Building the Australian cloud: A GTR roundtable [3/4]

There’s no doubt about it: the local cloud market is more buoyant than ever. To weigh up the prospects for the Australian cloud, we brought together a number of industry experts for a GTR roundtable. Participants included:

• Altay Ayyuce, ANZ director for cloud and service providers and Andrew McGee, chief technology officer with Hitachi Data Systems
• James Boddam-Whetham, managing director of Noggin IT
• Jack Dan, national general manager for government with Telstra
• David Hanrahan, general manager for cloud services with Dimension Data
• John Kaleski, ANZ general manager for cloud with Fujitsu
• Rob Purdy, director of cloud and tools with Datacom
• Craig Scroggie, CEO of NextDC

GTR: How is more ready cloud availability affecting customer outcomes?

SCROGGIE: Customers are getting a much better return on their invested capital, and are only paying for what they use. Customers are excited about getting a better return on the IT dollars, and in many cases it’s the business that are making the buying decision on cloud, not the IT teams.

People are making the most of being able to leverage their infrastructure in multiple locations and share the workload – and as the cost of intercapital data transfer rates come down, the cost for shifting data between cities reduces. That opens up a whole lot of new options for businesses on business continuity and disaster recovery best practices. A lot of the infrastructure is becoming more active-active rather than having an active and a passive investment.

B-W: There has been a big power shift away from IT managers to the operational side of things. IT managers often roadblocked a lot of development of innovative new software; operational people saw cloud software delivery as a way of achieving their operational objectives, so there has been a real push from the operational side of the organisations to adopt cloud and solve problems quickly.

On the flip side of that, IT managers have gotten to a point where they're happy that the cloud-based infrastructure is actually solving a resource issue for them, as well as delivering good technology for the business.

HANRAHAN: We're seeing a lot of market demand for standardised services around Lync and Sharepoint, where at least the infrastructure element of the service can be managed for them. The desire to have them delivered from the cloud is driven by customers' need for new-world services that IT no longer even wants to be involved in. They also want to dip their toe in the water by starting with a small group of users, and therefore truly looking to only pay for consumption.

We're seeing enterprise and public sector get their heads around the fact that the real benefits come when you're fully automated and self service is there. You can't do that by building half legacy and half in the cloud – so, we've seen that real move to standardise services and to deliver services far quicker than we could before.

Many organisations, particularly Australian organisations, would have portfolios of literally hundreds of applications. They can't afford to take that risk, and need skills and services to determine what to move and in what order, and how to manage their legacy while they're in that process – and, particularly, how to drive down the costs. Now that we're starting to be able to deal with a much wider range of workloads and applications that IT want to move, organisations are realising that cloud is just another delivery model.

GTR: Mobility is inevitably mentioned in the same breath as cloud. How is cloud's local growth supporting the expanded use of mobile devices and solutions?

SCROGGIE: The Web is really playing a back seat to how consumers are interacting with applications today; the experiences are being built for mobility. Yet there are two mobility considerations: one is to be mobile in the sense of the application, and the other is to have portability in the sense of moving from one provider to another.

Going to the cloud is great because these opportunities to invest less time in management, and to get more value, are already aligned with what the organisations are looking to achieve technically and economically. But they are concerned about what it means from a lock-in point of view: if I spend all this time getting into the cloud, how can I get out of it? So portability, orchestration, and the ability to use multiple providers through a single pane of glass is something customers are looking for.

AYYUCE: A year ago there were still disparate requirements and expectations of what governments were looking for. That has started to mature a lot with the way we consume those cloud services, and the expectation of business to have access to applications all the time.

The whole BYOD paradigm is really driving that, and you can see developments of some of our products supporting that. For example, we've delivered enterprise- grade secure file, sync and share functionality, which enterprises can host behind their firewall, but still give access to employees around the world – their own private cloud. That sort of thing is becoming more and more prevalent as enterprises that want the cloud, but no longer want their intellectual property placed into a public cloud environment.

DAN: Recent Telsyte research suggests that 2014 is the year when the penetration of smartphones will exceed computers, with tablets closely behind. As a result, many organisations, including Telstra, have embarked on a strategy of digital transformation, to enable us to tailor our products, services, and interaction to the expectations of our customers for both today, and the period ahead.

