Shoden acquisition: Japanese giant Hitachi focuses on data centres to expand its IT footprint in Sub-Saharan Africa

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All too often the news is about what China or India are doing to expand into Africa. This week saw a Japanese company Hitachi Data Systems buy South Africa based IT company Shoden Data Systems. Isabelle Gross spoke to Tony Read, COO of Hitachi Data System UK, Ireland and Sub-Sahara Africa about the acquisition of Shoden Data Systems and what it means for a Japanese global company to expand its footprint in Africa.

Shoden Data Systems is a long-time South African provider of data centre technology both in its home country and into Sub-Saharan Africa and it has been working for many years with Hitachi Data System. Shoden Data Systems designs, provisions, deploys and supports products and technologies that simplify and optimise data centres used by banks, telecommunication companies and retail companies. Its offering includes data storage solutions including solid state disks (SSD) for faster access to information, software to assist and improve server virtualisation and data protection solutions. Shoden Data Systems has a good market share in South Africa and has managed to expanded its footprint further in Sub-Sahara Africa by supporting its existing customer base’s roll out of services in other African countries.

According to Tony Reid, the two companies have become very close business partners over the years to the extent that 75% of Shoden Data Systems’ activities are Hitachi related. As the partnership between the two companies was getting stronger, it was a logical step forward to tie the knot between the two of them. Hitachi Data System will carry on providing equipment and resources while Shoden with its good understanding of the Southern African markets (South Africa and other countries in Southern Africa) will provide the routes to market. Shoden and Hitachi have also expanded their activities into Ghana, Nigeria, Uganda, Kenya, Tanzania and other SADC countries and the plan is to continue developing their activities in these countries.

The acquisition of Shoden is a first in Africa for Hitachi Data System. For the large conglomerate with a global footprint, this acquisition represent a rather small drop in the sea but as Tony Read explains Hitachi has been investing for a while in emerging markets like China and Brazil and as time goes by they have been seeing good growth potential in South Africa and some other Sub-Sahara African countries.

He is confident that the acquisition will be a success and will further strengthen Hitachi’s footprint in the region. When asked if Hitachi has any plans to move directly in the data centre business, Tony Read replies that this is not on the roadmap in the short term. He believes that going into this segment requires some other core qualities and he adds further that as African countries’ economies developed they will be more large organisations that will be looking for “in-house” data centre facilities rather then outsourcing the service.

In Tony Read’s opinion, the data centre market in Africa has a good future. There are emerging solutions like cloud services that could make IT services more readily available to use by businesses. In Africa, enterprises are less well equipped when it comes to IT hardware and software and a business model based on a pay per use basis to access software and IT services would actually make sense and drive further the penetration of ICT services.

Sooner rather than later, more telecoms operators will offer clouds services too and this is where Hitachi/Shoden will come in with the backend solutions and support. He believes that Africa has been pretty innovative in particular in the way that mobile telephones are used to carry out banking, transfer and payment services for example and so more innovations of this kind can be expected to develop.

Of course the expected growth in the data centre business will not easily materialise if some nagging bottleneck issues are not dealt with. Tony Reid reckons that power as well as network bandwidth are still causing problems. There is also still a skill gap but it is shrinking fast in some countries and in particular in South Africa. 

For now Shoden will carry on trading under the Shoden brand name in South Africa and in the other African countries where the company is doing business and depending on how things move forward it might later rebrand as Hitachi. As foreign investors are seeing potential growth opportunities in Africa more and more attractive compared to developed markets, it can be expected that more acquisitions of this nature will take place in Africa as the ICT market gets more mature and more diversified.

To follow the exchanges about this news, you need to be on Twitter. Follow us on @BalancingActAfr

This week on Balancing Act’s You Tube channel:

Data centres and managed services

Jonathan Tawiah, CEO, Ostec on providing managed services in West Africa

Le Cloud en Afrique selon Hedera Tech (en francais)

Robert Aouad, CEO Isocel on data centres in Benin

Services that drive data centre use - M-Money

Reg Swart, Fundamo on how Uganda’s Lake Victoria fishermen and the truckers who buy from them use m-money services

Nadeem, Juma, CEO, Mobipay on the up-take and use of Z-Pesa in Tanzania

Kamal Budhabbatti, Craft Silicon on integrating other day-to-day tools into into its m-money platform ELMA

Correction:  In the story in last week’s issue about low-end social networking site Eskimi, we got our Baltic countries mixed up. Eskimi is a Lithuanian, not a Latvian country. Also other social media sites without a high profile in Africa include Pinterest and Spotify. Please also note the launch of the continent’s own Zing.