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2019 South Africa Cloud Conference

The South African cloud market continues to experience significant growth as both large enterprises and SMEs migrate their workloads to the cloud. Key infrastructure providers such as Microsoft and Teraco continue to invest significantly in cloud and data centre infrastructure respectively, to cater to the increasing demand for cloud services. Through the use of independent software vendors (ISVs), many local organisations have started establishing their cloud journeys to ensure a smooth transition to the cloud environment.

Key Highlights of the Conference

The 2019 Cloud Conference was held in Johannesburg on 6 June 2019. The event featured several cloud providers, including Huawei, Liquid Telecom, Microsoft, Oracle and VMware. Furthermore, data centre providers such as Teraco also featured, and highlighted their ongoing expansion projects and key milestones achieved to date.

Most service providers highlighted the different cloud journeys being developed by customers to ensure successful migration to the cloud. These cloud journeys vary from service provider to service provider. The overarching themes by most service providers include planning, migrating and modernising / extending the cloud environment. The overall objective is to establish the best migration strategy that minimises costs and optimises return on investment.

Key highlights at the conference included the upsurge, evidenced by the service providers, in the demand for cloud services in the country, particularly by SMEs and start-ups. Microsoft is currently experiencing significant interest in cloud services from start-ups that mostly utilise artificial intelligence (AI) and machine learning (ML) solutions.

However, skills shortage remains a key challenge, as it is negatively affecting the development of the cloud market. Hence, partnerships between service providers and ISVs have played a key role in addressing the skills gap.
Huawei is aggressively marketing its cloud offering, which includes Huawei Cloud, Huawei Cloud Stack Online and Huawei Cloud Stack.

Teraco’s data centre services have experienced significant growth due to the increased demand for cloud services. It is currently expanding its Isando campus to about 12 000m2 by Q3 2019, at a cost of R900 million.

Cloud Migration Journeys by Service Providers

The cloud migration journey involves three broad stages, namely: planning, migration and modernisation / extension. Various service providers recommend specific migration strategies to their customers.

The overarching objectives in establishing the cloud migration journey include:

  •  Identifying gaps between existing legacy architecture in the organisation and next-generation cloud architecture.
  • Mitigating risk by validating critical elements of the proposed architecture.
  • Identifying the architecture that minimises capital expenditure on IT infrastructure.
  • Establishing the best migration strategy, e.g., ‘forklift’ migration, which involves moving workloads in their existing state, or hybrid migration, which involves moving applications in batches to ensure a smooth transition. 
  • Implementing advanced monitoring and telemetry strategies to optimise the cloud platform.

Liquid Telecom’s migration strategy for its clients is segmented into three phases: planning, migrating and managing. These phases entail defining a company’s cloud journey before migrating and maximising value through the cloud platform.

Microsoft’s cloud migration strategy is segmented into assessment, migration and optimisation of the cloud platform. The objective of this strategy is to establish inclusiveness, involving various stakeholders within the organisation, to ensure a successful migration strategy.

IBM’s migration strategy involves enabling cloud-native, integration and modernisation of the cloud environment.

Other cloud providers, such as Amazon Web Services (AWS), have an extended cloud migration strategy that includes assessment, concept development, migration, cloud leveraging and optimisation. However, the underlying objective of identifying the best migration strategy remains the same.

Huawei’s Cloud Solutions

Currently, Huawei offers private cloud, hybrid cloud and public hyperscale cloud solutions. Its cloud services are categorised into three types, namely: Huawei Cloud, Huawei Cloud Stack Online (HCS Online) and Huawei Cloud Stack (HCS).

  • Huawei Cloud is a full-stack platform that includes IaaS, PaaS, Security, Database, Big Data, and Enterprise Intelligence (EI) services.
  • HCS Online is an extension of Huawei Cloud in customer data centres. This cloud type uses a similar architecture and provides the same cloud services as Huawei Cloud – IaaS, PaaS, Security and Database services. The only difference is that it is deployed in customers’ data centres and provides isolated resources to ensure security compliance.
  • HCS is Huawei’s full-stack hybrid cloud solution that includes IaaS, PaaS and Desktop-as-a-Service (DaaS) offerings. In addition, it supports hybrid cloud architecture, including Huawei Cloud, AWS and Azure.

