A State-owned Cloud Computing Platform – Yay Or Nay? (Part 2)

To recap

The proposed National Data and Cloud Policy have been suggested to enable the creation of the state-owned State Digital Infrastructure Company (SDIC) and the establishment of a High-Performance Computing and Data Processing Centre (HPCDPC). This will ultimately be to serve the SA government and people with in-country cloud computing and ICT services that are, at present, dominated by multinational companies.

Some of the issues with the proposed policy and its implications.

The basic idea of cloud computing is that it is too expensive for an individual or company to buy their own big and expensive mainframes on which to store all their data. Massive companies (Google, Amazon, Microsoft) can afford to buy massive mainframes, however. You and I can use 1 or even 6 gigs of their mainframe for free because the enormous scale at which they work makes our 6 gigs inconsequential. Free is never completely free, however, think of the commodity of data mentioned earlier, and nor does it equate to reliability or security. Fact is, though, that the large, multinational companies, can provide much more cost-effective services to individuals and government alike and control of the digital market starts to shape up between these companies in which it is too expensive for government partners like SITA to take on a project when another company can do it so much cheaper. It makes it infeasible for SITA to fulfill its role in conducting the services and makes its mandate moot. SITA is a parastatal, however, and does need to provide itself with a revenue source. As discussed, the government would have to insource certain tasks for the sake of safety. The proposed policy should make it possible to insource even more tasks and projects, but that effectively means that the new state-owned enterprise, SDIC, and its partners are competing with superior skill sets those multinational big hitters while still not being able to match their pricing. The cloud computing services of SDIC will also be available to individuals and private companies, and it stands to reason that the public could be incentivized to make use of the SOE rather than the other, cheaper option. If a company were to tender on projects, it could be required that the company use the SOE’s cloud computing services to able to do so. With more and more data being stored in the HPCDPC, what is the likelihood of that data being manipulated and used under the guise of the Open Data Strategy that is proposed in the policy?

Data concerns aside, the looming issue of the very nature of SOE is concerning. To date, there has been very little evidence that an SOE can run profitably for an extended period of time. Telkom, of which the state owns about 40%, has been an exception to this rule as its CEO has mostly been left to run the company as successfully as possible without too much interference. Eskom, the largest fully government-owned company, fails in fully providing the services it is supposed to, has massive amounts of debt, and suffers from serious allegations of corruption within the organization. SAA, also fully government-owned, is in a controversial business rescue after not turning a profit since 2011 and operating on state bail-outs. Denel has experienced a slow decline and is now at risk of collapse as the money ran out, board members resign and Covid-19 exacerbated its liquidity crisis. PRASA has recently been in the news with blame being thrown this way and that for its collapse. SITA itself has come under fire for corruption and a lack of service delivery. These are just some examples of the numerous SOEs that are suffering from poor governance, mismanagement, fraud and corruption claims, and a lack of financial sustainability. Adding to these concerns regarding the feasibility of another SOE are the skills that would be required for such a venture. In a country where a continual brain drain across all sectors seems to be the prevailing occurrence, one question whether the skills and knowledge are present to successfully provide a service in a field that changes rapidly.

The policy does address these issues to a degree. It specifically mentions the Special Economic Zones (SEZ) Policy and Legislation that is meant to encourage and attract foreign and domestic direct investment in manufacturing. This will be expanded to include Digital/ICT SEZs to support investment in data and cloud infrastructure and services. Additionally, “multinational firms investing in data centres shall be required to make provision for skills and digital technology transfer to ensure benefits and gains from Foreign Direct Investment.” Furthermore, it is proposed that an Advisory Council consisting of private and public representatives and academia shall advise on technical issues regarding ICT and an institutional framework is suggested to “manage the government’s High-Performance Data Centre which will include a review of the mandates of existing government agencies and government departments.” These details by no means address the issues in their totality, and the exact source of funding for the SDIC and HPCDPC and the proposed members of a governing body is unclear.

What now?

This glance at the policy just skims the surface of the information, suggestions, and intentions detailed in the policy and we highly recommend interested parties to critically read the entire document. Decide for yourself what you think of it and what carries more weight – the good intentions and plans or the doubt as to its viability, implementation, and management.

The creation of a truly competitive cloud computing enterprise is the good intentions of the policy the viability of it, however, is very much in question. There is a lack of truly equal opportunity in South Africa, and people are placed into vocational positions based on other criteria than their actual ability to do the job which causes more and more able and skilled people to go where their skills are wanted and welcomed. As long as this is the case, and along with the continued lack of trust in the government’s transparency and honesty, the success of the proposed SOE hangs in the balance before it has even been implemented.

What’s more, one wonders at this endeavour taking priority as it seems to do. We are attempting to not only be a part of but to contribute to the Fourth Industrial Revolution where data is king, while basic infrastructures like sanitation, municipal water, provincial and municipal roads, are sorely lacking or being destroyed. Will the establishment of another SOE, with the major challenges it faces and the resulting economic growth and job creation it envisages, improves the state of affairs or further cripple a struggling economy?

This article was written by Monja Basson, an awesome copywriter at We Do Digital (Pty) Ltd. We Do Digital is a digital marketing agency in Pretoria, Gauteng, South Africa.