven by the need for agility, scalability, and cost optimisation in an increasingly digital landscape.
Chris Geerdts, BMIT’s Managing Director, says the market is witnessing a notable shift towards multi-cloud strategies, particularly in the banking, retail, and media sectors. Organisations are strategically selecting different cloud providers for specific workloads to optimise performance and cost-efficiency, demonstrating a growing maturity in cloud adoption.
Based on these trends, he sees the cloud services market maintaining a very robust Compound Annual Growth Rate (CAGR) of 24% over the next five years. This forecast is fueled by several key factors which are outlined in the Report.
For example, as the data centres that businesses have on their premises reach the end of their lifecycle, cloud computing is seen as a compelling alternative, offering cost savings, scalability, and flexibility, particularly with the ever-present threat of loadshedding.
Another driver is the popularity of hybrid cloud models, which enable businesses to modernise their IT infrastructure on the one hand while maintaining control over sensitive data and critical workloads on the other.
Underpinning this is the growing demand for data-driven insights and the increasing adoption of artificial intelligence (AI) which need scalable and powerful cloud platforms to operate, as they deal with large data sets and significant computational requirements. E-commerce and fintech also need platforms which are scalable, as well as very reliable, and flexible, to handle fluctuating traffic.
Cloud platforms offer the ideal environment for these areas of demand, whilst also fostering innovation by simplifying the development of new products and services in the digital age.
The government’s recently published “Final National Data and Cloud Policy” further reinforces the importance of cloud computing in the country’s digital transformation journey. The policy promotes a ‘cloud-first’ approach and emphasises the role of cloud technologies in enhancing government service delivery, fostering socio-economic development, and supporting the digital economy.
Whilst the benefits of cloud are indisputable, Geerdts warns against companies ‘flying blind into the cloud’ as they shift from traditional Capex models to Opex models. The migration process takes careful planning and monitoring and it is crucial to understand new cost structures. The perception, later on, of unrealised cost savings, often stems from a lack of understanding of cloud economics, which highlights the need for transparent pricing models and comprehensive cost management strategies. The planning and migration process and ongoing operations require appropriate skillsets and experience, be they in-house or outsourced.
Geerdts also notes that there are many opportunities for IT service companies and cloud service providers to benefit from this high growth market, against a backdrop of the fundamental digital transformation of businesses, and society itself. However it is important to understand the market deeply and know where the opportunities lie. Sound market analysis and understanding is therefore important to enable ‘instrument flying’ through the fast-moving cloud terrain.
Despite the positive outlook, the market faces many challenges, including skills shortages, the complexities of legacy system migration, a complex array of compliance and data governance requirements, and fundamentally new approaches to security. However, Geerdts believes these challenges which businesses face also present opportunities for businesses and cloud service providers to add value to what BMIT projects to be a R92 billion market by 2028.