Hyperscalers to propel SA’s cloud market to R80bn

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 26 Jul 2023
Christopher Geerdts, managing director of BMIT.
Christopher Geerdts, managing director of BMIT.

The cloud computing market in South Africa experienced 38% growth in 2022, supported primarily by multinational hyperscaler cloud providers expanding their presence in the region.

This is according to local market analyst firm BMIT’s latest SA Cloud Market Report, which notes this trend is expected to continue, with a projected compound annual growth rate of 27% over the next five years.

According to the report, by 2027, the cloud computing market in South Africa is predicted to reach a value of R79.7 billion.

International hyperscalers that have established local presence in South Africa include Amazon Web Services (AWS), Oracle, Huawei and Microsoft. Google Cloud has also made moves to imminently open data centres in South Africa.

BMIT adds that 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 that may be unsure where to start their cloud solution journey, simplifying the adoption process, it explains.

A cloud marketplace is an online storefront where customers can purchase software and services that easily integrate with, or are built on, the cloud provider’s offerings.

It also offers cloud-native applications that customers can purchase and manage on the platform. Major software and cloud service providers– such as AWS, Google Cloud Platform Red Hat and Microsoft Azure – have cloud marketplaces.

“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, MD of BMIT.

Double-edged sword

The market research firm says 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.

It notes that organisations are finding they must carefully manage their cloud resources to maximise efficiency and ensure optimal utilisation.

BMIT believes data analytics has become a key driver for decision-making and revenue generation.

By leveraging cloud-based data analytics platforms and services, it says, 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, it says, adding that 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, he says, 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,” the firm says.

“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.”

BMIT points out these challenges represent opportunities for local cloud service providers to add value for their customers.

Another important challenge that service providers are addressing is the escalating number and severity of cloud-based security attacks, it says.

The industry is also facing a severe skills shortage, which represents both a challenge and an opportunity for providers of managed services.

Looking ahead, BMIT notes several trends are shaping the cloud computing landscape in South Africa.

It says 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, the firm notes.

Edging closer

BMIT is seeing successful new businesses being built entirely in the cloud environment – digital banking and other financial services, for example.

Finally, it notes, edge computing solutions and the integration of the internet of things 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.

“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.