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Nov 25, 2011

Corporates head for the cloud in bid to lower IT costs

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Large organisations in South Africa are increasingly adopting cloud computing to reduce the costs of paying for their own information technology systems, states a new report by technology research company World Wide Worx.

“Out of 100 large JSE-listed corporations that we interviewed, 46% are already using cloud computing. Another 6% plan to introduce it next year and another 4% the year after, so it will be close to 60% by 2013,” says World Wide Worx MD Arthur Goldstuck.

The early adopters were pleased with the results, with 80% of the companies using cloud computing saying they were satisfied.

“While companies are starting to embrace the technology, there is definitely no herd mentality around cloud computing, which is a positive indicator. Those who have adopted it have given it much thought and looked very carefully at how cloud computing can meet their needs. When a company takes that kind of considered approach, it is more likely to be satisfied with the results,” he says.

Further, only 13% of the total sample said cloud computing was not important for their business as they did not see any benefits. Another handful cited poor infrastructure or security concerns, but most companies that still shun cloud computing are inhibited mainly by a lack of understanding, he states.

However, cloud computing has significant advantages as it removes the cost of buying, installing, maintaining and upgrading hardware and software, allows companies to pay for services on demand and creates economies of scale if a third-party specialist handles the equipment for them, he argues.

Goldstuck believes all companies should now be assessing it – if it offers clear benefits for their businesses.

The most popular business model for companies in South Africa is to outsource their server operations to a third-party specialist and access processing power, storage and software services over a private network.

A more conservative model is to retain ownership of the servers, and buy only the software as a service.

“Companies do not want to run sensitive data over the public Internet and some have created a private cloud hosted by a third- party specialist.”

Further, small and medium-sized enterprises (SMEs) see the benefits in terms of security, reliability and not having to manage their own machines to ensure the integrity of their data. SMEs see the benefits more readily than large corporations because a company can easily and quickly get a financial saving from using a public cloud, says Goldstuck.

However, which operations should be moved to the cloud first varies with each organisation. A bank, for instance, should ideally not put customer data into a third-party data centre, he emphasises. “A lingering problem is a current lack of standards because it discourages many potential users. Big industry players like software giant Microsoft, cloud infrastructure company VMware, global smart device manufacturer Apple and global information technology developer IBM should devise clearer standards for the benefit of the whole industry, Goldstuck concludes.

Edited by: Martin Zhuwakinyu
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