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The business case for cloud computing

July 19, 2012 • Opinion

Cloud computing has generated significant hype in Africa. But with IT vendors pushing the technology case, few companies have taken the time to look at the value it can offer from a business perspective, says Frank Rizzo, partner in Advisory at KPMG.

Cloud computing has generated significant hype in Africa (image: stock.xchng)

“With services such as Apple iCloud, Microsoft SkyDrive, and Google Drive popularising the commoditisation of cloud computing, we have reached the point where implementation has become a question for the CEO and not the CIO. Cloud computing is not driven solely by technical experts any more but by business leaders who are looking to leverage cloud computing from an overall business perspective,” says Rizzo.

Rizzo believes that while there are almost as many different definitions of cloud computing as there are vendors supplying solutions for it, on-demand self service and elastic capacity are the two fundamental characteristics of anything that has cloud aspirations.

Cost benefits

“You do not think about scalability when it comes to electricity. It is a case of plugging in an appliance and it works. The same holds true for cloud solutions. These solutions should be able to scale according to customer requirements, peaking during month-end activities and tapering down as less resources are required,” says Rizzo.

The benefit of this is that companies can focus on their core activities while the cloud takes care of the management of resources. This more efficient use of resources and reduction of extraneous infrastructure costs are big business drivers and make economic sense to decision-makers.

Scalability means that entrepreneurs and small enterprises are perfectly positioned to leverage off the power of the cloud as they do not have to invest heavily in IT infrastructure. But while cutting costs is a big driver for cloud adoption, CEOs need to get the total cost of ownership properly understood before even considering the return on investment they are getting from cloud services.

Questions lead to opportunities

Business decision-makers need to question themselves whether they are using the cloud to just cut costs or to improve business performance.

“Questions around the tax implications of adopting the cloud might not be as straightforward to answer as those on how an organisation can manage security and privacy risks. Yet, companies need to be honest with themselves if they are to truly benefit from the promise of the cloud,” adds Rizzo.

He feels that the most opportunity for the cloud exists in Africa, especially as Internet access across the continent is increasing. For Rizzo, the fact that mobile operators are pushing infrastructure means that the bandwidth is arriving. But people need to move quicker to access and benefit from it.

 Building momentum

Governments across the continent are also starting to take a more active role in cloud services rollouts. For example, the governments in Nigeria are driving cloud adoption while in Kenya the focus is more on e-health and e-education cloud solutions. In South Africa a number of pilot projects across sectors are on the go, including examples of enterprise resource planning taking place in the cloud.

“We need to look at where ICT fits in the South African government agenda. While we are starting to see the right movements by government, it needs to happen quicker. Quite a few other African countries are ahead of South Africa,” Rizzo says.

Irrespective of whether it is for public or private sector use, cloud adoption requires a careful examination of the potential operational risks and challenges in addition to the technology questions.

“Adopting cloud definitely has a big impact on IT but critical business operations are also affected. Approaches to implementation may vary depending on service and deployment models, and the maturity of existing business and IT processes,” concludes Rizzo.

Staff writer

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