Through a process of automation, virtualisation, integration and mobilisation we are transforming the nature of our entire business and we are sharing our experience and lessons learned with our customers, who are keen to use modern delivery approaches such as cloud computing to achieve similar outcomes.

PURDY: Once organisations come to grips emotionally with mobility and the implication that their data is travelling across the internet rather than being walled off inside a private network, the concept of data in the cloud becomes that much easier to accept.

The ease of downloading applications to mobile devices has set new expectations of IT and in many cases a cloud-based application is the only practical delivery option. You only need to look at what Microsoft is doing with Office and the way they are fusing desktop, tablet, and phone applications into a single capability to see the future.

As businesses redevelop or refresh their applications they typically now look at how the cloud and mobility can be leveraged to get better employee engagement and utilisation. A number of our customers, via our development capability, are deploying their new applications straight into the cloud and as mobile applications.

A great example is a solution we put together for Sealord that brings together customer, product, pricing and promotion management, while streamlining ordering and account management. The secure, mobile solution is delivered on Datacom CRM Online, which is a partner-hosted flexible software-as-a-service system.

KALESKI: Mobility has absolutely been a game- changer. It's one of the top three things that our customers are saying they want to have offered by Fujitsu. That includes device management, the ability to have an application delivered to any device any time, and the ability for it to be wiped straight away if it's lost – so there's no risk of data loss.

The interesting point that a lot of people are talking about now, is the ability to have access to the desktop on any device, at any time. They're effectively paying a service fee to have that managed desktop on any device, which plays into the whole managed service strategy.

This is one of the cornerstones of our strategy going forward at Fujitsu. It circumvents a lot of the problems that companies have around securitisation of the device, and makes the whole work-from-home policy a lot more transparent now that users can take the devices with them. And when it comes to the whole desktop as a service model, users are looking for a single vendor to own that relationship.

GTR: A raft of cloud-based storage platforms, combined with mainstream options from the likes of Microsoft and Apple, are rapidly turning cloud storage into a mainstream file system. How are local providers tapping into this growth in demand?

HANRAHAN: We've made additional investments around the platform to grow our backup as a service, which has meant we've had to make investments in the storage as a service element. To add tiers, we've had to increase the size of the storage images that can be attached to virtual machines. So, we have seen the cloud becoming considerably more 'enterprise' as a cloud backup.

We have three tiers of cloud storage, and we've seen that many of our clients who were on our standard storage model have been able to move down to the low-cost storage and still get enough for many of their applications. They've been able to drive out costs while still delivering storage. People are really getting the benefits of consumption, whereas before there was really only one option to choose from.

KALESKI: NSW BusinessLink is a good example. In providing fee-for-service corporate support to social service and welfare agencies, they had an aging, creaking Exchange 2003 platform and looked for a provider who could offer them a pure messaging as a service offering. We built a messaging as a service solution that took them from Exchange 2003 to Exchange 2013. Businesses were charged per user and per gigabyte of storage.

That is a really unique offering, that is pure software as a service. You don't see many specific SaaS offerings being offered by the likes of BusinessLink, with 27,000 users. But it's not just the storage as a service that we're offering back to customers to allow them to dynamically manage their costs; we're offering a dynamic back end including messaging as a service, backup as a service, and mobility. All of these things are sitting above or abstracted from that infrastructure layer.

DAN: The cloud computing benefits have become widely recognised: lower costs, on-demand availability, quick provisioning, platform choice and flexibility, pay for use, automated orchestration, comprehensive reporting and superior performance, reliability and access. However, to take advantage of these benefits, in some cases customers do need to amend their approach to managing their infrastructure, workflow and data, and change some of their business processes.

PURDY: Clearly the advantage is price and convenience. The disadvantages of these systems typically include lack of central control and governance, backup and restore flexibility, lack of corporate visibility of all data, location, uncertain reliability and SLA’s, and in some cases uncertain provider longevity (i.e. MegaUpload).

There's also a culture of change that needs to be set in place when adopting cloud. The old approach of buying as much as you can up front, and sweating it as long as possible, just isn't the same now. Cloud is now about ongoing management and consumption. We've recently run reviews with some departments where their IT team has 'reserved' cloud storage in case they needed it – so, in effect, paying for space they didn't need. They just didn't get the concept that with cloud, they can get the space just when they need it, and only pay for what they use.

