Cloud computing has moved beyond the realm of hype and early adopters to become an accepted method for accessing computing resources. But for Australian businesses, the path to the cloud is still a circuitous one.
The growth of interest in the cloud is reflected in figures from the research company Gartner, which reports Australian organizations will spend AU$1.9 billion on public cloud services in 2014, up 10.8 per cent over the previous year.
But the maturing of the market has not led to easier decisions for would-be cloud buyers. Interest in cloud computing has led to an eruption of new cloud services, many of them unproven. Some technology suppliers have also taken to rebadging older technology under the cloud label (a tactic known as “cloud-washing”). The myriad of solutions available has become yet another barrier to cloud adoption.
There are two core forms of cloud computing – public cloud and private cloud. The former is based on the idea that someone else hosts and runs your software at a remote location on their computing hardware (known as off-premise), rather than on your own hardware (or ‘on-premise’). You pay for access on a subscription basis rather than by buying a license, and can add or remove users at will, meaning you only pay for what you need.
This model has proven popular for everyone from sole traders to multinationals.
Private cloud computing sees these same principles applied to the operation of a company’s own data center, and hence tends to only be adopted by very large organizations.
Public cloud services fall into two main categories. Infrastructure-as-a-service (IaaS) clouds deliver access to raw computing resources, allowing you to host your own software and data in the cloud. This model is popular among start-ups, who don’t want to own their own hardware, and with larger companies that have experience in managing their own applications.
The second category is called Software-as-a-Service (SaaS) and describes those software applications that run purely in the cloud. Buyers choose the software and features they want and sign up to a monthly subscription, then access the software through their web browser, just as they would do with a regular web page.
But regardless of the model chosen, it is important that cloud buyers understand what they are getting in to.
According to Werner Vogels, chief technology officer of the largest IaaS provider, Amazon.com, principal amongst these is the question of security.
“You must at least have an understanding of how you are protecting your business, and can your provider give you the tools to protect yourself at a level that you are comfortable with,” Vogels says.
He says it is also worth remembering that in terms of technology, the cloud is still a relatively new concept that has not yet reached maturity. That means it is important to choose a supplier that can work as a partner in helping you make the right choices to meet your goals.
INFRASTRUCTURE-AS-A-SERVICE (IAAS) PROVIDERS
Amazon Web Services (AWS)
As the company that drove the growth of the Infrastructure-as-a-Service cloud, Amazon Web Services is the heavyweight of cloud computing, with the research group Gartner estimating it has more than five times the compute capacity in use than the total of the next 14 significant competitors.
AWS has evolved from the successful online retailer Amazon.com, and has taken the technology prowess of that organisation and made it available for other companies to build their own software solutions.
It has proven popular amongst start-ups, and hosts local companies including Freelancer.com, Guvera and Siteminder. It has also proven popular among larger companies including National Australia Bank, Qantas and MortgageChoice, who use it for testing and developing software and for hosting websites.
The most basic services from Amazon are actually given away free for the first year, with pricing then entirely dependent on the specific features required and calculated on a per hour basis. Amazon has also been remarkable for using its market share to create economies of scale, and has dropped its pricing 42 times since launching in 2006.
The centerpiece of Microsoft’s cloud strategy is Azure, a public cloud version of its Windows operating system that allows companies to easily host Windows applications on the internet.
According to the senior product marketing manager for Microsoft Azure in Australia, Ibrahim Hamza, Azure has proven popular with the Windows developer community, and increasingly with companies that run Windows software, who have started by developing and testing software on Azure.
“People are experimenting with moving their traditional IT into the cloud,” he says, “as they see the cloud works and they keep those applications in the cloud.”
Currently Australian companies using Azure must host their software on overseas data centers, but Microsoft has announced it will open a local Azure data center this year. Pricing on Azure varies depending on the specific service used, but Microsoft has pledged that it will never be beaten on price by Amazon for all major services.
