Businesses should be aware cloud services could be adding extra costs and security risk, despite the significant adoption and growth it has seen in South Africa.
Appie Pema, chief executive officer (CEO) of Aptronics, told News24 the costs incurred by cloud solutions are a result of savings being offset due to operational expenditure (OPEX), despite the fact that cloud services are often viewed as a means to reduce capital expenditure and maintaining operational efficiency at the same time.
“Everybody’s trying to drive OPEX down. Cloud is going to increase your OPEX. If you go into cloud, you’re going to have capital expenditure, but you’re going to have a fixed operating cost,” Pema said.
Pema said the cost involving hardware for cloud will have to be financed by the customers.
“That’s what people are marketing: I’m going to buy ZAR1 million (US$97,950) [worth] of kit[s] and finance it with a cloud contract over five years, whereas before I would sell it to you, make my 15 per cent margin. You maintain it and operate it,” said Pema.
Pema illustrated his point further: “I’m going to buy the hardware… I’m going to have my OPEX cost on top of that and you are going to fund it. It’s not cheaper.
Enterprise cloud solutions are offered by many companies in South Africa, however, Pema warns the industry is too fluid, reminiscent of the past’s migration to internet offerings.
“If you want internet connectivity you’re not going to go to Joe Soap down the street who’s got a POP (Point of Presence) and connect to him… You’re going to go to a company that’s got a reputable infrastructure and service and actually deliver what you want at a cost-effective value. For me cloud is the same,” said Pema.
Furthermore Pema said businesses must be wary of contracts, which lock users in.
“Remember, once you move into cloud, you are hooked. If I provide you [with] bad quality… service or the solution does not meet your requirements” it will be very difficult for the user in question to change service providers.
