Cloud computing holds much promise in the Middle East.
By any estimation, the Middle East is a market ripe for growth in cloud computing. MEA cloud datacentre traffic is expected to grow 440 percent by the end of the decade, according to Cisco’s Global Cloud Index, and by 2020, 95 percent of all workloads in Middle East and Africa will be processed in the cloud.
Bloomberg Businessweek Middle East spoke to three cloud professionals to learn about the current trends, challenges and potential of cloud computing in the Middle East.
Santosh Rao, Research Director, Gartner
Wael Mustafa, Area Vice President, Commvault, Middle East, South Africa and Turkey (MESAT).
Sevag Papazian, Principal, Strategy&
How do you see the cloud market in the Middle East?
Rao: Gartner forecasts that the 2018 end user spend on cloud computing in the MENA region will be $1.49 billion, and is expected to reach $2.21 billion by 2020.
The bulk of this 2018 spend is on software as a service (SaaS), accounting for about $740 million. When I say SaaS I refer to software such office suites, customer relationship management software (CRM) and ERP offered by cloud providers
Also, out of the $1.49 billion, $156 million will be on infrastructure as a service (IaaS) which includes servers and storage resources
The major cloud players are already eyeing the middle-east market. Amazon Web Services is already in Bahrain. Microsoft Azure recently announced that it will opens its data centre in UAE. SAP and Oracle too have announced to host their cloud data centres in the Middle East. The local hosters and telecommunication providers in every country within GCC are also transforming themselves to deliver cloud services.
Papazian: The cloud computing industry in Middle East is picking up, whereby the growth rate is higher than the global average. It is still not mature enough. Its growth will be accelerated by pressing needs to digitize economies and companies in the region.
Cloud computing encompassed the delivery of technology services through third party companies providing “cloud” services. The traditional definition includes Infrastructure (IaaS), platforms (PaaS) and software (SaaS). But one could also include other areas such as Business Process as as Service (BPaaS), Data as a Service (DaaS), etc.
Mustafa: The Middle East and North Africa region according to Gartner spent around $1.2bn on public cloud services last year. Spending is expected to reach almost $2bn by 2020. Digital transformation is driving the cloud data discussion for many organisations in the region as they continue to realise the benefits afforded by cloud. However, the cloud has also highlighted for many, the need to better manage data.
What have been the key developments in the field of cloud computing in the Middle East in the past year?
Papazian: Hyperscalers (Amazon Web Services (AWS), Microsoft, Google, etc.) have announced interesting moves last year: AWS setting up a capability in Bahrain, talks between AWS and the Saudi government, Alphabet interested in building data centres in the KSA with Saudi Aramco, etc.
Beyond hyperscalers, other players are continuing to invest to provide cloud services: telco operators are continuing to invest as they need to diversify out of traditional communication services, utilities are also venturing into that space. For instance, DEWA has established a data hub subsidiary (MORO) to offer cloud services
New policies and regulations: Bahrain announcing it is pursuing a “Cloud First” policy, CITC in Saudi Arabia releasing a cloud regulations framework
Mustafa: Recent developments include working with Saudi Telecom Company (STC), to deliver a Backup-as-a-Service solution, utilizing the STC cloud environment. STC is a leading service provider within the Kingdom of Saudi Arabia, with more than 32 million customers in that market. STC has a long history of industry leadership in embracing the latest technology for innovative services. This solution continues this tradition, helping customers to realise the true value of their data, while minimizing complexity and cost.
Wael Mustafa, Area Vice President, Commvault, Middle East, South Africa and Turkey
Who is providing most of the cloud services in the Middle East now?
Rao: Currently a majority of the cloud services are provided by local data centre hosters and telecommunication providers. Some examples are Injazat, Etisalat, Du in UAE, Mobily in Riyadh, Oman DataPark in Oman. We also see a few emerging pure-play cloud vendors such as BIOSME and Wannago cloud services, both based in UAE who are beginning to gain mindshare in the region.
Also, we see some enterprises leveraging cloud data centres from AWS and Microsoft hosted in the European region. With these global cloud providers setting local data centres in GCC and local hosters and telcos transforming themselves, it is expected that cloud adoption will further accelerate in the region.
How do local Middle East telcos tend to offer cloud services at the moment?
Rao: The local telcos are currently ramping up and most of them today offer cloud Infrastructure as a service through their existing data centres. Most of these data centres are setup by using hardware and software from data centre OEMs such Dell, HPE, Cisco, Red Hat, Microsoft and others.
How can the local cloud players compete when the big four come in?
Rao: Competing with global cloud players on pricing will be a challenge for local providers. Therefore, local providers must find ways to deliver additional value. Providing application and infrastructure managed services in addition to cloud services can help local providers to effectively compete with the global players. Furthermore, local providers can also look at ways to potentially compliment the services offered by global players and deliver a multi-cloud solution to enterprise customers.
What industries is cloud computing disrupting the most? What are the main benefits?
Mustafa: Cloud computing is disrupting just about every industry at one level or another, however, industries that rely on the accurate and timely analysis of vast amounts of data such as banking, retail, manufacturing and healthcare are being disrupted the most.
Businesses in these industries are witnessing numerous benefits from the implementation of cloud computing and effective data management solutions. Cloud computing is allowing organizations to optimize their operations, streamline processes, enhance data collection and analysis, and ultimately drive down costs while at the same time increasing customer satisfaction through the provision of superior products and services.
Papazian: Besides accelerated digitisation, the typical benefits of cloud include the migration from a capex to opex model, focusing on core business activities, improving go-to-market strategies, providing speed, quality and agility when dealing with technology system, etc.