Despite these three cloud types having different features, they all share unified architecture, ecosystem and user experience. Huawei Cloud and Huawei Cloud Stack Online also share unified APIs, Cloud services and Operations & Maintenance services.

Huawei’s cloud portfolio offers an open application platform and provides powerful cloud infrastructure that supports AI services. Furthermore, its security solutions are aimed at controlling data access through data warehouse security. Data security is achieved through data and network channel encryption.

Microsoft’s Cloud Migration Considerations

Microsoft SA detailed some of the key points that organisations need to consider before migrating to the cloud, which include their existing budgets, industry legislation around data residency, service level agreements (SLAs) by various service providers and the existing skills set within their organisations.

Organisations need to extensively assess their current IT budgets to establish their affordability before they embark on their cloud journey. This will enable companies to create a cloud environment that best suits their needs and realise the highest return on investment.

The process of migrating to the cloud needs to be carefully managed to allow for a smooth transition and ensure all employees are familiar with the processes. ISVs have played a critical role in partnering with Microsoft to develop and deliver successful cloud migration strategies.

However, the upscaling of existing skills within organisations remains a key priority to ensure the modernisation and extension of the established cloud environment.

The ability to leverage existing infrastructure is a key consideration that could result in significant cost-saving during the cloud migration process. Organisations need to assess the degree of compatibility between existing hardware and software infrastructure, and the new cloud architecture.

Teraco’s Data Centre Projects

At the conference, Teraco announced the latest developments in the expansion of its Isando Campus to cater for the increased demand for cloud services. The current expansion of this campus (JB3 phase) is expected to increase total usable space by 4 000m2 to a total of 12 000m2 by Q3 2019. The total power available to the Isando campus will increase by 60MW and total 80MW.

Teraco believes public cloud infrastructure, meant to serve the sub-Saharan Africa (SSA) region, will be mostly located in SA. This is mainly due to the country being one of the largest economies on the continent and possessing adequate ICT infrastructure to support cloud development. Despite the current power generation challenges, Teraco believes SA remains best-positioned on the continent to accommodate data centres and provide the required power supplies for their optimal operation.

Other arguments for SA as the best location for public cloud infrastructure include:

  • Lower latency: The location of public cloud data centres in SA (as opposed to outside SSA) will reduce the latency levels and improve data transmission within the region.
  • Large addressable market: There is a growing addressable market for cloud services in SA and across the Southern African region. This will create a cloud market for locally-based cloud providers, making the country a regional hub of cloud services.
  • Stable political environment: Generally, SA enjoys a stable political and economic environment, which is critical to attracting foreign investment, including public cloud infrastructure providers. Hence, sustained political stability will result in the country being a favourable destination for cloud infrastructure.

Unisa’s Hybrid Cloud Services

UNISA currently leverages Microsoft Azure cloud services that utilise Teraco data centres. These cloud services are highly scalable and significantly improve the capabilities of the institution. As a result, the hybrid cloud services have improved the learning experiences of up to 350 000 students by reducing latency and improving connectivity speeds.

Currently, the key cloud services UNISA subscribes to include SaaS, Container-as-a-Service (CaaS), PaaS, IaaS, Azure Kubernetes Service (AKS), Office 365 and Microsoft’s GitHub. UNISA also subscribes to site-to-site VPN services from Microsoft.

As a result of the cloud migration, UNISA has been able to migrate 355 GB structured data to the cloud.

In Summary

The three broad stages characterising the cloud migration journey are planning, migration and modernisation / extension.

Huawei, Microsoft and Teraco have increased their efforts in providing cloud and data centre services to the market, which is evident from the increased investments committed by these companies.

