South African companies pay exorbitant prices for cloud computing services, with the larger enterprises forking out funds to the tune of millions of rands a month to service providers.
So said Tumelo Ramaphosa, founder and CEO of StudEx Group, parent company for IT consultancy StudEx Enterprise, cryptocurrency-based StudEx Wild Life and community networking vehicle StudEx Live.
Speaking to ITWeb about the local cloud market, Ramaphosa noted that while cloud is having an immense impact on helping companies increase efficiency, business agility and innovation, many local firms still pay steep capital expenditure for cloud services, defeating the primary objective of migrating to cloud computing.
On a global scale, Ramaphosa explained that companies around the world spend billions of dollars annually on cloud services, resulting in zero return on investment for some firms: Apple spends more than $30 million on Amazon’s cloud every month, while Snap is spending over $2 billion to host its Snapchat service on Google Cloud.
Facebook said it spent $3.7 billion on data centres, servers and network infrastructure in the first quarter of 2020 and Uber reportedly paid Google $53 000 per day to use Google Maps, which is hosted on the Google Cloud Platform.
With unnecessary spending costing South African firms no less than global counterparts, San Francisco-based StudEx Enterprise has expanded to SA on a mission to help local companies to optimise their cloud spend and significantly lower their monthly IT expenditure.
“South African companies are grappling with exorbitant bills, high spend and huge funds wasted on unmanaged cloud services, resulting in a significant portion of their budget flowing into IT services, with much of the expected savings not materialising.
“In our work in the US, we’ve seen many companies struggling to manage their cloud spend, mainly because businesses are meant to focus on their primary objective, which is servicing clients in their area of expertise. And this is not any different in SA.”
StudEx Enterprise has collaborated with artificial intelligence firm Reserved.ai to use its automated machine learning cloud financial management platform to monitor companies’ cloud usage 24 hours a day to deliver cost optimisation suggestions and strategies to maximise savings and minimise risk.
Reserved.ai founders Aran Khanna, Nikhil Khanna, Daniel Christianto and Aran Khanna are considered experts in cloud computing, having worked as architects for AWS and Microsoft Azure.
Together with StudEx, the companies say they have helped over 50 clients in the US to save costs on cloud by tying key metrics to net costs from any segment of a company’s infrastructure.
StudEx Enterprise has established a partnership with Amazon Web Services (AWS) and Google Cloud to help local customers save up to 35% on costs, while saving operations and finance teams hours a week on cloud billing administration.
The company says it is engaging Microsoft and is hoping to offer similar services to Azure customers before the end of 2020.
“We are currently doing proof of concepts among SA companies and hosting webinars to help them understand the value of cloud computing. Cloud can be a complicated technology to use and many companies miss out on the true value of their cloud migration objectives. This is because one requires specialised solutions architects to help companies track, trace, optimise and calculate their cloud spend using advanced technologies and then gain efficiency and get good returns on their cloud investments.”
Having operated in the US since 2016, StudEx Enterprise and Reserved.AI have customised their tools to better adapt to the African market’s requirements, he notes.
Rude awakening
With multinational companies opening data centre facilities locally, SA is witnessing intense competition in the cloud space.
In April, AWS announced the opening of its data centre region in Cape Town. With this launch, AWS now spans 73 Availability Zones within 23 geographic regions around the world, and has announced plans for 12 more Availability Zones across four more AWS regions in Indonesia, Italy, Japan and Spain.
The opening of the AWS data centre in Cape Town comes amid a hive of activity in SA’s cloud computing space. Last year saw US-based software giant Microsoft open two data centre regions in SA, while Chinese telecommunications giant Huawei started offering its cloud services locally in March last year.
Other cloud players expected to launch data centres this year include Oracle and Norwegian-based Web company Opera.
“It’s great that these global tech companies are seeing opportunities in Africa because Africa is the next big thing! AWS data centres will allow AWS to offer affordable services to its customers and ensure optimum efficiency, while helping them complying with data laws. It will also allow our company to pull data from the local region, which will result in lower prices paid by clients.
“AWS will also be able to achieve its goal of upskilling African SMEs and software engineers in cloud computing skills, having already millions in this project,” he explains.
Ramaphosa believes that while the cloud wars have led to tight competition in the local market, the extent of cloud appetite in SA lags behind global counterparts, leaving much room for growth as more local firms recognise its value.
The coronavirus pandemic has been a rude awakening for many South African businesses, with some scrambling to gear up their IT infrastructure in efforts to gain online presence, he says.
“The apprehension towards cloud by many local businesses is attributed to the lack of knowledge on the benefits of cloud. Some companies which have missed opportunities to provide their customers with robust, agile services and products of a global standard are awaking to the realisation of what today’s digital customer requires.
“This is why we are currently hosting free webinars to educate companies on gaining utmost value from cloud migration − consumers are now online but sadly not all local businesses are online,” concludes Ramaphosa.