“Data is the new oil’ , is a term first coined by British mathematician Clive Humby in 2006. The expression has aged well, so much so that it is now part of corporate and tech “lingo” along with other variations being in popular use, for example, “Data is the new gold”.
The ever increasing reliance on data has helped conceive a whole new ecosystem built around the fundamentals of storing and analysing data. An important component of this ecosystem is cloud computing, and as Pakistan moves towards digitising its economy, the role of cloud technology is further elevated.
However, according to experts, the current infrastructure for management of data in the country is fragmented and outdated in most cases as in-house IT departments don’t have the adequate competencies to keep up with technological advancements. This leads to a lack of flexibility in data management.
Further highlighting the need to develop the cloud ecosystem, as quickly as possible, is the fact that Pakistan failed to make it into the Association of Cloud Computing Asia’s cloud readiness index. Countries such as India, Indonesia and Vietnam are all present in the rankings.
Attempts to work on this, however, remain underway. In a recent development, Daraz Pakistan and Alibaba Cloud signed an MOU on September 17, ‘22 for the provision of cloud services in Pakistan.
Alibaba, which acquired Daraz in 2018, is one of the biggest cloud service providers in the world, and counted among the top five Cloud Service Providers (CSP).
The signing of Daraz’s MOU with Alibaba was witnessed by Rukhsana Afzaal, High Commissioner for Pakistan in the presence of Daraz founder and CEO, Bjarke Mikkelsen and Alibaba Cloud Intelligence General Manager of South Asia and Singapore, Dr Derek Wang.
A little bit about Daraz before we go on. The company was founded in 2015, and is one of the most well-known eCommerce brands in Pakistan. It boasts more than 40 million active monthly users and over 100,000 active sellers. In addition to this, Daraz University, Daraz’s online learning centre, offers personalised and localised courses covering all areas of the e-commerce ecosystem. “We are glad to partner with Daraz to bring digitalisation opportunities to Pakistan, and by offering our proven cloud computing services, we are confident to support Daraz in building up Pakistan’s digital momentum to benefit the wider ecosystem,” said Wang on the partnership, providing much-needed hope.
Such partnerships enable local companies such as Daraz, Telenor and so on to market the services of established CSPs and earn a margin of anywhere between 10 percent to 20 percent. Furthermore, by venturing into cloud services through this route, these companies save the cost of investing in their own infrastructure.
What is a cloud?
It’s pretty obvious by now we’re not talking about the fluffy white things in the sky that sometimes turn grey and shower rain upon us. Except for the fact that our cloud is, perhaps, as intangible, what we are referring to couldn’t be more different. This one is a wireless ‘cloud’ system of data storage. The National Institute of Standards and Technology, US Department of Commerce says, “Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”
What this basically means is that cloud computing is based on the infrastructure that facilitates the delivery of multiple services and applications directly through the internet. These services include networking, database, softwares and data storage. In business terms, think of it as rationing your supplies at a third party warehouse. In this case, the third party will sort and package them also. To put it in even simpler terms, cloud provides an infrastructure that can replace local storage (computer hard drives in most cases).
Why can we not carry on with the local storage?
So local storage — anything that is saved on-site, on a flash drive or local file server—has served us well over the years but cloud is a game changer. It is more efficient, offers huge cost savings, has much better data management and protection, and the processing capacity is higher than that what most local storage systems can offer. Furthermore, it facilitates user mobility as data is accessible from anywhere in the world.
Use Cases for Cloud in the Pakistani Market
According to experts in the industry, the current infrastructure for management of data in the country is fragmented and outdated in most cases. In-house IT departments don’t have adequate competencies to keep up with technological advancements. This then leads to a lack of flexibility in data management, a major reason why many websites crash when subjected to high user traffic.
Cybernet’s RapidCompute, Multinet, PTCL, Jazz’s Garaj are the only significant local providers, whereas Telenor has partnerships in place to offer Alibaba’s cloud services. The range of offerings could be different in both partnerships. International providers such as Amazon Web Services and Huawei Cloud have also ventured into the Pakistani Market.
