Rising data centre deployments reflects $1bn cloud service potential

Significant rise in the number of data centres deployments in Nigeria, reflects the enormous potential inherent in cloud computing, industry observers have said. In view of falling oil prices, and rising pressures on the naira, local firms in critical sectors of the economy, are increasingly demanding cost-efficient storage and data processing capabilities, as well as Information Technology (IT) infrastructure, delivered as a service, on a pay-as-you-use basis. Cloud technology, which refers to the use of computing resources (hardware and software) delivered as a service over the internet, industry experts say, can meet this needs by assisting businesses lower their budgetary requirements for IT, whilst allowing them piece together IT projects without spending on purchasing servers, storage systems and maintenance. Nigeria already has a cloud service market potential of about $1 billion, market analysts have said.

But, broadband infrastructure bottlenecks, epileptic electricity supply, cyber-security concerns, amongst others, constitutes significant drawbacks to the speedy adoption of this new technology consumption model. In Africa, the cloud market is expected to grow to $35.6 billion by 2015, says MainOne, undersea cable operator. Recent studies have also shown that businesses in the country are embracing cloud computing as they continually come to terms with the benefits of cost savings and higher data processing efficiencies associated with this new technology model. According to a survey conducted by World Wide Worx and Cisco, 44 percent of Nigerian businesses are set to embrace cloud computing in 2014. Firms in retail, telecoms, oil and gas, and banking industries are considered most likely to extract value from using cloud infrastructure to handle the large volume of data transactions in their sectors.

“With data centres, businesses, especially Small Medium Enterprises (SMEs) can get access to innovative and affordable computing services that would indeed improve enterprise productivity and efficiency”, Austin Okere, group managing director, Computer Warehouse Group (CWG) Plc, told BusinessDay at an industry forum in Lagos. Jeremy Deutsch, managing director of Equinix, data centre provider, said he sees huge data growth and increased uptake of cloud-based services. “This all points to increased need for datacentre facilities to enable the Cloud,” he said. There is a major business opportunities for firms looking to set up datacentres in Nigeria despite the unfriendly conditions – particularly, power. The Ministry of Communication Technology has estimated that 300 data centres will be required in the coming years, to support affordable internet services and software applications in Nigeria.

One of the huge opportunities for companies to establish data centres in Nigeria, lies in the policy by the Central Bank of Nigeria (CBN) that prevents certain financial information and data from being stored outside the shores of the country. MTN Nigeria has deployed a high-grade data centre with 500 square metres of collocation and hosting space in Lagos. By virtue of this IT infrastructure, MTN, is offering cloud-based services targeted at SMEs. CWG Plc, an indigenous Information Technology (IT) firm, with annual turnover $130 million, recently launched its tier-3 data centre valued at over $10 million. MainOne, last week, said it has completed its $40 million data centre facility in Lagos. Several months back, Rack Centre, a Jagal Group Company, went live with the first phase of its development of the technology company’s tier 3 data centre, offering around 3,000 rack spaces.

“With the increased recognition of Nigeria as one of the leading emerging economies, it is very important that we have available such infrastructure required to establish, enhance and sustain effective business performance in today’s global digital economy”, said Funke Opeke, chief executive officer, MainOne, in an interview with BusinessDay. Industry experts are of the view that cloud is driving the insatiable demand for data centres facilities and large foreign technology companies such as Microsoft, Google, Vodacom Business, are looking to cash in on one of the Africa’s fastest followers – Nigeria – in terms of adoption. Ayotunde Coker, managing director of Rack Centre, agrees with Deutsch that additional data centre facilities are required in the country to continually deliver this sort of capabilities. “To build a data centre requires a significant amount of Capital Expenditure (CAPEX) and expertise.

“To the right standards of reliability, it probably takes about 18 -24 months to build this kind of infrastructure. Business dont have that time to do that”, said Coker, in an interview with BusinessDay in Lagos. “We enables business access to this world-class facility for their IT. They can be operational within weeks, and it allows them to put the CAPEX that would have been spent in what is not a core competence for them into the front-end of their business where their core competence is and where their money will be better spent”, he further added. With the burden of developing and maintaining the technological expertise required in running the network been transferred to data centre providers, industry experts told BusinessDay that the pay-per-use basis of cloud computing will helps transform the way IT departments create and deploy customised applications during these difficult economic times.