This document provides an overview of the South African data centre market and key trends, including: 1) The market is expected to grow at a 9.6% CAGR to R4 billion by 2016 due to outsourcing, aging equipment, and power availability issues. 2) Companies are consolidating data centres and increasingly relying on third-party services due to trends like virtualization. 3) End user requirements vary by industry, with financial services spending the most on data centres and retailers prioritizing cost and support. Security, control, and reliability are top concerns that influence companies to keep data centres in-house rather than outsource.

1. South Africa Companies Requirements within the
Data Centre Environment
One Size Does Not Fit All
Date: 17th May 2012
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2. Agenda
• Overview of the South African Data Centre Market
• Key product offerings
• Virtualisation
• End user requirements
• Last word
2

3. Overview of South African Market
•Industry Best Practices
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4. DC revenues are expected to grow at a CAGR of 9.6% to
reach R4.0 billion by 2016, from R2.3 billion in 2010
South African data centre market revenue forecast
4500
A number of trends contribute 2016 Revenues:
4000 R4.0 billion
to growth:
1) Outsourcing of data centre 3500
2010 Revenues:
R2.3 billion
requirements 3000
Revenues (R Million)
2) The SME sector which will
2500
increasingly adopt a variety of
data centre services 2000
3) Aging equipment that can no 1500
longer keep up with
1000
performance requirements
4) Insufficient power availability 500
for new high-density servers
0
2010 2011 2012 2013 2014 2015 2016
Source: Frost & Sullivan, data centre operators interviews
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5. Companies are increasingly considering centralising
their data centre architecture
South Africa Data Centre Market: Key Trends, 2011
Consolidation of data centres
Consolidation of data
centres
Growing dependence on third-party
Bigger and bigger is better
Virtualisation Market
Market services
Growing dependence
Trends
Trends on third-party services
Going
Green
Going
Green
Source: Frost & Sullivan
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6. Companies are outsourcing non-business-critical
functions to third-party companies
South Africa Data Centre Market: Key Trends, 2011
Consolidation of data centres
Consolidation of data
centres
Growing dependence on third-party
Bigger and bigger is better
Virtualisation Market
Market services
Growing dependence
Trends
Trends on third-party services
Going
Green
Going
Green
Source: Frost & Sullivan
6

7. Corporate responsibility and a need to lower power
costs are influencing environmentally friendly DCs
South Africa Data Centre Market: Key Trends, 2011
Consolidation of data centres
Consolidation of data
centres
Growing dependence on third-party
Bigger and bigger is better
Virtualisation Market
Market services
Growing dependence
Trends
Trends on third-party services
Going
Green
Going
Green
Source: Frost & Sullivan
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8. Escalating costs of power, which contributes 50% of
OPEX spend, is driving uptake in virtualised technology
South Africa Data Centre Market: Key Trends, 2011
Consolidation of data centres
Consolidation of data
centres
Growing dependence on third-party
Bigger and bigger is better services
Virtualisation
Market
Market Growing dependence
Trends
Trends on third-party services
Going
Green
Going
Green
Source: Frost & Sullivan
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9. DC market of R2.3bn is dominated by system integrators
who contribute over 70% of the total market share
Data Centre Market Shares by Revenues, 2010 Competitive Environment
Gijima Competitors 17+
2% Fujitsu
Continuity 1% Systems integrators
Teraco 1%
Market leaders, first to establish data
Other Tier I centres
3%
5% e.g. Business Connexion, IBM , T-
Neotel
4% BCX Systems
26%
Telecoms operators
Vodacom Business
Tier II Entered the market over the last 5 years
5%
e.g. MTN Business, Vodacom, Telkom
MTN Business Internet Service Providers
5% Tier III
e.g. Hetzner, MWEB
Degree of Rivalry High
HP
7% Barrier to Entry High
IBM
15% The extent of leased vs. owned data
T-Systems Threat of
9% centres threatening and impacting the
Substitutes
market
DiData
14% Location
Telkom Competitive SLAs
3% Differentiators Value Added Services
Regulatory Compliance
Source: Frost & Sullivan, competitor interviews
The entry of telecom operators has intensified levels of competition which are expected to be
maintained going forward as data centres keep up with trends towards greater virtualisation
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10. The sizeable DC operations will meet customer demand
for easily scalable storage and computing resources
Providers Data Data Centre Floor Footprint Product Specialisation Strength of
Centres Certification Space (m2) Range cloud
offering
Cloud and
BCX 3 III, IV 8,300 National
virtualisation