Microsoft is also making its popular Office software available via the public cloud, through a version called Office 365. This service is currently available in Australia through Telstra, although the company will begin selling Office 365 direct in the next few months.
Cloud computing forms an important part of Telstra’s evolution beyond telecommunications. According to the director of Telstra Business solutionsales Brendan Donohoe, early cloud clients such as Komatsu are being joined by mid-market companies.
“We bring customers in to teach them about things like infrastructure-as-a-service, and it is not unusual to have 100 customers turn up,” Donohoe says. “The proposition from us is that it just becomes part of the network, so the customer doesn’t have to worry about how they are going to access it and whether it will be reliable.”
Telstra has also ramped up its software-as-a-service offerings, providing access to numerous cloud-based systems from different suppliers, as well as bundling together a cloud-based collaboration suite including Microsoft’s SharePoint collaboration and Dynamix CRM software. Pricing varies depending on the service and number of users.
As well, Telstra offers access to Microsoft’s Office 365 software, starting from $5.60 per month per user, along with additional services such as email and collaboration software and cloud-based security software.
Another American competitor, Rackspace Hosting is a “hybrid cloud” provider that claims it allows workloads to run where they perform best—whether on the public cloud, private cloud, dedicated servers, or a combination of platforms. The company just launched a “cloud-bursting” service in Australia which allows private cloud owners to rent extra space in the public cloud during periods of peak demand.
SOFTWARE-AS-A-SERVICE (SAAS) PROVIDERS
The oldest provider of cloud-based software began life in 1998, long before the term “cloud” had ever been applied. Today NetSuite has grown into a complex software suite capable of running many of the functions of a small or mid-sized
business with up to 10,000 employees.
According to NetSuite’s regional managing director Mark Troselj, that heritage gives NetSuite an uncommon advantage.
“Most cloud computing companies are relatively new, or they are an existing on-premise solution that has decided to launch a cloud product,” Troselj says. “The NetSuite solution was designed to run over telephone lines, so if you’re travelling you don’t need to find high speed broadband in order to run your business.”
NetSuite operates in 30 languages and handles multiple currencies, with features ranging from financials through to CRM, warehousing, inventory and distribution,
While NetSuite represents a fully-fledged enterprise resource planning (ERP) suite, smaller businesses are catered for through partner company JCurve, which offers an accounting package based on NetSuite, with pricing starting in the $1000s. This means that as a user grows in size it does not need to change software provider.
Salesforce.com has been the most vocal SaaS company, starting with customer management software and adding in capability for service management and social media. In 2013 it announced a significant upgrade and rebranding of its core product as Salesforce1, which the company’s vice president for strategic research Peter Coffee says takes the functionality of Salesforce.com and enhances it for mobile devices.
“We give you a container with all the things you need to do, and they all interact with each other in an appropriate way,” Coffee says.
A subscription to basic sales and marketing services for up to five users costs
AU$35 per user per month, with the complete suite available for AU$95 per month.
The company also has its own cloud-based software development platform, Force.com, that developers can user to create extensions to the core software.
New Zealand-born cloud-based accounting software maker Xero has burst from humble beginnings in 2006 to post revenue of NZ$70.1 million ($65.13 million) for the 12 months ending 31 March 2014. Although still small fry in comparison to Salesforce.com and Amazon, that figure represents 83 per cent growth over the same period a year earlier.
Xero’s software is designed to meet the accounting needs of businesses from one employee up to 100, with services starting from AU$25 a month for the starter edition, up to AU$80 for businesses of 50 employees or more. Basic features include bank reconciliation, invoicing and billing, with more expensive editions including superannuation and multicurrency support.
The managing director for Xero Australia, Chris Ridd, says the company has also worked with developers to create a range of cloud-based products that complement the core accounting software, for tasks such as workflow management and point-of-sale.
“We’ve got some pretty substantial small businesses that are doing a lot with the software, and once you start looking at the add-ons, some of these businesses are doing quite sophisticated things that five years ago was the domain of expensive on-premise software,” Ridd says.