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BCX, Alibaba deal set to expand cloud choices for SA

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 22 Sept 2022
BCX and Alibaba Cloud executives in Thailand after the signing the exclusive deal.
BCX and Alibaba Cloud executives in Thailand after the signing the exclusive deal.

Telkom subsidiary BCX has signed an exclusive deal with Alibaba Cloud to bring the Chinese company’s services to the South African market.

The parties signed an exclusive distribution contract yesterday in Thailand, to grant BCX exclusive rights and authority to distribute Alibaba Cloud’s products and services in South Africa.

The signing ceremony was attended by Jonas Bogoshi, CEO of BCX; Selina Yuan, Alibaba Group vice-president and Alibaba Cloud Intelligence international president; and Daniel Jiang, general manager of the Middle East and Africa for Alibaba Cloud Intelligence.

The exclusive deal comes after ITWeb first reported in July that Alibaba Cloud was set to launch in the local market, after inking a channel agreement with start-up company BGPAfrica.

Mervyn Goliath, MD of BGPAfrica, has since welcomed the BCX-Alibaba pact, saying it “will certainly give impetus to much-needed digitalisation in the region”.

The entrance of Alibaba Cloud services in SA via BCX comes as multinational hyperscalers − such as Amazon Web Services (AWS) and Microsoft Azure − have already established data centres in South Africa, as more organisations take their workloads to the cloud.

With the recent landing of the Equiano subsea cable, Google recently told ITWeb that it will also throw its hat into the ring, as it is looking to invest in more cloud infrastructure in SA to take on the incumbents.

According to Statista’s cloud market report, in Q4 2021, AWS was the leading cloud computing service provider with a global market share of 33%, followed by Azure (21%), Google Cloud (10%), Alibaba Cloud (6%), IBM Cloud (4%), Salesforce (3%), Tencent Cloud (3%) and Oracle (2%).

Harnessing the next frontier

In a statement, BCX says Alibaba Cloud offers a range of cloud computing products and services for the full gamut of ICT applications, including databases, networking, security, analytics, big data and application services.

According to the Telkom unit, this is complementary to BCX’s offering as a vendor-agnostic systems integrator that develops solutions for clients based on their exact use case across a wide range of technology spheres and vertical sectors.

Alibaba’s Jiang says: “We are happy to build a partnership with BCX to bring advanced, secure and reliable cloud services and technologies to businesses in SA and beyond. We believe our partnership with a local industry leader like BCX will further upscale the local cloud computing market and better support local businesses to embrace a digital economy.”

BCX believes the South African market will benefit from greater choice, competitive pricing and hyper-performing ICT and cloud technologies enabled by the partnership.

The companies aim to combine their technology capabilities, expertise and strengths to deliver services that allow businesses to take advantage of cloud computing technologies to grow and evolve.

BCX CEO Bogoshi says: “Africa is recognised as the next frontier in the adoption of emerging technologies. We are proud to partner with a reputable global player, such as Alibaba Cloud. The partnership gives BCX the opportunity to expand our reach and services, and create additional revenue streams, which is part of our broader strategy to grow our business and expand our partner eco-system.

“As the exclusive South African distributor of Alibaba Cloud, BCX will be the primary contact for all resellers in SA and intends on providing Alibaba Cloud services across the continent through distribution and channel partners,” adds Bogoshi.

The companies aim to enhance the technology capabilities of small, medium and large businesses across the continent through the partnership.

Telkom CEO Serame Taukobong recently said he is planning to rebuild BCX, an ailing company in the group, which has continued to suffer losses in recent years.

In the current reporting period, BCX’s revenue declined by 2.6%, a situation the CEO said his team will turn around soon.

New competitive force

Commenting on the deal, Jon Tullett, IDC associate research director for IT services and cloud, Sub-Saharan Africa, says: “It’s always good to see new global cloud investment in the country, and it’s likely to be welcomed not just as a new entrant, but as a new force driving competitive cloud business across the entire ecosystem of existing providers and partners.”

Tullett believes Alibaba Cloud will have a challenge competing with the momentum of the existing hyperscalers, since they have strong established partner networks and customer bases, “but at the same time, it’s important to highlight that CIOs in SA are fully committed to deploying workloads into multiple clouds and looking for the best options in alternative platforms; and that practice will work in Alibaba’s favour”.

On whether the deal will change the fortunes of the under-performing BCX, Tullett says: “It’s a major deal to have signed, but success will require a lot more – the full go-to-market strategy isn’t yet clear, and there will be numerous opportunities to build a services portfolio around a central cloud offering.

“It certainly has the potential to make a big difference to BCX, but the deal itself won’t be the metric of success. Operationalising it and turning it into revenue, that’s the metric and it’s one that will take some time to deliver.”

Nonetheless, he acknowledges Alibaba Cloud is a significant cloud player worldwide, noting Western markets tend to overlook the scale of Alibaba (and other Chinese players like Huawei).

“It’s a top-tier hyperscale player in IaaS [infrastructure-as-a-service], and a growing contender in applications. Alibaba Cloud doesn’t have the same geographic reach in terms of deployed regions as its main rivals, but in terms of IaaS service portfolio, it’s right up there.”

Tullett adds: “The big questions here aren’t Alibaba Cloud’s capabilities, but BCX’s strategy and execution to bring it to market.

“It’s very unusual for a cloud provider to sign an exclusive relationship with a delivery partner – other cloud operators have forged wide partner networks to accelerate adoption. The terms of that relationship will play a big role in determining the resources that are deployed to build out services, and their success in SA. As a single measure, the availability of skills to local customers will be a major factor.”