GTR: Many cloud applications are provided by local startups who value the model's rapid ramp-up and relative ease of implementation. How can government organisations evaluate the maturity of a cloud provider so they can effectively balance the risk of cloud versus its rewards?

HANRAHAN: Whereas in that first 12 to 18 months, there was this rush to move without applying the things we've always done around good IT projects. But organisations are becoming able to look at cloud as another delivery model, evaluate the risk, put risk mitigation in place and treat it as a mature IT project. From that perspective, a lot of the FUD is disappearing.

We are also helping organisations that have struggled to secure their own environments, that don't necessarily have the pockets to provide 24x7 incident and security response. Many agencies have brought services say they feel the cloud is more secure because it is more standardised, and has those wrappers around it. They were not able to get that inhouse, where every single server that was built was different.

The demand for ongoing innovation, and for agile development and things to keep that platform continuously innovating, is really significant. And I think a lot of smaller players, who think they will be able to provide that purely themselves, will struggle. But we are seeing quite strong growth in our One Cloud reseller and service provider program, where they are able to either deliver a white label service off our cloud, or put in a whole cloud platform under our brand.

KALESKI: This is a change management phase no matter how you look at it. And, because it's so new and is such a complicated process, we're hearing customers say that they need just one vendor to own that relationship and manage that end to end process.

That said, in the next 12 months you're going to see the maturity of these SaaS solutions in the market. The companies that provide an offering that is reliable, as risk free as you can possibly make it, are going to be successful in this space.

SCROGGIE: Evaluating cloud technologies should follow a similar technical and commercial review, as Government would traditionally have made in technology procurement. Inside our ecosystem there are hundreds of providers all doing something unique. There's a shift in the role of the traditional systems integrators going on, and many are carving out very small niches that are creating great technologies. Pilot a few of the best benchmark technologies, experience their ease of use, portability and flexibility – not all clouds are created equal and many offer substantially different levels of support and have additional costs for each additional service.

Understand how these systems may potentially need to talk to each other – the API platforms in the cloud will be of critical importance in the future, so watch for open standards and the role of open source in these evaluations. The next natural problem from this cloud explosion will be managing cloud sprawl.

DAN: When dealing with government exercise strong diligence in terms of choosing the right technology partner. Reliability, scalability, security, financial viability and risk management are all important factors in the decision making before even getting to the technical and technological aspects. We have seen government organisations place a strong emphasis on them as part of the selection and evaluation of offers in the marketplace.

These considerations apply to any significant ICT project, and even more so in the case of cloud computing, where – as mentioned before – a degree of control is transferred to the service provider. The requirements associated with enterprise and government grade infrastructure, along with the necessary security, performance and reliability standards, involves a substantial level of investment to get it right.

In this sense, in my view, a true cloud capability is not really suited to the “broom cupboard” approach. Where we see some smaller, more agile companies being successful is in leveraging cloud capabilities for the delivery of specialised services and innovative applications to customers and Telstra is supporting a number of such providers that leverage our cloud capabilities for new applications in select markets or verticals.

PURDY: There is nothing special about the cloud and associated companies. The same issues of credibility apply to both cloud providers and traditional providers. Would a government agency trust its key systems and data to a provider of limited reputation, capability, balance sheet strength, and professional indemnity insurance? Would a government agency invest in a database format that was proprietary and leave itself exposed to future exploitation?

This is a tricky one, and I think not something that most people think about when adopting cloud services. There are a couple of things I tell my customers to watch out for:

1. Ask to see their financials, as you would for any services engagement

2. Understand how much you, as the customer, make up of their business. If you only have a small but important spend with them, and they only have a handful of other big customers that make up their spend, what happens if those other big customers leave? Are they still going to be in business?

3. If they go out of business, what happens to the service and to your data? When a company liquidates, it's not the salesperson or CEO you talk to – it's the receivers.

4. If they provide a SaaS product, confirm where they host their applications. What happens if they stop paying their bills to their hosting provider like AWS or Azure because cash gets tight? Will those providers switch off your application?

These recommendations are balanced against how important the application is to you as the customer. If it's only a small, non- important part of the IT spend then it's probably OK to take the risk. But if the application has the ability to become part of your core service, then you need to not only understand how you can adopt the service, but also know what happens if the service stops or if you decided to move away to something else.

This is part 3 of 4 in this GTR roundtable, which originally ran in the May/June 2014 issue of Government Technology Review. Read part 1 here.