Service providers believe key considerations prior to cloud migration include the assessment of existing budgets to establish affordability, addressing scarce skills necessary for cloud management and extension, and leveraging existing infrastructure with the new cloud architecture to achieve cost savings.

Furthermore, service providers believe SA is well-positioned to host cloud and data centre infrastructure due to its energy generation capacity, good ICT infrastructure and a stable political environment.

Contact Derrick Chikanga for more information on cloud services or IT services.

Microsoft Launches its Cloud Data Centres in South Africa

Microsoft launches two data centres located in Cape Town and Johannesburg.

The South African cloud data centre market has started gaining traction as demonstrated by the recent launch by Microsoft South Africa of two regional cloud data centres in Johannesburg and Cape Town. Companies have started realising the benefits of cloud adoption, which include reduced costs of managing and maintaitng IT systems as well as the scalability and agility of cloud services. Furthermore, various sporting bodies have also started adopting cloud services, notably the South Africa Rugby Union (SARU), to monitor and improve player performance. This is a demonstration that cloud solutions will not only have an impact in the work space, but across various sporting disciplines as well.

Market Overview

On 6 March 2019, Microsoft SA announced the official launch of its two regional Azure cloud data centres, located in Johannesburg and Cape Town. It is one of the first global cloud data centre providers to provide cloud services on the African continent. 

The newly appointed MD for Microsoft SA, Lillian Barnard, highlighted that these enterprise-grade data centres will support cloud, artificial intelligence and edge computing innovations across the continent. Further, key sectors of the economy that the company is looking at supporting through its cloud data centre infrastructure, include agriculture, financial services, healthcare, manufacturing, mining and the public sector. 

Microsoft’s cloud data centres are expected to enable skills development through the creation of a Cloud Centre of Excellence (CCoE) by companies migrating towards the cloud. The CCoE is a cross-functional team of executive support that leads other employees through cloud adoption, migration and operation. In addition, after cloud migration, employees will be required to upscale their skills to align them with the new cloud services.

Key Drivers and Inhibitors of Cloud Adoption in South Africa

Various drivers and inhibitors are currently influencing the uptake of cloud services in SA. Microsoft highlighted that some of the key drivers to cloud adoption include digital transformation and increased innovation by businesses.

The key drivers and inhibitors to the adoption of cloud services in SA are provided below.

Drivers

  • Reduced costs of managing and maintaining IT systems, i.e., lower total cost of ownership (TCO).
  • Scalability and agility of cloud services.
  • Business continuity in cases of natural disasters, power failures or infrastructure breakdown.
  • The need to develop local skills and transform existing capabilities, in accordance with emerging global trends.
  • Ubiquity of broadband connectivity and the availability of faster connectivity at lower prices.
  • Cost savings through the reduced costs of updating or replacing legacy software.
  • Mobility and the ability of employees to work remotely.
  • Business innovations that require new digital capabilities
  • Increased collaboration and efficiency through the cloud.

Inhibitors

  • Limited skills across most local organisations.
  • Data residency requirements within some organisations, particularly those that handle certain forms of personal information e.g., financial institutions, is limiting the uptake of cloud services.
  • Discomfort with the adoption of new technologies by end-users.
  • Concerns around potential security issues related to personal and company information being managed by a third party.
  • Latency associated with connectivity to data centres offshore and relatively slow connectivity speeds. (These constraints are being alleviated.)
  • Perception by smaller organisations that cloud services are meant for large corporates.

Microsoft’s Customer Experiences for Data Centre Migration

Microsoft SA highlighted various customer experiences influencing the current Azure cloud migration by businesses. These are:

  • Expiry of existing data centre contracts
  • End of support for existing software
  • Quickly integrating new IT infrastructure acquisitions
  • Software and hardware refreshment and upgrade
  • Urgent capacity upgrading
  • Cost optimisation
  • Business innovations requiring new digital capabilities
  • Unsupported legacy IT infrastructure
  • Security protection of business assets and customer data
  • Increased focus on core business operations

These drivers of cloud migration by Microsoft’s customers are closely related to the digital transformation currently being undertaken by these businesses in SA.

