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Rising Clout of Cloud: Frost & Sullivan finds that Data Centre Operators Are Expanding Their Portfolio to Support Cloud-based Services

Lack of in-house capabilities and the need to cut costs stoke demand for hosted services

Data centres in South Africa are riding a wave of opportunity as the increased availability of bandwidth, proliferation of connected devices, and regulatory compliance requirements have caused explosive growth in data loads. In particular, the need for enterprises to improve efficiency, agility and cost effectiveness in order to maintain near-100 percent uptime, is triggering demand for hosted, as-a-service type, solutions.

New analysis from Frost & Sullivan, South African Data Centre Market, finds that the market earned revenues of $305.8 million in 2013 and estimates this to reach $521.7 million in 2018. It covers data centre services such as co-location, managed hosting, hosted security, Web and application hosting as well as cloud-based services.

Enterprises are realising that it is critical to change their approach to conducting business and adopt new elements such as on-demand bandwidth, storage facilities, high-speed Internet and network security. However, South Africa lacks skilled manpower that can manage and maintain advanced data centre technology. Highly skilled personnel come at a premium, and some of the human resources needed has to be brought in from other countries. Therefore, companies are using third-party providers to manage specific data centre activities and achieve lower total cost of ownership.

In data centres, the cloud computing segment is one of the biggest beneficiaries of growth in the corporate sector and the burgeoning of small and medium-sized enterprises (SMEs). However, the uptake of cloud computing services is restrained to some extent due to issues regarding data security and control. These concerns are especially pertinent in sectors such as banking and financial services as well as the government.

"Companies are increasingly segmenting their business, and consequently, view certain areas as strategic and mission-critical. They will be reluctant to transfer control of such functions to third-parties," says Frost & Sullivan ICT Industry Analyst Ishe Zingoni. "When drawing out their cloud strategies, enterprises will choose cloud models based on the sensitivity levels of their different operations."

While the private cloud is still the largest cloud computing component in the enterprise market, public cloud deployments are expected to rise to prominence as enterprises outsource their non-core operations. Furthermore, due to the prohibitive costs of private cloud solutions, SMEs are expected to flock to the public cloud.

In response to these trends, data centre service providers are seeking to expand their offerings beyond pure hosting or co-location. Managed hosting, virtualised offerings and cloud computing have gained currency, and are expected to drive market growth till 2018.

"Eventually, as security concerns are allayed and business cases improve, there will be a substantial uptake of cloud-based business solutions, and a distinctive preference for hybrid-type cloud solutions," noted Zingoni.

www.frost.com

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