It first disrupts the ICT industry itself, on two fronts:
1- Companies are changing the operating models and architecture to cater for the cloud. Accordingly the nature of ICT footprint differs, as well as the services, jobs, etc.
2- Technology companies have to adapt to offer cloud solutions, instead of traditional on-premise solutions. For instance, we now see telecom operators offering cloud services, as it complements their traditional communication services which are facing margin pressures
Cloud is also impacting governments: Cloud solutions generate efficiencies for government agencies, especially when a whole-of-government approach is adopted, rationalising infrastructure and common applications, as well as creating opportunities for savings because of a larger scale of demand and rationalisation effects. Finally, it allows government to focus on their core services, taking a distance from the daily hassle of managing IT systems
Another area is Smart cities mainly driven by IoT. In this case, new models of cloud should be adopted to cater for the volume of data and computing required. One such model is edge computing, which provides decentralised cloud capabilities closer to clusters of IoT devices, reducing the need for massive centralised capabilities, and improving the efficiency of bandwidth consumption
In addition, cloud enables several models in specific sectors, such as Unified electronic medical records in healthcare, the concept of flipped classroom in Education, Industry 4.0 through Industrial IoT, etc.
Finally, cloud computing enables the growth of Micro, Small and Medium Enterprises (MSMEs) in the regional economies as it removes some of the barriers to entry associated with Technology requirements. This is an important agenda item to governments, as MSMEs are the driver behind economic diversification and innovation
What challenges does cloud computing face in the Middle East?
One major concern is security because vulnerability to cybercrime is very high even if you have all the security elements within you, especially when you are moving all of your data and workload to cloud environments. One of the other concerns, especially in our part of the world, is clarity on data governance, because now you have so many parties who are not necessarily visible to you, but they are touching your data, because the data is not actually with you, it is sitting somewhere else in the cloud. So the data governance, and clarity on data governance is still a challenge, and these are things that are still being worked around.
In the Middle East the cost of connectivity is still very high – among the highest in the world – and that is a challenge. On the one hand we are saying save money in order to reduce cost once you go to cloud. But because it is all connected, the user can face a higher cost for connectivity.
Papazian: Companies consuming cloud services face some of the following challenges:
Lack of clarity about regulations: can you or not move your data to the cloud.
Concerns about security and data privacy; Concerns about lock-in effect from specific vendors and the inability to retrieve data or switch vendors; Poor quality of cloud services in the region in general, including after-sales support.
Another issue is legacy infrastructure and systems making it challenging to migrate to the cloud. A further challenge is a lack of buy-in from senior decision makers about the need to move to the cloud, and the ROI associated, compared to the risks of disruption
Companies providing cloud services face some of the following challenges: A Lack of clarity about regulations and government incentives; Poor connectivity and infrastructure, and limited digitisation of companies and IT spend –usually two to three times less than global averages.
There is also the issue of limited availability of qualified talent
Wael Mustafa: While the cloud market will continue to grow through 2018, cybersecurity vulnerabilities have emerged that will invite the threat of sensitive data belonging to Middle East-based organizations being stolen from shared cloud infrastructure. In the UAE alone, consumers lost Dh3.86 billion to cybercrimes over the course of 2017. Efforts to curtail these security concerns will put pressure on cloud vendors’ expenses as they work to replace affected hardware and upgrade systems to restore customer confidence, while simultaneously avoiding breaches and performance slowdown.
New data compliance laws will also add to challenges for regional businesses, including the General Data Protection Regulation (GDPR) launched by the European Commission in 2016 to strengthen data protection within the EU that will be taking effect on May 25. Significantly for organizations in the Middle East, new regulations affect the export of data outside of the EU, and so cloud service providers will need to adapt to the new regulation by investing time and money in local infrastructure, resources and policies to ensure timely compliance in order to avoid financial repercussions and failure in customer confidence.
Papazian: How is the situation with regard to skills?
As highlighted by a recent study published by Strategy& and LinkedIn, the region is facing severe shortage of qualified talent in the digital space (https://www.strategyand.pwc.com/reports/digital-workforce-full-report. For instance, 1.7% of the GCC workforce have digital jobs, compared to 5.4% in the EU. This also applies to cloud
The impact cloud has on companies require new types of capabilities for IT professionals. Until recently, IT has been mostly about devices, enterprise applications, and infrastructure. IT today is mostly about services with little infrastructure and hardware on site or even owned by the company. Accordingly, some traditional IT functions such as asset management, operations and maintenance will have to be reviewed. Instead, a new generation of IT functions will have to be established, focusing on IT service definition, SLA management and service sizing and consumption.
Companies need new talent strategies. Until now, companies have recruited developers and administrators. As they move into the cloud, they will need architects who understand the cloud and contract managers who understand the service models on offer from vendors. Growing and acquiring the talent needed for the cloud is inherently challenging, particularly for emerging markets such as Middle East countries. Corporate programs need to proceed in cooperation with government initiatives that seek to encourage interest in digital careers and provide incentives to enter the industry. For example, educational establishments and companies can work together to ensure that the right courses are taught so that those graduating have the correct skills. Companies then need to provide competitive packages and career structures to retain talent in the region, while also attracting Middle East talent to return to the region
Finally, the presence of large-scale international players would accelerate talent development. The partnerships that will be established between governments and cloud providers have to include the talent agenda, including training, developing, and recruiting highly qualified professionals.
Copyright: UMS International Fz LLCTheme