Neotel 3 III 3,000 International Backup and WAN
MTN 4 III 3,300 International Backup and WAN
Cloud and
IBM 2 III 2,900 International
virtualisation
DiData/ LAN, Virtualisation,
6 III N/A International
IS cloud
2 III 2,100 International Cloud and WAN
Gijima 1 III 800 National Managed services
Vodacom 6 III 4,500 National Collocation, Backup
Telkom 6 III 9,700 National Collocation
Strong Weak
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11. Product offerings
•Industry Best Practices
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12. As traditional products mature, newer products are being
introduced
Data Centre Adoption Trends
Introduction Growth Maturity Decline
High
WAN
Web Hosting
Managed DR
servers LAN
Hosted
Enterprise Basic
Adoption Rate
Security Hosting
Remote
Hosted Backup
Managed
Backup
Cloud storage, virtual server and
desktop, remote backup and
hosted exchange are promising
Virtual
Server
service segments as traditional
product lines are maturing
SaaS
Cloud Virtual
Low storage Desktop
Source: Frost & Sullivan
Bubble size represents revenue/subscriber size of service area
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13. Virtualisation solutions and cloud-based services will
drive data centre revenues in future
Growth forecasts per product sector, 2010 – 2016
CAGR Virtualisation solutions
Web-Hosting 8% are a key technology
Virtual server 13% trend as they offer
SaaS uptake will be significant efficiencies
Virtual desktop driven by hosted 30%
exchange, CRM and UC and cost savings to
SaaS 23% companies of all sizes
Remote Backup 10% As a result SaaS, virtual
desktop and virtual server
Managed Servers 8%
are expected to have the
LAN 2% highest growth rates to
Hosted Managed Back up 8% 2016
The importance of core
Hosted Enterprise Security Cloud storage is a 10%
small sub-product services to overall data
of cloud-based
Disaster Recovery
services
5% centre revenues will
Cloud Storage 12% decline by 2016, as these
services also become
Basic Hosting 5%
2010 more commoditised
2016
0 200 400 600 800 1000
Source: Frost & Sullivan analysis
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14. Virtualisation at the heart of the cloud business model
Ease of
Cost avoidance Application Mobility
Implementation
Expand capacity at
High VM can be built in a
minimal cost, by
availability, "always matter of hours or
maximising the use
on" applications even less
of existing resources
Saves energy costs;
Frost & Sullivan
and, by decreasing
Easy to implement expects virtualised
the overall
business continuity offerings to overtake
footprint, avoids or
plans the uptake of
defers build out of
managed services
the data centre
Source: Frost & Sullivan analysis
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15. Market leading companies are well represented in the top
5 providers per product segment
Basic Hosting LAN Managed Web Hosting SaaS Hosted Hosted
Networking Server Exchange * Exchange
forms part of
1 Global Micro the SaaS total
market
2 numbers
3
4
5
Virtual Virtual Cloud Storage Hosted Remote Disaster Hosted
Machines Desktop Managed Backup Recovery Enterprise
Backup Security
1
2 No other
companies
offer stand-
3 Global Micro
alone cloud
storage
4
5
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16. End User Requirements
•Industry Best Practices
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17. Financial sector, government and ICT contribute two
thirds of data centre revenues
The financial services sector is dealing
with an explosion in IT needs, both for Proportion of vertical sector spend for data
data and infrastructure centre services (2010)
o Large banks and financial institutions are
turning to cloud and virtualisation solutions to
Healthcare Retail
address these challenges 4% Mining 10%
8%
The government sector is likely to Manufacture
continue outsourcing its DC services to 7%
Oil&Gas
vendors to comply with good 1%
Financial
22%
environmental stewardship and carbon Transport
4%
emission reduction goals Media
3%
Retail relies heavily on service
providers to provide fast ICT
Government
20%
service, adequate support and effective 21%
solutions
o Price is a key criteria in the decision-making
Source: Frost & Sullivan 2009, 2010
process
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18. Expenditure on data centres can comprise as much as
85% of total ICT spend as for banks
Total spend per sector in the sample Average PC Number of potential PC’s
Access for desktop management
22%
78%
34%
66%
Retail and mining
represent
40% opportunities for
60% virtualised desktops
45%
55%
45% Financial services spend
55%
on data centres is
high, but a large
44% proportion is in-house
56%
18%
Data Centre Spend
ICT Spend
Proportion of staff
Note: Data is presented 82% With access to a PC
for the sample of 50 1 10 100 1000 Without access
companies selected in
conjunction with Telkom Log of Sum of Expenditure (ZAR Million)) = 4000 PC’s
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19. Security will always be a concern but the financial sector
consistently are looking for ways to cut costs
