06 July 2021

By Andrew Baker, Absa Chief Technology Officer

As the COVID-19 pandemic prompts a leap forward in digital and technology adoption, ‘cloud’ stands out increasingly as a competitive business advantage and it will soon be a strategic imperative, writes Andrew Baker, Absa's Chief Technology Officer.

There has been a substantial acceleration in digital and technology adoption over the past year, spurred by the need for digital alternatives to the ways in which we worked, shopped, learnt and even socialised before the pandemic. The 23% jump in the number of digitally-active Absa customers in South Africa in 2020 vs 2019 serves as one of many proof-points. In this context, the way in which large volumes of data are stored and managed has also come under scrutiny more than before.

Traditionally, most companies stored data on servers on their own premises. However, as data volumes grew, owning and managing on-premises data centres has become costly, cumbersome and inefficient. Storing data online, or ‘in the cloud’, is an alternative solution provided by companies such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud.

Companies that store their data in the cloud also have access to powerful ‘cloud computing’ capabilities. It means they can analyse, interpret, process and manage data faster and at bigger scale. Cloud security services have also made it easier for companies to manage IT infrastructure as more staff work from home. It is for these reasons, and more, that Absa has become one of the biggest cloud adopters in Africa. We have accelerated cloud adoption, and we’re not alone in doing so.

According to the International Data Corporation (IDC), cloud adoption has surged in the past year and will continue to do so. Global spending on cloud services across the board will accelerate to $1 trillion in three years, growing at a compound annual rate of 15.7%, according to IDC. Gartner's prediction is for end-user spending on public cloud services to increase by more than 18% to $305 billion this year compared with 2020.

The move to cloud in Africa is further promoted by the establishment of local data centres by the world’s largest cloud service providers. For example, last year, AWS announced the opening of a data centre in Cape Town to service clients in Africa.

Until now, businesses in Africa were mostly connected to AWS data centres in Ireland, and while these were only about 160-170 milliseconds away, the geographical spread carried the risk of interruption, such as breakages in the West African Cable System. The opening of the AWS data centre in Cape Town means this risk is now significantly reduced. As the data centre footprint develops in Africa, it presents significant opportunities for businesses, from small businesses to large corporates, to move to virtual systems.

Cost benefit

Well-architected cloud offers significant cost benefits, both from the perspective of capital outlay and ongoing operational costs.

In a fixed-capacity operating model, determining the size of a company’s data storage needs – despite the best modelling algorithms – is never a perfect science. Being left short of, or with excess capacity due to a cumbersome operating model can have costly consequences. Cloud, on the other hand, allows a business to scale up or down elastically, according to its particular and immediate operational requirements.

At Absa, we conduct numerous mobile disbursements across our Africa operations, processing large files of cellphone numbers for payment. Before, this process cost us millions of rands with minimal returns on investment. After migrating to a cloud-native platform, however, the equivalent cost declined to a mere $19 a month.

The journey to cloud

The journey to cloud is not an easy one, particularly in the heavily-regulated financial services sector. It is a detailed, methodical and complex process undertaken with oversight by regulators in the multiple jurisdictions in which we operate.

In order to maximise the potential benefit of cloud computing, it is critical to get staff on board, particularly in large multinational organisations.

Our efforts to train staff in cloud computing was accelerated recently with the launch of a Cloud Incubator – an internal initiative launched jointly with AWS – to train 1,500 Absa staff members across Africa this year alone. A key outcome for us is that cloud incubator participants will be able to identify cloud opportunities within their businesses, and create more efficient, scalable services and solutions. Employees will have the confidence to innovate faster and experiment more to drive broadscale digital transformation across the business.

At Absa, we are accelerating cloud adoption as we firmly believe it will have a significant impact on our ability to innovate, offer new value propositions, and play a meaningful role in our customers’ and clients’ experiences. Cloud is already improving our ability to manage and access big data sets and to bring products to market faster.

Cloud is currently a competitive business advantage but will soon become a strategic imperative.