As the Cloud sector grows ever more rapidly and different solutions and plays seem to appear almost daily, the question becomes one of detail and matching need with the correct package. BRIAN KARLOVSKY looks at how the market is developing and what the channel should be doing for its clients.
Get niche or get big seems to be the current mantra in Australia as Cloud adoption accelerates from Software-as-a-Service (SaaS) to Infrastructure-as-a-Service (IaaS), through to Platform-as-a-Service (PaaS) and back to complex SaaS. But while companies large and small become more comfortable with the idea of Cloud, there is still an entrenched distrust of public Clouds whisking precious data overseas.
While local players gained the early advantage with on-shore datacentres, Amazon Web Services, Microsoft, VMware and IBM’s Softlayer all now having on-shore options available.
However, latency and the increasing multitude of regulations around data protection and privacy are offering some interesting niche plays for the channel.
Dimension Data general manager of Cloud, David Hanrahan, said he was seeing a significant acceleration of the Cloud market, where organisations were looking for seamless orchestration across public, private and hybrid Clouds.
“In the hybrid Cloud world, closely locating colocation facilities is important to ensure application performance does not impact the overall business outcome,” he said. “In Australia, the overriding need to ensure data stays onshore – whether from regulatory or privacy concerns – means that local Cloud platforms with contracts governed by Australian law are increasingly important to organisations making the move to hybrid Cloud.”
Hanrahan said Australian organisations were, in many cases, erring on the side of caution and looking to consume services from local Clouds under local contracts, while still looking for substantial economies of scale to be reflected in pricing.
“This is leading to organisations turning to local instances that are part of a larger, global Cloud ecosystem,” he said. “Many are finding that separating sensitive data [which should remain onshore] from non-sensitive data [which could reside anywhere] to be particularly challenging.
“As a result, they are managing that risk by ensuring all data remains onshore. This is likely to continue until such time as the ability to apply information security policy once, and have it be effective across the internal and external service delivery models, is more mature.”
He said many Dimension Data clients were taking advantage of the company’s global Cloud platform to deploy the applications and services their business depended on to the nearest region or country to where their users are.
“Providing local performance with global scale and consistency of experience is critically important and the ability to deploy front-end application servers on a global basis, while keeping back-end data onshore, is also a rapidly accelerating deployment model.”
However, the move to hybrid Cloud, and a rapidly accelerating move away from in-house datacentres, will see datacentres that can host in-house managed assets close to highly connected Cloud services become more important, according to Hanrahan.
“We’re also seeing a trend towards offering the whole hybrid Cloud model under consumptive billing arrangements growing in popularity. The need for competent services organisations to advise, migrate and manage services in this new model is becoming more important by the day,” he said.
Bulletproof director of sales and marketing, Mark Randall, said Data sovereignty laws, recent changes to privacy legislation and desire for high performance and low latency were the most significant factors driving a preference for local datacentres.
“Of course, most major global Cloud providers now host locally to address these requirements,” he said.
“Consequently, customer concerns around this topic have dwindled in the last couple of years, with organisations more focused on Cloud as a means of supporting business agility, innovation and cost savings.”
He said more aggressive sovereignty or privacy laws may drive the final few global providers to set up local datacentres sooner than they otherwise would.
NEXTDC CEO and executive director, Craig Scroggie, said data sovereignty was an important consideration in this highly globalised world. Many Australian businesses, large or small, want to understand where their business data resides.
“Many businesses are comforted by the knowledge that when it’s stored locally, it is protected by Australian laws and not subject to foreign jurisdictions,”he said. “Multinational Cloud providers, who are hosting locally, are not pushing data out of Australia; they are driving investment into Australia. The reality is that multinational companies are taking major steps to place infrastructure within Australia’s jurisdiction to allay consumer and community concerns. So we’ll see more local presence from big global Cloud providers, while many are already here, there are many still to come.”
Only a few avenues
Rhipe vice-president, market research, Stephen Parker, said the entry of Amazon and Microsoft into the local market left only a few avenues for local players.
“You have either got to get some massive scale or you have got to find localised differentiation,” he said. “One of the challenges of localised differentiation is that Amazon and Microsoft are now in the local market, so simply having a local presence is no longer a differentiation.
“Twenty-four months ago the local presence was a differentiation, but now when we talk local we talk hyperlocal, which might be relevant for latency, or even just the emotional angle.
“It could be because of the high speed connect, it might be that you’re on a high-speed ring.
