January 19, 2015 | Written by: IBM Cloud Staff
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By Anthony Butler
My region (Middle East and Africa) is one of the most diverse in the world. Economically, it features some of the poorest countries—and some of the richest. It spans two hemispheres, from the tip of South Africa to the northernmost borders of Turkey, and it boasts a linguistic diversity that, by some estimates, covers over 3,000 languages.
Despite its diversity, there is one commonality across the region: there is a tremendous amount of innovation and entrepreneurial activity. As the region is unencumbered by much of the history and technical debt that affects more mature markets—such as high dependence on fixed line technologies and inefficient data centers—we are seeing these emerging markets lead the way. The rapid adoption of mobile payments technologies, exemplified by Kenya’s M-Pesa, provides an instructive example as to how unique challenges of the region are giving birth to innovative solutions.
In some cases, forward-looking governments are considering how they can nurture and foster this kind of entrepreneurial activity as it is seen as a key enabler of economic growth. In other cases, we are seeing increasing numbers of investors enter the market in search of new opportunities to invest. For example, in the last four years IBM’s Global Entrepreneur program has held Smart Camps throughout the developing world to identify entrepreneurs with innovative ideas and support their efforts. Most recently, IBM offered a program specifically for cloud-based startups where applicants can get free credit, go-to-market advice, mentorship and support in reaching IBM’s enterprise client base.
Cloud services can play a critical role in enabling the development of these ecosystems and helping them realize their full potential. Here are five ways that I see the cloud boosting developing nations:
1. Cloud can help mitigate local challenges and constraints
In many emerging markets, there are infrastructure challenges that pose a significant road black for startups looking to reach global or regional scale. There can be unreliable network connectivity, limited infrastructure or irregular access to power and utilities. The cost of finding reliable hosting environments in these markets can be prohibitively expensive, placing it outside what a small startup or lone developer can afford.
In other markets, there may be political instability or even civil war. Cloud, however, provides the developer with access to an elastic, secure and reliable hosting service in a data center that is removed from these local challenges. This could be a service hosted outside of the country or in a secure location within the country but, in either case, the developer or startup can free themselves from these constraints, whether cost-related or related to basic infrastructure availability.
2. Cloud can lower the barriers to entry for entrepreneurs
Cloud affords elasticity in pricing and capacity, which lowers barriers to entry. A developer doesn’t need to sign a multi-year contract with a local colocation provider or make a capital investment to procure servers or software licenses. The aspiring developer or entrepreneur can procure services online, using a credit card or some other means without making a significant (and prohibitive) commitment. If their app takes off, they can easily grow; and if it does not, then their investment and exposure is mitigated.
Furthermore, cloud enables the composable business: rather than having to create a new application by creating each of its composite parts, an entrepreneur can improve time to market and reduce complexity by procuring discrete services from the cloud and then using these to compose their application. For example, rather than negotiate with their local telco to get access to SMS services, an aspiring developer can simply procure these services from Twilio in the cloud and integrate these into their application via an API. And rather than buy and implement their own CRM system for keeping track of customers, a startup can procure this as a service.
3. Cloud can level the playing field between the developed and the developing worlds
Cloud can play a significant role in leveling the playing field between mature and developing markets. A developer in Africa can now access the same advanced features and capabilities as their peers in more mature markets—at the same time. Whereas once there was a delay in how new technologies and services reached the less mature markets (if they even reached them at all), cloud allows services to be sold anywhere with minimal marginal cost of expansion into new markets. IBM Bluemix provides an example of how this can work: a developer in Africa has the same ability as a developer in the United States to develop leading edge applications leveraging something as innovative as IBM Watson or IBM’s other analytics technologies. The playing field is leveled such that the key success factor becomes the skills and abilities of the developer and less so their geographic location.
4. Cloud enables reach into new and expanded market opportunities
As I mentioned, cloud abstracts away local constraints and, by doing so, enables a developer to reach a global market opportunity just as easily as a local market. If a developer can host his or her application in the cloud, they can reach North American markets with the same ease as they can reach African markets. For developing countries, this can be an important source of revenues as it means, conceivably, that an innovative developer in this market can reach more affluent consumers with potentially higher disposable income in remote markets and capture some of that opportunity. At scale, this can represent a significant benefit for entire countries and, as such, many forward-looking governments are looking at how they can support and bolster indigenous ICT innovation.
5. Cloud enables rapid and low-cost deployment of new services
Cloud affords developers with an agility that would be unattainable otherwise: new offerings, services and products can be quickly developed and made available. These services can be rapidly prototyped, tested and adjusted in response to market dynamics. For entrepreneurs in the developing world, this helps them compete with global markets but also allows them to keep pace with developments in their own markets where the rate of change is often faster and more aggressive than in so-called mature markets. The ability to provide rapid iterations of capabilities to adjust to market needs or functional voids is enhanced through the cloud. Testing and growth for scale allows new entrants with a winning idea to grow rapidly at lower cost. And when business volumes decline, developers can release the resource with minimal expenditures. In a non-cloud world, there would be sunk costs that would slow down a startup’s ability to adapt or change, but with cloud, many of these considerations are abstracted away.
Cloud enables startups in emerging countries to truly compete in global markets on an equal footing with mature market offerings. By mitigating local constraints and giving access to the latest technologies, the benefits and value of cloud can be profound. The uptake of cloud is happening today, but forward-looking governments can do more to help remove barriers to cloud adoption amongst their nascent developer communities and ecosystems. For example, they can address regulatory and legal challenges that sometimes prevent the cloud adoption.
Governments can also work with telcos and others to resolve infrastructure challenges that can hinder uptake and create economic incentives for building cloud data centers, points of presence or other on-boarding routes in their countries. They can further look at how free trade agreements between countries can take into account the provision of cross-border cloud services and can lead by example in moving their own workloads to the cloud. This would effectively lower their own costs and help develop and bolster indigenous cloud skills and services.
Anthony Butler is Senior Technical Staff Member (STSM) and Chief Architect in IBM Global Technology Services in Middle East and Africa; he is focused on helping clients discover new sources of value and transform their business through cloud, mobile and emerging technologies. He has many years experience leading complex IT transformation programs for some of IBM’s largest clients. He is patent filings focused on cloud, mobile payment technologies, and next generation security technologies. He holds a Masters of Engineering from Royal Melbourne Institute of Technology.