As hyperscale cloud service providers enter the South African market, hosters, cloud providers and system integrators alike are striving to move up the value chain and position themselves to retain their relevance.
This is according to Louis Pienaar, GM enterprise product and product development for Liquid Telecom, speaking at the ITWeb Cloud Summit yesterday.
Pienaar said local cloud providers are now in a situation where they have to become agnostic cloud providers in order to survive in a market that is being dominated by hyperscale cloud service providers.
According to Synergy Research, hyperscale companies with the broadest data centre footprint are Amazon, Microsoft, Google and IBM - each present in all four regions of the world. It says in the next five years, hyperscale providers will continue to increase their share - of service markets; overall IT budgets and spend on data centre infrastructure.
Meanwhile, Michael Needham, senior manager: solutions architecture for Amazon Web Services (AWS), pointed out that the dominance of the hyperscale providers is now, for the first time, eating into the rest of the other players that provide cloud infrastructure.
He said some of the hyperscale providers who are working from a smaller base are in 100% growth rates and in the last quarter of 2017, AWS, which works off a larger base, is sitting at 45% year-on-year growth - making the company a $20 billion dollar revenue business going into 2018.
However, Pienaar says to remain relevant, local providers must differentiate themselves and offer services that South African businesses can't get from the hyperscale providers. He said local providers' understanding of the customer has allowed them to tweak the environment to an extent that it becomes fit for purpose.
"Even though the hyperscale providers have got scale and skills that are very difficult, if not impossible to match, it is sometimes difficult for the big providers to scale down."
Furthermore, given the weakening of the Rand, he believes it make sense for businesses to try and localise their billing.
Speaking to ITWeb, Jon Tullett, IDC's research manager for IT services for Africa, says the top-tier cloud providers entering the SA market are definitely having a marked impact on local markets - both service providers and customers.
"We're seeing significant changes in strategy among local providers, but that's not unexpected. And while there may be some consolidation, new opportunities will emerge for local players."
IDC expects a majority of cloud revenue to be mediated by channels in the foreseeable future, and many of those channels will be local, said Tullett.
"As customers move to hybrid or multi-cloud environments, there will be increased need for brokerage, optimisation, and so on, and local players, with their existing relationships and local market specialisations, will be important in fulfilling those roles."
Also, despite the arrival of major international competitors, demand for local services - notably colocation and hosted private cloud - remains robust and a growth market for local providers, adds Tullett.
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