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South African companies are more receptive now than ever before to moving at least some of their business activities to the cloud, says Frank Rizzo, managing partner, IT advisory at KPMG Services 

KPMG Services, Frank Rizzo, cloud computing, South AfricaSouth African companies are more receptive to moving at least some of their business activities to the cloud.

“With the rapid adoption of smartphones and tablet devices in South Africa, we are seeing consumers driving demand for cloud computing," said Rizzo. "One only needs to look at how people are uploading their family photographs and holiday videos to sites such as Facebook, Flickr, YouTube, and Zoopy to see the cloud in action in SA."

A recent KPMG global survey of organisations that will use the cloud and companies that will provide cloud services has shown that the cloud is moving beyond IT and widely starting to impact on business operations. A true cloud solution is one where users can access a flexible volume of services as needed via the internet.

Indeed, such an approach has the potential to deliver significant cost savings with 76% of both groups of respondents citing cost savings as an important driver to cloud adoption. Even more intriguing are the ways in which the cloud may lead to fundamental innovations and process breakthroughs.

“The cellphone is a powerful business tool not only in South Africa but in the rest of Africa," said Rizzo. "Entrepreneurs are driving their businesses through their phones whether it is with voice, text, or social media. Mobile data also plays an integral part in this. These mobile entrepreneurs are leveraging off the power of the internet for research on best practice, marketing their business, and interacting with potential clients from around the world."

But for a cloud model to work effectively, connectivity issues in South Africa need to be resolved. Businesses require stable and resilient bandwidth to drive operations in the cloud. To this end, cloud service providers still need to be assessed on integrity, reputation, and trust just like any other service provider.

“With the undersea cables, a vast amount of bandwidth is coming to Africa," said Rizzo. "The continent has a proud history of being in a position to leapfrog others when it comes to implementing technology. Cellphone networks being a case in point where we have some of the best telecommunications operators in the world when it comes to high speed mobile networks and penetration."

There is also no need for African companies to build data centres or go the traditional IT implementation route. Instead, Rizzo says, they can outsource to other markets and focus on their core business.

“Nothing stops South Africa from becoming the cloud computing hub for the rest of Africa," said Rizzo. "We can outsource to other markets and be the central point for this new landscape. Government therefore has an important role to play in driving this potential employment boom. We need those visionaries in government and their partners to start running with this."

Beyond connectivity, the elephant in the room remains that of security. Half of the IT executives surveyed say security is the most important challenge when it comes to the adoption of cloud services.

“South Africans are more aware of security issues than many other markets," said Rizzo. "This applies to both the physical world and that of the digital one. It comes down to cloud service providers needing to assure their clients that the necessary security is in place.”

Rizzo used the example of the online banking boom of the late 90s to show how eager South Africans are to adopt new technology despite security concerns. Banks made sure that they had measures in place to protect the consumers.

“In the old days, service providers had to earn trust," he said. "But today there has been a shift with a lot of people going from the departure point that service providers have their trust until they break it.”

The survey also found that approximately 45 percent of the respondents had not evaluated the tax implications of cloud or do not know if these factors are being evaluated. Questions such as what happens when you start transacting in the cloud and what are the implications of running a business with client data spread over the world need to be asked.

“The SA Revenue Services is seen as a centre of excellence when it comes to taxation. How do they see the impact of the cloud? One thing is certain. All of this will take time to address and resolve,” Rizzo said.

But who is ultimately responsible for leading the migration to the cloud? As the role of the traditional CIO expands to break down potential silos and integrate internal and external business needs, systems, and partners, you will see the arrival of the chief integration officer, Rizzo believes: “The move to the cloud is not a technology issue but a business one. The CEO and CFO are becoming more actively involved in the decision-making process because of the business benefits and the potential cost reductions of migrating.”

Cloud calls for executives to challenge their thinking, to look at old problems in a new light, and to create new opportunities.

"Business professionals need to focus on the business value and potential of cloud over its technical capabilities or merits," said Rizzo. "At the same time, business must work with the IT organisation to avoid pockets of capabilities that will create disparate data sets to manage. However, one thing is certain – 2012 will see a shift in the way companies approach cloud computing thanks to the consumer growth in the market over the past 18 months."