Key solutions for the financial sector
The safety of data is critical in the financial sector. Regulation
Managed Servers is a barrier to moving data off site, however. The management
of servers on site can be outsourced
Software as a Service (SaaS) allows the user to effectively rent
SaaS
the use of select software which saves on licensing fees
Virtualisation has been used as a means to reduce hardware
Virtualisa-tion requirements within the financial sector. However, most
virtualisation has been restricted in house
Low Medium High
Barrier Barrier Barrier
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20. Most retailers continue to keep data centres in-
house, but larger retailers are considering virtualisation
Key solutions for retail sector
Connectivity is important in the retail sector as information
WAN
must be shared and consolidated from different branches
Many retailers choose to outsource data centre
Managed Servers management services and these are often lucrative
contracts
This includes virtual desktop, virtual server and cloud
Virtualisation
storage, and addresses cost sensitivities in the sector
Low Medium High
Barrier Barrier Barrier
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21. Due to the nature of the manufacturing sector, it is not
always conducive to build sophisticated data centres
Key solutions for the manufacturing sector
Manufacturing companies process large amounts of data
Basic Hosting and often have sites all across the country, the servers
need to be hosted in a satisfactory manner
Virtualisation is a popular adoption trend within the
Virtualisa-tion manufacturing sector. Companies see the value in it and
are taking steps to prepare for it
Connectivity is essential for the manufacturing sector as
WAN
various branches are scattered around the country
Low Medium High
Barrier Barrier Barrier
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22. Control is rated as one of the most important factors
influencing companies to keep DC management in-house
Factors influencing companies to keep data centres in-house (South Africa), 2009
• Control relates to the level of trust companies has in service providers
when deciding on retaining a data centre inhouse or outsourcing to a
Control
third party
• Corporations require guaranteed security of data
• Organisations require uninterrupted connectivity of its mission critical
Reliability processes
Concerns • A number of companies are reluctant to outsource relate to the limited
reliability of IT networks
• Companies have a direct responsibility towards their customers to
ensure data security
Security • Furthermore, in certain sectors, regulatory compliance also influences
a company’s decision to keep data centres inhouse
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23. According to most companies, cost savings would be a
major driver for outsourcing in the future
Factors influencing companies to outsource data centres (South Africa), 2009
• When considering to outsource, many companies weigh up the cost
Cost associated with outsourcing vs. investing in their own data centre
savings infrastructure and expertise
• Cost savings are complemented with a customised offering and
efficient service
• A lack of facilities is rated as an important driving factor for outsourcing
data centre infrastructure and management services
Lack of
facilities • Many companies find that as the business’ data requirements
grow, their current facilities are no longer sufficient and they need to
turn either to upgrades or outsourcing
• Companies are looking to streamline their business in order to create
Streamlining efficiencies amongst the core business processes
business • Integration and synchronisation is key to companies and are looking for
operations vendors to assist them when outsourcing the data centres
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24. Last word
•Industry Best Practices
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25. Companies needs to make a decision to "make“ or
"buy“ data centre solution
Application Outsourcing v. In-
Outsourcing v. In-house Colocation v. In-house
house
• Address the challenges of • Application outsourcing will • Colocation will address the
business address the challenges of challenges of business
continuity, scalability, financials business continuity, scalability continuity, financials, energy
and security and financials efficiency and probably also
• Difficult for an organisation to • However, the company will not security
raise its public green profile meet the wider data centre • Not all colocation centres are
• Two major drawbacks, are challenges equipped to offer high power
control and labour relations • Application outsourcing should densities
therefore be regarded as a quick • Colocation centres offer
fix or stop-gap solution scalability, but only to the extent
• Energy efficiency and security that the centre itself does not run
are two challenges that will likely out of space
not be addressed
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