Channel Post speaks to industry experts who say companies shoud embrace cloud, before they are left behind
More and more companies in the Middle East and Africa region are seeing cloud computing as a key enabler to business innovation. A recent survey by Capita IT Services has come to a conclusion that though acceptance of cloud computing is growing, CIOs often have to convince the management that cloud adoption is the way forward.
The research, a combination of round table sessions and surveys featuring nearly 150 CIOs, found some interesting points regarding cloud adoption. More than three in five (61%) believe that improving the company’s innovation is now one of their highest priorities, with a further one in five (20%) believing it to be a low priority. Not surprisingly, the report discusses the shift of CIO from chief information to chief innovation officer.
The report further asserts that the ‘C’ in CIO now represents communication, collaboration, change; the ‘I’ represents integration, interfaces, investment; and the ‘O’ means optimisation, organisation and operations. In addition, the report also found that there was a 50-50 split between how to install architecture of innovation; half of respondents believe that every employee should be given freedom to be innovative, whilst the other half think there should be a dedicated innovation team.
Opportunities
“The cloud services market is estimated to grow over $35 million in the UAE during 2014,” explains Saurabh Verma of IDC Middle East and Africa. “Organizations in the region are evaluating cloud delivery models for Greenfield projects as well as a part of their infrastructure refresh and / or applications renewal cycles.”
Rajesh Abraham, the Director for Product Development at eHosting DataFort (eHDF), agrees. He says that in the last couple of years, the uptake for cloud computing solutions has increased in the Middle East and this demand for cloud services in MEA continues to increase, as organizations realize the business agility and cost optimization benefits of cloud.
“According to IDC analysis, the UAE cloud market in particular is primed for annual compound growth of 43.7% until 2016,” adds Abraham. “SMEs are a very important part of the economic mix of the UAE and the region; so our public cloud solutions are designed for SMEs with budgetary limitations looking for scalability options. In the Middle East and North Africa alone, cloud services are expected to grow rapidly. According to industry figures it is to be around 43 percent in Saudi Arabia and 40 percent in the UAE by end of 2014.”
Thierry Chamayou, the Vice President for IT Business in Middle East and Africa at Schneider Electric, says, the demand for cloud services in MEA is registering sustained increase as organizations realize the business agility and cost optimization benefits of cloud. He also says that security, control, and usability constrain widespread adoption, especially in key Gulf countries such as Saudi Arabia. Despite this, Chamayou says, the Saudi cloud market is expected to grow at a CAGR of 49.7 percent and the UAE 43.7 percent during the period 2012-2016.
Glen Ogden, the Regional Sales Director for Middle East at A10 Networks says that though the acceptance of cloud computing is on an all time high, there are a number potential barriers to accelerating public cloud services in the Middle East. “Connectivity costs tend to be be high, and there are may be concerns over data security and sovereignty. As cloud services and connectivity becomes more competitively priced and trusted, the lure of applications such as SalesForce.com and Google Apps will mean that organisations may move to cloud regardless, even if just for a slice of their IT function,” explains Ogden.
SMBs jumping onto the cloud computing bandwagon
Cloud computing can phenomenally decrease an SME’s overall costs including capital costs and ongoing operational costs as it is a usage based pricing model. With cloud services, the SME owner can reduce their overall risks by paying on a predictable monthly subscription model. In addition, cloud enables an SME business to deploy services faster and dynamically provision any additional capacity as and when needed. Moreover, cloud based services are simple to adopt and more accessible as they are accessible over the internet.
“Each business has unique data management requirements, which can be determined based on a number of factors such as operational processes, human resources, scale of work, and especially financial capabilities, among others. If an SME wants to save on CAPEX then cloud is the way to go,” adds Abraham. “We are seeing an increased demand from SMBs for public cloud services which provide clients with the flexibility to buy public cloud platforms with an easy-to-use self-service online portal. Following their purchase as per requirement, clients can set up and start using their virtual machines in less than 15 minutes.”
SMBs are traditionally more receptive to public cloud services than larger enterprises, while they may have the tendency of treading carefully and deploying private cloud first. “This may be for a number of reasons. Larger enterprises are often much better equipped to deal with IT complexity, and may have more stringent requirements of availability and data location,” adds Ogden. “SMBs may be comfortable with a more relaxed policy on data location and availability. Fundamentally this comes down to the needs of the business, and the capability of the business to manage IT complexity and change. For SMEs the possibility to pay per use and grow or shrink IT on demand alongside their business is very compelling.”
Meanwhile Chamayou says that the demand for IT capacity will continue to grow in the region with SMEs increasingly looking towards cloud computing for a cost-effective alternative to owning infrastructure. “Large enterprises will employ a combination of investment in infrastructure, and colocation services for less critical scenarios. All in all, businesses will seek consolidation and higher efficiency,” adds Chamayou.
Verma also asserts that SMBs are going for cloud computing solutions. “However, it has not significantly affected on-premise solutions, primarily because the large spenders on applications and infrastructure such as government, telecom, and banks are still largely operating with on-premise solutions,” adds Verma.
So what’s in it for the channel?
According to Ogden, the opportunities are there for the taking. “However, cloud services are demand driven and typically follow an incremental revenue model which places a significant financial burden on the mid-size/smaller integrators until a critical mass of users is achieved whereupon their initial investment can be recovered and profits finally achieved. This lag between the launch of a cloud service and its ability to generate predictable revenue adversely affects the smaller players in the market as they are more likely to struggle with bridging this gap financially,” adds Ogden.
Odgen further adds that in order for the channel to play the cloud card right, they need to first look at their own customer demographic to understand the kind of cloud services that are applicable. “For instance, SaaS can be a compelling proposition for the SMB/SME sector where IT skills are traditionally low and IT does not form a significant part of their core business. There are obvious benefits of cloud in many SMB/SME sectors, the key is to identify the demographics and pick the right portfolio of cloud applications to find the sweet spot,” explains Ogden.
Abraham says that CIOs today are always looking at innovative provisioning, scalability and faster time to market as some of the benefits from the adoption of cloud. “In addition to facilitating shared resources and reduced investments on hardware, these services allow companies to buy capacity-based options – a key imperative for growing businesses as they move online and require rapid provisioning. These innovative changes only add to the ROI and at the same time keep the organization updated with the latest technological advances,” says Abraham.
According to Abraham, although the market is already inundated with private, public and hybrid cloud models, what the channel needs to understand is that the adoption of the type of cloud depends on the organisation’s nature of business, overall IT strategy and application workloads. “Needless to say, there is no one-size fits all solution in the cloud space and hence providing made-to-order solutions providing the best ROI, is the need of the day,” says Abraham.
Verma meanwhile asserts that companies need to understand that there are no direct guarantees in the services business. “We have SLAs to ensure a certain quality and availability of delivery. Cloud is simple delivery model, and the channel makes the money for the professional services. As the market evolves and adoption of cloud services increases, the channel, too, will have to raise the bar, and polish their service delivery capability to move away from traditional reselling business, and also to remain relevant for the customer,” concludes Verma.
