Winfred Kagwe | Allafrica

Cloud computing was a concept unfamiliar to many Kenyans just a few years ago, but indications are it is finally picking up in this market.

Globally, according to a Gartner Special Report on Cloud Computing, the period between 2008 and 2013 is the ‘hype cycle’ when revenues from the service are expected to increase significantly with global cloud spending growing to US$241 billion by 2020.

The East Africa region is predicted to be consistent with the global trend. A report by Deloitte East Africa released last week cited cost and tax advantages as some of the key reasons for the expected increase in uptake, in addition to other advantages derived from the cloud services.

The concept of cloud computing works through a collection of Internet-based or private network services by providing users with scalable, abstracted IT capabilities, including software, development platforms and virtualized servers and storage.

As opposed to the other computing models, users of cloud computing can reverse VAT and withholding taxes on imported service and do not have to have a physical taxable presence. Providers of cloud computing can also claim capital expenditure and VAT is not charged on exported services.

“Cloud computing makes it conveniently easier to innovate and increase revenues in a way that is not easy to achieve with the traditional IT models as it promises increased revenue, less recurrent costs and minimal initial capital outlay,” said Nikhil Hira, Deloitte East Africa Tax Partner and Technology, Media and Telecommunication Leader at the AITEC East Africa ICT Summit last week.

Education, finance IT and telecommunications are going to be the forerunners in adopting to the cloud services. Business Process Outsourcing firms are also seeking a computing platform for their services without necessarily buying the software and hardware.

The increased demand for cloud computing infrastructure by companies is mostly because it provides computing infrastructure as a service exempting them from purchasing servers, software, data centre space, or network equipment directly.

But as much as it has its advantages, cloud computing has its risks. “Enterprises who manage sensitive information, such as social security numbers, credit card numbers, and patient health information must implement protection measures and policies when using the cloud,” Marthinus van Jaarsveld, Deloitte East Africa Technology Advisory Partner.

Financial institutions must protect consumers from fraud and identity theft. Firms must carefully manage trust, authentication, and authorization to applications and data in the cloud, especially with “cloud to cloud” and “hybrid cloud” inter – application authorisations.

Last year,Safaricom rattled the market introducing its cloud computing services. In May it reported 51 per cent of organisations were currently using the cloud for data management, 45 per cent of organisations had adopted the cloud for communications and 47 per cent were currently using cloud services for corporate IT systems.


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