South Africa’s cloud computing landscape is undergoing a significant transformation as organisations increasingly embrace multi-cloud strategies to enhance their operations and services.
The South African cloud services market witnessed impressive growth last year, expanding by a remarkable 31%, highlighting the burgeoning demand for cloud solutions across multiple sectors.
This growth is documented in the recently published SA Cloud Market Report from BMIT, a respected local market analysis firm. The report underscores a wide-scale adoption of cloud technologies among businesses, fuelled by the critical need for agility, scalability, and cost-efficiency in today’s rapidly evolving digital environment.
In preparing the report, BMIT undertook thorough secondary research and conducted face-to-face interviews with industry leaders from cloud original equipment manufacturers and system integrators in South Africa, ensuring a comprehensive view of the market landscape.
Furthermore, a substantial survey collected insights from 949 knowledgeable individuals regarding their organisations’ cloud usage, shedding light on current trends and perspectives within the sector.
Chris Geerdts, BMIT’s managing director, emphasised that a significant shift towards multi-cloud strategies is particularly evident in sectors such as banking, retail, and media. This shift highlights a new level of maturity in cloud adoption as organisations judiciously select various cloud providers tailored to specific workloads, optimising both performance and cost outcomes.
Moreover, Geerdts forecasts that the cloud services market is set to sustain a robust compound annual growth rate of 24% over the next five years, driven by several key factors elaborated upon in the report.
“As on-premises data centres reach the end of their operational lifespan, companies increasingly view cloud computing as an attractive alternative. The compelling benefits include cost efficiency, scalability, and flexibility, especially in light of the ongoing challenge of load-shedding,” Geerdts noted.
“Another significant factor is the rising popularity of hybrid cloud models. These models uniquely enable businesses to modernise their IT infrastructure while simultaneously maintaining control over sensitive data and critical workloads.”
“The growing demand for data-driven insights, coupled with the increasing reliance on artificial intelligence, necessitates scalable and robust cloud platforms capable of managing extensive data sets and substantial computational tasks. Highly scalable and reliable platforms are essential for sectors like e-commerce and fintech that experience fluctuating traffic demands,” he added.
BMIT asserts that cloud platforms create an optimal environment for these high-demand areas, nurturing innovation and streamlining the development of new products and services in the digital era.
In addition, the recent launch of the government’s “Final National Data and Cloud Policy” emphasises the critical role of cloud computing in South Africa’s digital transformation journey.
The policy advocates for a “cloud-first” strategy, underscoring the significance of cloud technologies in enhancing government service delivery, driving socio-economic growth, and bolstering the digital economy as a whole.
While the advantages of cloud computing are clear, Geerdts cautions companies against “flying blind into the cloud” during their transition from traditional capital expenditure models to operational expenditure frameworks.
The migration initiatives necessitate meticulous planning and vigilant monitoring, making it essential for organisations to comprehend new cost structures and their implications.
“The eventual dissatisfaction regarding unrealised cost savings often arises from a misunderstood cloud economics framework, highlighting the essential need for transparent pricing models and robust cost management strategies. The meticulous planning, migration, and ongoing operations demand appropriate skillsets and expertise, whether sourced internally or through outsourcing partnerships,” he explained.
Geerdts also highlighted that IT service providers and cloud service marketplaces stand to gain significantly from this high-growth environment, especially against the backdrop of pervasive digital transformation affecting businesses and society alike.
However, he emphasised the necessity of deep market understanding to identify where genuine opportunities exist.
Sound market analysis and comprehension are imperative for achieving clarity in navigating the rapidly evolving cloud landscape, he urged.
BMIT acknowledges that despite its optimistic projections, the cloud market is not without its challenges. Issues such as skills shortages, the complexities involved in migrating legacy systems, stringent compliance and data governance demands, and entirely novel security approaches remain prevalent.
Nonetheless, Geerdts is optimistic that the challenges confronting businesses will also open up avenues for cloud service providers and other players to add substantial value as the market is projected to reach R92 billion by 2028.
**Interview with Chris Geerdts, Managing Director of BMIT**
**Editor:** Welcome, Chris! It’s great to have you with us today to discuss the recent developments in South Africa’s cloud computing landscape.
**Chris Geerdts:** Thank you for having me! It’s an exciting time for cloud services in South Africa.
**Editor:** Your recent report highlights a remarkable 31% growth in the cloud services market last year. What do you believe is driving this rapid adoption among organizations?
**Chris Geerdts:** The primary drivers are agility, scalability, and cost-efficiency. With the digital landscape evolving so quickly, organizations have realized that traditional on-premises infrastructure cannot keep up with their needs. As a result, many are turning to multi-cloud strategies that allow them to leverage the strengths of various cloud providers tailored to specific workloads.
**Editor:** Multi-cloud strategies are indeed becoming popular. Can you elaborate on the specific sectors where this trend is most pronounced?
**Chris Geerdts:** Certainly! We’ve observed significant adoption in sectors like banking, retail, and media. These industries are increasingly mature in their cloud usage, selectively adopting multiple cloud services to optimize both performance and costs.
**Editor:** You also forecast a robust compound annual growth rate of 24% for the cloud services market over the next five years. What key factors are contributing to this optimistic outlook?
**Chris Geerdts:** Several factors play a role, including the end of life for many on-premises data centers and the appealing benefits of cloud computing in terms of cost efficiency and scalability. Additionally, the rise of hybrid cloud models allows businesses to modernize their IT infrastructure while retaining control over sensitive data.
**Editor:** That’s an interesting point. Speaking of sensitive data, how crucial is the demand for data-driven insights and AI in shaping cloud strategies?
**Chris Geerdts:** It’s crucial! Many sectors, particularly e-commerce and fintech, rely on scalable and robust cloud platforms to manage large data sets and complex computations. The growing need for real-time data insights and AI capabilities means that businesses must ensure their cloud environments can handle fluctuating traffic demands.
**Editor:** Recently, the government launched the “Final National Data and Cloud Policy.” What implications does this have for the digital transformation journey in South Africa?
**Chris Geerdts:** The policy is significant as it advocates for a “cloud-first” strategy, highlighting the critical role of cloud computing in enhancing government services and the broader digital economy. It’s a clear indication that cloud technologies will be pivotal in driving socio-economic growth.
**Editor:** Before we wrap up, do you have any words of caution for companies entering the cloud space?
**Chris Geerdts:** Absolutely. While the benefits of cloud computing are immense, organizations should not “fly blind” into the cloud. A strategic, informed approach is essential to ensure a successful transition that aligns with their specific needs and business objectives.
**Editor:** Thank you, Chris, for your valuable insights! It’s clear that South Africa is poised for significant advancements in cloud technology.
**Chris Geerdts:** Thank you for having me; I look forward to seeing how these trends develop!
