25 Aug 2016

The challenges of cloud adoption in the Nigerian online and digital industries


By Wale Oyepeju - Head of IT, Ultima Limited 


Cloud services are playing a key role in enabling and nurturing businesses in Nigeria, especially those in the online and digital sectors. The reasons for cloud adoption in this sector of the economy aren't far fetched and they're borne out of the dynamic nature of the industry and the infrastructure challenges in the country.

"Never have businesses been driven by technology like we have in this era of cloud" 

Many online businesses see leveraging cloud technology in order to stay ahead of the competition as an imperative, with their seemingly superior product and service offerings. For others, the main objective is to reach a global audience with the offer of value added customer excellence. Never have businesses been driven by technology like we have in this era of cloud.

That said, utilising the adoption of cloud in Nigeria is still frought with key challenges. Some of these issues are global and general in nature, while others are cultural and local to Nigeria.


Pricing


IT leaders in Nigeria consider the price point a key factor in deciding whether to move specific IT functions to the cloud or retain on-premise. In arriving at this decision, price points are analysed across cloud providers and weighed up against on-premise costs. The idea to migrate services to the cloud is sometimes dropped when there is no favourable price point to support the decision. 

"Different price points have to be worked out for each sector in a way that is beneficial to both provider and the business"

For instance, discussion to migrate traditional video data backup and archiving processes to the cloud usually enters a stalemate because traditional warehousing, even with its inherent risks, is still a cheaper option for content producers and a widely adopted tactic in the entertainment sector. 

Cloud providers need to engage business owners and IT leaders in order to understand their needs better and tailor cloud solutions to industry peculiarities. Take for instance the bandwidth required for financial transactions - They aren't the same as what is needed for the backup and retrieval of video data. The frequency of data retrieval is also not the same. This means that different price points have to be worked out for each sector in a way that is beneficial to both provider and the business. In instances where on-premise price point more reasonable than cloud, other benefits would have to influence the decision to utilise cloud.

"WhatsApp has proved to us all that real growth comes from focusing on product and not technology"

There is also a dearth of innovation in Nigerian cloud sector towards the development of sector-specific cloud products and solutions. WhatsApp has proved to us all that real growth comes from focusing on product and not technology. According to a recent HBR article, the team at WhatsApp focused on what the customer wants to deliver what we know as WhatsApp today. Cloud providers’ product development model should be innovative, more of “outside-in” strategy than “Inside out”. 


Adoption reluctance


Furthermore, there is a general paranoia and reluctance among stakeholders to move key IT functions to the cloud. Business leaders still believe hosting key business applications in-house will safeguard their data and prevent unauthorised access. Unlike in Europe and America where cloud is widely utilised by the financial sector, adhoc use of the cloud in Nigerian financial institutions is prevalent. Some stakeholders also believe that cloud adoption will translate to job cuts, creating skill gaps within the IT sector. There is also the fear of incurring huge cost in data transfer when switching cloud providers, or from cloud to on-premise platform.

"For cloud adoption to gain ground in Nigeria, Internet has to be faster, cheaper and more reliable"

According the Nigerian Guardian, the Federal Government has committed to increasing broadband penetration from about 8% to 36% by 2018. This is an indication that things may not improve much in the short-medium term. The assertion was made at a time countries in Europe and America can boast of 31% - 52% fixed broadband penetration. Government, through private partnerships must speed up infrastructure development and solve key challenges that could undermine the growth of online and digital industry. The success achieved with mobile and wireless telephony needs to be consolidated through high impact fixed broadband penetration.

Efforts aimed at solving other key infrastructure challenges in the power sector will further improve the adoption of cloud in Nigeria. Key issues around right of way as they affect network backbone deployment need to be looked into. For cloud adoption to gain ground in Nigeria, Internet has to be faster, cheaper and more reliable. 

Creating awareness


Cloud awareness is generally low in developing countries, Nigeria inclusive. Evident is also the cloud knowledge gap between business/finance and IT. Studies have shown that nearly a third of companies are neither tracking their public cloud usage nor managing the costs associated with public cloud services. Deirdre Mahon, Cloud Cruiser’s Chief Marketing Officer said today’s reality is that IT can only move at the speed of finance: “If business, IT, and finance stakeholders cannot view the same real-time dashboard showing exactly what cloud services are being consumed by whom, services will come to a screeching halt.”

"IT leaders need to understand the financial implication of cloud option in a holistic manner"

To solve the knowledge gap between business, finance and IT, communication needs to improve and knowledge transfer is encouraged corporate-wide. IT leaders need to understand the financial implication of cloud option in a holistic manner and communicate the cost saving in both top and bottom lines. Finance leaders also need to avail themselves of the various tools that can support the decision to adopt or utilise cloud. 

The legalities


There is also the need for robust legal and regulatory compliance framework for cloud. Nigeria is not known to have a holistic cloud framework and regulatory compliance guidelines that address territorial issues bothering on cloud adoption, taxation, QoS, copyright, data security and privacy laws. There are liability and governance issues that a comprehensive legal framework will address within the Nigerian context. 


Money matters


"Many businesses are slow to adopt cloud due to the confusion over the financial impact of cloud"

What is evident is the confusion in the simplification of financial benefits of cloud. Given that the adoption of cloud can sometimes increase OPEX, any business leader would ordinarily not see the financial benefits of cloud. Many businesses are slow to adopt cloud due to the confusion over the financial impact of cloud.

Laurence Goasduff in his article, “The Financial case for moving to the cloud” said that: "Adopting the cloud can save significant amounts of money, which ultimately is the lifeblood of any business”. The discussion on the financial implication of cloud is usually not balanced. There are other cost savings that we often don’t talk about. These cost savings come in the form of indirect, direct and overhead costs of maintaining IT infrastructure on-premise.

In conclusion, there is an urgent need for stakeholder engagement beyond selling of cloud products and services. Not all cloud products are a fit for the Nigerian online and digital Industry due to pricing and market share. The Federal Government needs to fast track key infrastructural development. We need a roll out plan for smart city initiatives. Regulatory bodies should also focus on developing local cloud players with the aim of exporting cloud solutions and products to Nations. Re-imagining regulations beyond sanctions and penalties need to be done for healthy growth and development within the online and digital industry.


About the author:

Head of IT, Ultima Limited 

Wale’s journey in the corporate world has seen him wear three hats with a wealth of experience in IT Service Management, Broadcast Technology and Telecommunications. Wale was instrumental to the implementation and technical support of MTN Nigeria’s Virtual Top-Up platform. His dedication earned him consistent service delivery award in 2009. As an astute IT Service Manager Wale holds a MBA in Customer Service Excellence from Anglia Ruskin University, UK.

Wale will be speaking on day 1 of Nigeria Com 2016 about utilising the adoption of cloud services in the online and digital industry.

You can find out more about the event here.

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