Technology firm Cisco predicts that cloud traffic in Africa will grow at a compound annual rate of 54% until 2018. Meanwhile consulting firm Frost & Sullivan says revenues in the cloud computing market in South Africa and Kenya will increase to US$288 million by the same year, up from US$114.6 million in 2013.
The growth of cloud and other internet businesses has until now been hindered by a lack of local data storage on the continent. Most of Africa’s internet traffic is rerouted internationally, which costs an additional US$600 million per year. This status quo has also been markedly inefficient: internet traffic from Lagos to Abuja needs to be redirected via London.
With demand for data in Africa soaring, the need to correct these costly and inefficient hosting difficulties has prompted the birth of a local data-centre industry that barely existed a few years ago. Data centres are booming as cloud computing and data uptake increase. Frost & Sullivan says South Africa’s data-centre market alone is likely to see revenues increase to US$521.7 million in 2018, up from some US$305.8 million in 2013.
No wonder companies have established data centres across the continent, notably MainOne in West Africa, Teraco in South Africa and Liquid Telecom, with its East Africa Data Centre (EADC) in Kenya. Cloud is crucial to the uptake of these data centres, says Michelle McCann, business development manager for NAPAfrica at Teraco, who says its advent has driven the industry’s growth.
‘There is a definite move towards using co-location data centres rather than duplicating infrastructure resources. Teraco sees this in enterprise, where organisations are driving towards Layer 3 IT strategies and making a decisive move away from capex [capital expenditure] to opex [operational expenditure], which is essentially a pay-per-use model.’
‘Utilising leading providers of infrastructure for cloud computing is not a nice-to-have, but a necessity. There are so many advantages
EADC general manager Dan Kwach says there has been a ‘steady increase’ in enterprises using its storage for cloud services, after the initial demand for carrier-grade data centre space had been mainly driven by the telecoms market.
‘The enterprise market is steadily taking a lead as the need for service-type, opex-driven data centres and IT takes shape. This is for the purposes of a primary data centre, high availability site or alternate backup,’ he says. EADC saw this as ‘the largest market opportunity,’ says Kwach. ‘The majority of space and power at the EADC is used by core IT systems and shared services of large enterprise clients. However, demand from private-cloud and public-cloud services is increasing rapidly.’
McCann says cloud-neutral data centres have become one of the most important criteria for successful cloud-strategy delivery.
‘Leveraging the network and services of an existing data-centre ecosystem to build a unique service delivery solution makes the evolution to cloud so much easier.’ She adds that low-cost interconnect and pay-as-you-go pricing, as well as high availability offered by local data centres are all vital to cloud firms.
‘In addition, the ability to interconnect with other providers and specialist cloud service providers is critical to business growth and cloud strategy leverage. This is especially so for customers that want to access white label services to grow their own service offering. Being in a neutral data centre immediately provides them with a key competitive advantage and gives them prominent positioning in the cloud.’
Kwach says his company and others such as Teraco were benefiting from legacy data centres’ lack of technical design and capacity, which was necessary to accommodate high-end computing and storage infrastructure/equipment. ‘World-class data-centre infrastructure brings with it the advantages of [using] cutting-edge technology for [the] supply and installation of various electrical and mechanical services within a data-centre environment,’ he says, also noting efficiency in operations and the availability of abundant and redundant connectivity services as advantages.
Infrastructure is essential to firms that are looking to do business in the cloud. These companies need to understand their future power and connectivity requirements and the associated costs.
Data centres have improved because of their adherence to global standards, thus attracting multinationals that offer various ICT services
McCann says the arrival of local data centres has helped cloud computing offer more adequate performance and security to manage traffic spikes and delays, while supporting other critical components such as last-mile performance issues and malicious attacks – at a lower cost than hosting globally.
‘Utilising leading providers of infrastructure for cloud computing is not a nice-to-have, but a necessity. There are so many advantages to this approach, including low-cost interconnect pricing and higher availability models; reduced latency; and improved overall network performance,’ she says.
Generally, local data centres, cross-border peering and the growth of local content are imperative to bridge the digital divide and empower African businesses, says McCann. Teraco believes co-operation from African countries in the ICT sector can help grow the continent’s economies, provide better services and distribute content more economically.
Data usage is set to proliferate in Africa in the next few years, especially as uptake of smartphones surges. Yet costs remain prohibitively high. Narend Baijnath, an ICT professor at Unisa, says in an article on the Conversation website that the minimum amount of data needed to access, let’s say, just three educational videos each week is 500 MB/month. But less than 3% of Africans can afford a mobile package. Hosting content locally and avoiding expensive rerouting via Europe can help bring those costs down.
McCann says: ‘The internet broadband take-up and digital constraints are not new, but it remains a critical issue for Africa. Solutions must address access, content and economical issues. While it may not solve the issue, Teraco and NAPAfrica do believe that a progressive internet environment and concepts such as peering could close the gap significantly.’
Kwach says other benefits include the close proximity to Africa and ensuring that the available global bandwidth is used efficiently. ‘There is also the elimination of outages due to breaks in international connections or isolated failures affecting data centres sitting outside Africa,’ he says, while noting the decrease in exposure to data security breaches around the world.
However, issues still need to be overcome for the data-centre industry to truly take off. Teraco, the EADC and MainOne may be flagship examples, but besides these firms there are relatively few smaller data centres located across the continent.
Kwach says the biggest challenges for new-build data centres in Africa have always been connectivity, security and power supply – but these are moving in the right direction.
‘The skills necessary in design, build and maintenance of data centres are steadily growing with major roll-outs in South and North Africa,’ he says.
Previously, demand – primarily driven by the telecoms sector – had failed to support a business case for data-centre investments and operations. This, however, is changing. ‘Adoption of global standards and trends by the enterprise market segment is slowly increasing demand for carrier-grade data centres,’ he says.
Legislation and regulations relating to data security have also helped by recommending that data be stored closer to the owner and user, providing a boost to the local data-centre industry.
Meanwhile, data centres have also improved because of their adherence to global standards, thus managing to attract multinationals that offer various ICT services to the continent.
McCann says costs and infrastructure challenges are the primary reasons individual data centres are being held back, but agrees with Kwach that this is gradually changing for the better.
‘Building a world-class data centre requires millions and supporting first world infrastructure – a reliable and stable electricity grid are key,’ she says. ‘It then also requires additional budget to sell the space and maintain the space.’
Once these basic challenges are addressed, growth will be explosive as data centres look to meet the existing demand.
‘Outsourcing is a definite trend as opposed to insourcing. The local market is set to grow rapidly. Only 10% of data-centre facilities are currently outsourced in South Africa, compared with one-third in the United States and a quarter in Europe.’