Key Vertical Sectors

While the cloud market in SA is currently in the growth stage, some verticals have emerged as early adopters of cloud solutions.
The public sector is a key sector demonstrating the biggest potential for cloud adoption in SA. This has been mainly due to the limited IT skills within most government departments. As such, most public entities are looking at outsourcing their IT infrastructure through cloud services.

Early adopters:

  • Banking/financial sector
  • Healthcare
  • Manufacturing
  • Mining
  • Public sector

Microsoft’s Partnership with the South African Rugby Union (SARU)

In February 2019, Microsoft SA formed a cloud partnership with the SARU. This partnership is aimed at transforming SA’s rugby through the use of cloud capabilities to unlock new opportunities.

To develop its new platform, SARU partnered with Accenture and incorporated various technologies.

Technology used by SARU uses GPS to track player performance during a match. This technology compiles performance statistics such as the number of shots and tackles achieved, as well as the distance covered during a match. Subsequently, SARU uses software, provided by Microsoft, to analyse player performance to identify areas of improvement.

This analysis helps SARU prepare for upcoming matches and helps identify weaknesses in the opposition players, allowing for development of strategies to improve their performance on the field.

Microsoft’s Partnership with Team Dimension Data

Since 2014, Microsoft has partnered with the professional cycling team Team Dimension Data for Qhubeka in the Tour de France, using the Office365 package as the collaboration platform for the cycling team.

This platform is used to manage its global team through a central repository to communicate, collaborate, share information and manage the team’s operations.

In addition, the Office365 package enables the team members to communicate with each other via Skype during racing events, as well as maintain communication with the administration bodies.

Further, they are also able to access emails with event updates and time changes, which is aligned to their events calendar. The OneDrive application allows them to save data and information which they can share with other team members.

Microsoft’s Partnership Network

Microsoft SA leverages a broad network of partners located both locally and internationally. This network is characterised by a vast network of independent software vendors (ISVs) and systems integrators (SIs).

In 2018, Microsoft SA had 6 000 registered partners, of which 1 200 were registered during the same year. Furthermore, 470 partners were classified as either gold or silver partners. The number of partners that attained gold or silver partner status increased by 31% in 2018.

During the same year, the number of data centre migration certified partners amounted to 24. These are the partners tasked with modernising and migrating Microsoft’s customers from the traditional legacy infrastructure to the modern Azure cloud infrastructure.

As such, partnerships have been key to Microsoft’s operations in ensuring smooth migration to the latest Azure cloud infrastructure.

Typical Cost-Savings through Azure Cloud Adoption

According to Microsoft, the adoption of Azure cloud has resulted in tangible benefits for businesses, with most companies reporting various cost savings from the migration to the cloud services.

Some of the benefits that could be realised through the adoption of the Azure cloud services include:

  • 15% reduction in total cost of ownership (TCO): the migration to cloud services could result in a 15% reduction in the total direct and indirect costs of acquiring and operating IT infrastructure by organisations.
  • 25% cost-reduction from reserved instances: Reserved instances (RIs) are reservations in resources and capacity within a particular region for future usage. RIs are generally cheaper than on-demand purchases, therefore resulting in significant cost savings.
  • 25% cost-reduction from exact IT requirements: By purchasing the exact IT infrastructure and avoiding excess capacity, some organisations have been able to achieve up to 25% cost savings on IT infrastructure.

Summary

During the recent launch of Microsoft’s Azure cloud data centres, key drivers were highlighted that influence cloud migration. Most businesses have started realising the cost benefits that result from cloud adoption, which include approximately 15% reduction in TCO and 25% cost reduction from reserved instances.

However, inhibitors remain in the market. These include limited skills availability across most organisations and data residency requirements in some sectors, such as the financial services and public sectors. Nonetheless, the landscape is shifting as more organisations in both government and financial services start embracing cloud data centre migration in accordance with their digital transformation initiatives.

