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Raxio’s Data Centre Gets Nod From Stakeholders As BoU Roots For Shared ICT Infrastructure

The financial services sector has been challenged to adopt a shared technology services delivery model, thereby cutting down the cost of doing business and pass on those benefits to customers in form of reduced cost of lending.

The call was made by Dr. Tumubweine Twinemanzi, the Executive Director Supervision, at Bank of Uganda (BoU) during the first executive roundtable for business and ICT leaders as well as regulators to discuss how enterprises can manage operational costs by leveraging cloud technologies.

The event was organised by Raxio Data Centre and Oracle at Serena Kampala Hotel, on March 6th 2019.

Raxio  is developing a state of the art colocation, enterprise grade and carrier neutral datacentre at Namanve Industrial Park, on the suburbs of Kampala. The data centre is being developed to tier III grade and is expected to be completed in H2 of 2019.

Oracle on the other hand, has developed, Cloud at Customer- a cloud based solution that allows Ugandan based organisations to enjoy cloud services either in a colocation data centre such as Raxio’s or customers’ owned data centres.

“We have reached a stage where financial institutions or financial services should compete based on the quality of services and the appropriateness of their products and not on how beautiful or how brandy-new their infrastructure or systems are,” said Twinemanzi, adding: “What Raxio is trying to do (shared services) is something that is dear to my heart; something that we have been trying to do in the financial services sector. Financial institutions should focus on their core business which is intermediation- mobilising deposits and extending credit.

BoU’s Dr Twinemanzi Tumubweine and Oracle’s Byron Osiro, the Oracle Senior Cloud Platform Manager, East Africa.

“Commercial banks and for that matter financial institutions are not the best at running networks or managing data. Let us leave that to the experts; let’s go back to the economics of division of labour,” said Twinemanzi.

The financial services industry in Uganda has over the last 10 years has seen average cost to income rations rise to 74.6%, compared to 66.7% in the 10 years to 2008. As a result, average lending rates increased to a 10 year average of 22.16% from 20.39% in the same period.

Twinemanzi challenged Raxio and Oracle to explore especially introducing shared software as a service- not just for Oracle but also for other software solutions, such as accounting, core banking solutions and credit analysis modules.

“The idea of software as a service is overdue,” he said.

Speaking at the event, Joachim Steuerwald, the Oracle Cloud Platform Sales Director, said with increased reliability on digital mobile solutions for virtually everything, it was it was mission critical that service providers invest significantly in reliable systems.

“We are increasingly becoming a digital economy. Customers can’t event tolerate our digital services being down for even an hour- it is just not acceptable. This requires the ICT behind those businesses to be available- 24/365. Building these highly reliable systems requires that we have the right environment,” he said.

“Many of the data centres in the region are fairly old. Before Raxio decided to enter the market, we did not have any single Tier III data centre in the region and that has been a significant constraint to achieve the kind of uptimes that a digital economy demands and that is why we’re interested in a partnership with Raxio,” further said Steuerwald.

Joachim Steuerwald, the Oracle Cloud Platform Sales Director addresses business eladers about the benefits of Oracle’s cloud services. He said that that Oracle’s Cloud at Customer solution is tailored to yield operational optimisation and letting customers pay for what they consume, rather than what they anticipated to consume in the near future

Steuerwald said that while cloud services, have been around for sometime, adoption in East Africa like in many other African countries in Africa has been slow, partly because of lack of an African data centre footprint which made cloud services expensive but also due to data security concerns, especially by governments, which is why Oracle is fronting the idea of localised cloud services.

“This is why we thought of bringing an alternative, which we call Cloud at Customer, that basically offers the same cloud technology, but brought closer to the customer in a regional data centre such as being developed by Raxio or into the customers’ owned data centre as a viable alternative,” he said adding: “We are obviously exploring with the regulators; we are seeking dialogue with the regulators to see how we can work around the impediments, but also work on the regulation environment to allow banks and other financial services providers to tap into the cloud more readily.”

Twinemanzi, however reassured the financial services sector saying that BoU had initiated discussions aimed at introducing a regulatory framework guiding the adoption and use of cloud services and other such shared services.

“From a regulatory point of view, BoU is beginning to have an internal conversation on coming up with an official position on the whole idea of cloud computing; do we allow it, under what circumstances, who can and who cannot? What can they do and what data can they store there- at least as regards financial data,” he said adding: “I think if we take the lead as the financial services sector regulator, it will be a question of time before other regulators come on board.”

Cost-cutting with cloud services

A 2017/2018 survey amongst government ministries, departments and agencies (MDAs) by National Information Technology Authority (NITA) showed that while a majority of MDAs agreed that cloud services had significant benefits such as reduction in ICT related costs (86.4%), simplicity of deployment (77.3%), increased productivity and flexibility in up-or down-scaling, only 28.6% of the MDAs reported using cloud computing services. Most MDAs (80.5%) reported that they host their applications and databases in-house. 

The risk of a security breach emerged as the biggest barrier, followed by the high cost of cloud computing services and uncertainty about the location of hosted data.

James Byaruhanga, the Raxio General Manager however said that with shared infrastructure and software solutions, the kind that will be ushered in by a Raxio-Oracle partnership most stakeholder fears will be addressed.

“Shared cloud services hosted in a local data centre basically provide enterprises with a scalable model, tailored to your existing computing needs on a pay as you grow basis,” said Byaruhanga, adding:“What we want to give you is secure shared connectivity with multiple connectivity points that will position your business to look at the future. We will give you a more efficient and differentiating service that will make your business stand out. The whole idea about shared infrastructure is to reduce the cost of cost of ownership, reduce operational expenses, allowing you to be more efficient and provide a better service to customers.”

James Byaruhanga, the Raxio Data Centre General Manager speaks at the first Oracle-Raxio executive roundtable to address how enterprises can manage operational costs by leveraging cloud technologies at Serena Kampala Hotel, on March 6th 2019.

Steuerworld said that Cloud at Customer is tailored to yield operational optimisation and letting customers pay for what they consume, rather than what they anticipated to consume in the near future.

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