Cloud computing presents a number of interesting business opportunities across Africa, but with them come certain tax and legislative challenges.
So says Frank Rizzo, technology sector leader for KPMG Africa, who adds that, thanks to new availability and lower cost of high-speed bandwidth across Africa, cloud computing is becoming a viable technology on the continent. It presents interesting business cases and opportunities, he notes. "With all this new bandwidth, the question is how to utilise it, and how do we leapfrog legacy systems to use this new technology? It creates numerous business opportunities for large enterprises and entrepreneurial opportunities for start-ups.
"For instance, the cloud offers a good platform for business to expand across Africa or to follow clients moving into Africa. This is the ideal time for enterprises to look at ways to maximise the opportunity presented by cloud across Africa," he says.
However, he sounds a note of caution. "But there are questions to consider, such as taxes, legislation and legal jurisdiction. For example, the issue of data privacy and data movement needs to be considered in areas such as Namibia and Madagascar, which have quite onerous legislation around data movement. Companies must be aware of taxation issues - for example, if taxation happens at source, where is the source of the transaction? Where do you establish your cloud footprints? Where - legally - does your transaction reside? And what tax and regulations is it subjected to?"
Another potential stumbling block, he says, is the question of data responsibility. "You may engage with a cloud service provider, but many of them are start-ups themselves, so there is a risk of them failing. Business needs to ask: what happens to my data? What are the data exit clauses? This becomes an interesting legal dilemma."
However, Rizzo says these challenges are not insurmountable. "Businesses should simply not 'dive in blind'. They should be aware of the possible pitfalls and seek expert guidance. As with anything brand new, there are issues to consider carefully. Businesses cannot just ship data off to a cloud service provider without knowing who they are, where they are and what the contract clauses are."
Cloud computing was cited as a top disruptive technology in a recent global KPMG survey. However, it has now passed the hype phase and is entering the 'how' phase, says Rizzo. While he believes SA is slightly behind the global curve in terms of maximising its use of the cloud, he expects to see cloud computing becoming mainstream over the next few years.
Rizzo notes that KPMG's recent global research on cloud adoption, "The cloud takes shape", found that organisations are moving from the 'when and why' to the 'how?'
"Now, companies are accepting that they cannot ignore it, and they are asking how they should move. And moving to the cloud is proving more complex than was initially thought. Survey respondents said data management was particularly complex, while other concerns involved system integration for legacy systems, the issue of multiple cloud providers and areas of jurisdiction. Now, enterprises in South Africa are saying 'we can't ignore it', but asking 'how do we embrace it?'"
Rizzo will address the upcoming ITWeb Cloud Computing Summit on the business opportunities and challenges presented by the cloud, and the findings of the recent KPMG survey. For more information about the event, click here.
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