Central to Microsoft’s cloud data centre migration has been the formation of partnerships with various players, including independent software vendors (ISVs) and systems integrators (SI). In 2018, Microsoft SA had approximately 6 000 registered partners, of which 470 were classified as either gold or silver partners. Twenty-four of these companies are data migration certified partners, who will play a critical role in migrating customers to the Azure cloud infrastructure.

Various sporting disciplines have partnered with Microsoft, including SARU and the Team Dimension Data for Qhubeka, allowing them to enhance their performance and achieve more efficient information sharing.

This is a demonstration that Microsoft’s cloud solutions will not only be critical in the work space, but also provides vital services to sporting disciplines.

More Information

Please contact Derrick Chikanga (derrick@africaanalysis.co.za) for further information about the data centre and cloud markets.

2018 Microsoft Tech Summit Review

Cloud Key Take-Outs

The tipping point has arrived for cloud services in Africa. The barriers to adoption have been eroded and delivery models for IT have changed forever.

  1. Companies will adopt cloud services at a faster rate. Through the use of local data centres, barriers to cloud adoption such as data protection, reliability and latency are being addressed.
  2. Pivotal to the development of Microsoft’s cloud strategy is Microsoft’s commitment to the African continent. Microsoft has taken great strides in improving the quality of service for companies in South Africa and on the continent, by building two of their own data centres in SA and forging relationships with Internet Solutions, Liquid Telecom and Teraco.
  3. Any company – vendor or end-user – that does not have a commitment to the cloud will be left behind.

Demand for Cloud Services

A recent study, presented at the Microsoft Event, found that 93% of South African companies are developing a cloud strategy.

The major drivers of this trend are: (1) economic imperatives, (2) technological advancement and (3) societal changes.

On the societal side, key research findings by Microsoft include:

  • New generations have new expectations: +50% of the workforce will be millennials by 2020. They have new expectations in terms of how and where they want to work.
  • Employees increasingly want the flexibility to work from anywhere. It is estimated that +42% of the global workforce will be mobile by 2022.
  • Employees demand to be “untethered” by routine tasks and to be free to tap into their own creativity, as they believe it fuels success.
  • Cyberthreats are at an all-time high. 74% of businesses expect to be hacked in the next year, therefore security needs to be built into every touchpoint.

Driving Cloud Adoption

To drive cloud adoption in the region, Microsoft is establishing an Azure cloud region in South Africa to offer locally hosted cloud services to South African businesses. This entails providing technical skills and deploying infrastructure in co-located data centres in Johannesburg and Cape Town.

In terms of global scale, Microsoft operates twice as many hyperscale cloud data centres than the combined count of its global competitors. South Africa, through Microsoft’s distributive data centre deployment model, will become part of this global network.

Africa Reach

Microsoft Azure’s hyperscale data centres (Johannesburg and Cape Town) are due to launch in 2018. With this launch, Microsoft will increase the number of globally announced Azure regions to 42.

The new SA data centre facilities will provide highly available, scalable and secure cloud services, with the option of data residency in SA, to companies operating across the African continent. The cloud services include Microsoft Azure, Office 365 and Dynamics 365.

This is a strategic development that will boost cloud adoption. Currently many companies in Africa rely on cloud services delivered from outside the continent – either via locations from within the European Union or elsewhere.

About the Event

Microsoft held its second South African Tech Summit in Cape Town on 13 and 14 February. Approximately 3 000 people – ranging from end users of Microsoft products to developers and partners – attended the event. The summit included an exhibition floor “the Hub”, multiple breakout rooms and labs, and keynote speeches presented by prominent Microsoft executives.

  • Microsoft speakers outlined the company’s vision for Microsoft 365 and Azure.
  • Partners showcased their latest offerings in the Microsoft enterprise and cloud-based services space. Partners included: Axiz, Britehouse, Checkpoint, Citrix, EOH, Liquid Telecom, StorTech and Veeam.

Look out for more information on the event in the coming weeks.