Cloud computing is now a reality in South Africa and is poised to become the standard mode of delivering computing resources in the future. Frost & Sullivan said the South African managed services market earned revenues of $2.09 billion in 2010 and is forecast to reach $3.86 billion in 2016.

"Increased uptake of cloud-based services will be driven by the ever declining broadband costs," said Frost & Sullivan's Information and Communication Technologies Industry Analyst Ishe Zingoni. "As infrastructure becomes far more ubiquitous, particularly undersea cables and terrestrial networks, the costs of bandwidth and Internet-based services, such as cloud offerings, are expected to fall."

Very often, the cloud presents SMEs with the only route to access normally expensive computing resources. Shared cloud infrastructure, or the public cloud, is a viable option for SMEs that cannot afford to build data centers of their own.

"The SME sector represents a key market for cloud-based offerings, as these companies often cannot afford to build their own infrastructure. The declining costs of bandwidth will make these offerings affordable and attractive to the sector," Zingoni said.

"Another manner in which managed services can potentially impose additional costs on businesses, relates to the sub-optimal customer service that can emanate from poor service provider response times and lackluster technical innovation," concluded Zingoni. "It is imperative for service providers to focus more on providing true TCO savings, rather than merely on price."