IBM has joined the bandwagon to open data centres in the UAE – Dubai and Abu Dhabi - to provide managed services to enterprises and help accelerate their journey to the hybrid cloud.
Big tech companies have shown interest in the Middle East, especially in the UAE, to open data centres. Amazon Web Services has a cluster of data centres in Bahrain and the UAE.
Oracle already opened its first data centre in the UAE last year in Abu Dhabi and plans to open one more data centre in the UAE, likely in Dubai, and two in Saudi Arabia this year while Microsoft opened its data centres in Dubai and Abu Dhabi last year.
Alibaba Cloud, the cloud computing arm of Chinese e-commerce giant Alibaba Group, has already invested in one data centre in the UAE while SAP opened its data centres in UAE and Saudi Arabia last year.
The only big player left is Google.
Big cloud providers need to have local data centres to cater to governments, financial and banking sectors for data residency regulations and that is why big players have opened data centres in the region.
Hossam Seif El-Din, Vice-President for Enterprise and Commercial at IBM Middle East and Africa, told TechRadar Middle East, that IBM has been offering cloud managed services to organisations across various sectors, globally and in the region, through its data centres globally but due to data residency issues, “we found it is important to have local data centres to target banking and government clients for mission-critical applications and data”.
Moreover, he said that only 20% of the companies have moved to the cloud and believe that it is the right time to move to the cloud.
“We see a huge growth opportunity as 80% of the workloads still sit on on-premises. We not only provide IaaS, PaaS and SaaS but also manage on their behalf. The data centres will deliver data backup and protection services for customers,” he said.
In the case of a network failure or downtime, he said that data and workloads hosted in the data centres will be recovered instantly and available for use in real-time.
According to an International Data Centre (IDC ) report, the average cost of downtime is $250,000 per hour across all industries and organisational sizes.
When asked whether IBM is planning to open more data centres in the region, El-Din said: “no comments”.
According to IDC, the public cloud market in the UAE is expected to grow by 35% to $406m in 2020 compared to $299m last year and two-thirds of the organisations will approach the cloud through a hybrid model.
The research firm is seeing a decline in on-premise [non-cloud] spending and a lot of spending is moving to the cloud as a subscription-based model to cut costs.
Manish Ranjan, research firm International Data Corporation’s program manager for software and cloud in the Middle East, Africa, and Turkey, said that looking at the Middle East in isolation, Saudi Arabia and the UAE are the biggest spenders on the public cloud services, with growth rates exceeding the market average.
“There are a lot of opportunities for the cloud in the region and Saudi Arabia is the right place for any cloud provider looking to tap into them. Under the Kingdom's proposed data regulations, vendors that have their own in-country data centres would certainly have the upper hand from a compliance and governance standpoint, particularly when it comes to serving the government, healthcare, and banking sectors,” he said.
For the same reason, he added that local telecom operators are better placed than their international counterparts as they are able to deliver software solutions, infrastructure, and development platforms as a service from in-country data centres.
“As such, local telecom operators across the region are investing heavily in local data centres to meet growing cloud demand,” he said.
Total spending on public cloud services in the Middle East and Africa (MEA) is expected to reach $2.65 billion next year, up from $2.04 billion in 2019.
“Over the longer term, we expect the spending on public cloud services in the region to increase at a compound annual growth rate (CAGR) of 27.2% for the 2018-2023 period,” Ranjan said.