“If you’re just down at the generic IaaS, PaaS layer you’re going to have to have some local differentiator and, in reality, that differentiator is when you start to say things like: ‘We have the ability to really deliver hybrid’.
“You can have your server on your premises, your server with your service provider and maybe some servers with Amazon. We have invested in the technology that links all of those together.
“In the IaaS spectrum, at the pure datacentre provider end, there has to be some differentiator otherwise you are going to struggle against the global providers.”
He said local service providers, even if they could scale, would still need to offer that value-added service, which could be driving into hybrid integrated infrastructure services and PaaS services.
“By finding those industry niches, which say that ‘our IaaS is different to yours, because we understand that you need eight years of document retention and you have a document retention policy that supports eight years because in that particular industry that is unique - but we offer it.
“Because of that, it doesn’t matter that we are a bit more expensive, because the cheaper guy just can’t do what you do and therefore all of his strengths are irrelevant.
“It’s finding that angle which says: ‘the strengths of my competition actually become irrelevant because they just can’t do what you need’. You’re either getting a much smarter differentiated IaaS, PaaS, or you find the industry vertical add-on as you head through this grey continuum from PaaS into SaaS.”
HubOne chief executive and founder, Nick Beaugeard, said the main drivers of Cloud were uncertainty, fear in the eyes of the local industry, and a “strange parochialism which has plagued our industry for the last 20 or so years”.
“In a significant number of engagements we have performed, there is [at the end of the due diligence], little legislative requirement for data to be located at rest in Australia,” he said.
“In fact, we joke with customers that if a country with a standing army wished to access your data, no matter where it was held, it would become accessible to them.”
He said the local industry was pathologically frightened of outside influence. “Whilst it makes total commercial sense to host datacentres closest to the largest number of customers [and at about one per cent of the global market Australia doesn’t have that clout], our industry is ever keen to keep data, jobs… in the country.”
Beaugeard said it was his strongly held view that the significant majority of information technology consumed over the next decade would be SaaS. “Software-as-a-Service seems to have reduced requirements on local datacentres and we see that driving customer behaviour from now on.”
Much like virtualisation across machines, Beaugeard said datacentres will be scale hubs for large Cloud platforms. “Whilst research, academia and others may continue to deliver their own facilities, the allure of Azure and AWS is strong. “I see massive growth there [and I believe their tenancies are driving our current growth] with a reduction in bespoke, client specific implementation and installations.
“Should we manage to deliver a great country wide data network, then all bets might be off. Latency will become far more important as bandwidth increases and a local point of presence may mean the difference between a sale or not.”
NEXTDC’s Scroggie broadly noted that there were any number of business advantages for a company keeping their Clouds in their own jurisdiction, especially if they could be hosted in the same facility as their own IT infrastructure. This allowed their IT assets to be unified in a single integrated network to better align with the way they consume Cloud services and provide the ideal environment for a hybrid IT service.
He also said the importance of geo-location and latency really depended on where you were and what you needed to do with your data. “Obviously there are concerns around data sovereignty with geo-location, and the different price of the same goods and services depending on where you do business.
This is of course another reason why we are seeing more international Cloud providers establishing an Australian presence,” he said. “Again, for many organisations, colocating their Cloud and infrastructure in the one facility solves many latency issues, which raises the need for data centres that are highly connected, with an established community of carriers and Cloud providers to provide the required services.”
Hanrahan agreed saying that latency was an increasingly important issue brought about by increased use of rich media content, and increased integration between digital front end and back office systems.
“Whilst Content Delivery Networks and streaming services have a role to play in some cases, using datacentres with low latency is the best solution for most, he said.”
The future will bring service providers to the fore as the key customers of datacentres, according to Randall.
“We’re going to see an increased importance of service providers as the key customers of datacentres, driven by Cloud uptake,” he said. “We’ll also begin to see environmental concerns and regulations, such as Power Usage Effectiveness and NABERS ratings driving consolidation from inefficient older facilities to newer ones. Similarly, increased power costs will also result in a trend to use more efficient datacentres locally.
“Cloud will continue its rapid growth as the early majority are coming on board.
“Adoption is also proliferating across an ever increasing range of applications and workloads, and we’re already working with customers on complete datacentre migration projects.
“Partners who assist early and later majority customers with Cloud Strategy, lift and shift and re-architecture/transformation, as well as ongoing support and management, will play an ever increasing role in Cloud adoption.