“Around 70% of the IT budget for big organisations is spent on just maintaining the infrastructure while around 30% is left for innovation. Once they shift to cloud, the tables are turned and you have a higher amount spared to invest into scaling businesses and on top of it there are value add enterprise services that CSPs can provide to further assist businesses,” said Ovais Khan, Head of Delivery, MENAP at Systems Limited when talking to Profit.
While sharing a use case for cloud in the financial services sector, Khan added, “In the lending side of things, we are trying to automate the whole process of assessing customer creditworthiness and KYC which is a major delay factor in the timely disbursement of loans. An enabled cloud system in this situation will serve as a central point for not just acquiring the data but also running analytics and other procedures.”
Basically, a centralised data server breaks down the silos that are otherwise present between departments of large organisations which maintain their in-house data storage. Next, an effective third party cloud system is equipped with advanced analytics tools, such as machine learning and powerful servers that can increase the accuracy and speed of data processing.
The situation at present is that the use of cloud services in the country’s public sector is comparatively low, and the bulk of data centres are designed to serve the needs of a single enterprise. This lack of centralised cloud infrastructure remains a major impediment to the perks of cloud computing.
Integration of all government databases to cloud platforms will enable the government to better analyse the data which will ultimately lead to quality enhancement of E-Government services. An important point of note is that a cloud infrastructure will help reduce the burden on the national treasury of operating separate data centres for federal entities and departments. It will also increase the level of data security, critical for those public and private organisations that are subjected to regular cyber-attacks.
Ali Naseer, Chief Business Officer Jazz, in an article for a private publication, discussed that a local cloud infrastructure provides a standardised security framework which is much more secure than what other less ‘Tech-Savvy’ entities can develop in-house. Additionally, network disruptions due to technical faults can also be minimised if a centralised and certified service is used. (Most of the local data centres are Tier-3 certified)
The SME crowd is also a market for cloud technology given that the business case is very strong for them. Especially, export oriented service businesses like those operating in the IT sector are increasingly adopting the technology as cost efficiency is critical in a market where they’re competing on pricing to the final consumer.
Why operate locally when you have foreign services?
From a consumer perspective, if we compare local vs foreign CSPs, the first point of consideration would be the cost. In reality, there is no comparison as costs of cloud packages vary from customer to customer.
It is different if we have to make a baseline comparison because foreign CSPs such as AWS will be cheaper when it comes to basic storage services. But, if we add other features to the offering, for example backup recovery and customer support then the packaged deal provided by local operators such as Jazz’s Garaj would cost far less.
“A local cloud infrastructure, like Garaj powered by Jazz, provides a better experience through localisation. Besides keeping Pakistani data in Pakistan, It includes features like 24/7 support in both Urdu and English, flexibility to pay in Pak Rupees and customised offerings. Local customers really appreciate such flexibilities that usually offshore Cloud Service Providers do not offer. Currently, our state-of-the-art cloud platform is serving around 50 enterprises in banking, financial services, startups and public sectors,” explained Naseer.
However, according to Khan of Systems Limited, products of foreign service providers are much more resilient in terms of data storage, disaster recovery/continuity of services and security of that data/assets/systems living in the cloud. This would enable users to leverage Web 3.0 technologies such as blockchain for decentralised processing and storage.
The Strategic importance of local Infrastructure
Perhaps, one of the strongest and most convincing arguments of building a cloud infrastructure within the country comes from a data security point of view. In the recent past, cyber attacks directed on public as well as private organisations have resulted in loss of sensitive data. Also, the government has concerns over data of Pakistani companies being stored in other territories. As per SECP’s draft Cloud Adoption Guidelines for Incorporated Companies /Business Entities, issued in August 2021, “All business entities, while selecting Cloud Service Providers, must ensure that the selected service provider does not offer services through their data centres located in any hostile country (i.e. India, Israel, etc.).”
Naseer added more to these concerns; the fact that a major consumer base is currently using the services of foreign CSPs such as Amazon and Microsoft results not only in an outflow of the revenue generated but is also a missed opportunity for the government in terms of taxation.
An efficient cloud computing ecosystem, therefore, appears to be the only way forward. Besides serving as a bedrock for the introduction of next generation technologies such as Internet of things (IoT), it would also help public and private sector users to leverage economies of scale and conserve financial resources.
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