Building the Australian cloud: A GTR roundtable [1/4]

By GovTechReview Staff
Friday, 12 September, 2014

Times change, however, and Australian offerings have rapidly matured as increasing demand and improving technology bring both private and public cloud capabilities well within reach of domestic companies. A healthy array of new providers have reinvigorated the local market, bolstered by new equity injections from overseas giants that increasingly see Australia as a key market for the region.

With the Queensland government recently joining the list of public-sector administrations committing to a cloud-first architecture, the market is only likely to grow further. Federal data centre as a service (DcaaS) purchasing guidelines are set to be reviewed later this year, promising further shakeups in the way cloud services are procured and implemented.

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: What kind of investments have been put in to expand the local cloud market?

PURDY: With data centre providers like NextDC, Equinix and Metronode in NSW there are now options for both the mega-scale and smaller local providers to establish large, highly available cloud infrastructures. We use a combination of our own and third-party data centres to achieve highly available SLAs within individual states.

DAN: Telstra recognised the disruptive and beneficial effects of cloud computing early on. Back in 2011, we decided to make one of the largest investments in cloud capability – to the tune of $800m – and I have no doubt that such a decision was a strong signal of confidence for the future of cloud computing in Australia and helped develop a market that has grown considerably over the last few years. I have no doubt that our approach will be studied closely by other providers – and that is a good thing for customers, as it will help build a mature market offering.

SCROGGIE: Over the last few years we set about building a national network of world-class data centres that would provide a home, largely, for cloud computing so customers could have their data centre on demand. We have invested almost half a billion dollars over the last few years building a world-class network of data centres to support the growth in the cloud computing revolution.

That is a reflection on the way cloud computing as a value proposition was moving. And it has been, without question, one of the most transformative times I've witnessed in my 20-plus years in the industry. The combination of being able to pay for exactly what you consume, with the risk profile largely shifting from the end user to the actual manufacturer or vendor, means the industry is in a very very different place to what it was before.

AYYUCE: We saw 2013 as a fairly massive shift in the industry with respect to cloud services. Until then there were a lot of organisations dipping their toes into the whole cloud space, but in 2013 we saw that tectonic shift from putting test and dev environments there, to moving full speed ahead with their production environments. So, there has been a massive shift away from traditional purchasing models as customers change the way they consume services.

KALESKI: Fujitsu started this cloud journey over five years ago and, from that perspective, we have learned an awful lot about how to support our customers. From an investment standpoint the industry has matured extraordinarily over that five year period: we now have things like dark fibre links – which we installed to our data centres in Homebush and North Ryde NSW as well as Malaga, WA – that let data go coast to coast without stop signs.

We can offer redundancy literally coast to coast, and that's a very unique value proposition for end users. Customers are the beneficiaries of those investments made by the technology providers and the systems integrators, and the maturity of systems integrators now taking them to market.

HANRAHAN: We've seen a particularly significant shift, particularly in the public sector where most of the services that are coming out, coming with cloud as the delivery model instead of being asked for as an option. So instead of just being focused on solutions that probably deal with things being built for cloud, we're seeing it as the new standard – and, as a result, the services have had to evolve really quickly to keep up with that.

GTR: What are your customers seeing as the biggest benefit of the local cloud?

SCROGGIE: There is definitely a more mature way of thinking for organisations. In the past they may have decided that information lives on their systems, therefore it all gets treated the same way. But as people have adopted all types of public and private cloud computing apps, they're thinking about what is the information they have, how it's classified, how sensitive it is, and how they would protect it. They are becoming more aware of the value of their information, and the answer to these questions will determine the type of procedures put in place to protect and use it.

HANRAHAN: In the public sector, it has been driven by the need to be able to do disaster reovery to a site that's got exactly the same architecture in country rather than trying to do the data offshore.

PURDY: We have invested in an enterprise quality computing infrastructure to ensure we can deliver the highest SLAs both in terms of performance and availability. Customers can have confidence that when they move their enterprise systems into cloud providers using facilities like these, that they will get better uptime and resilience than what they would get from their own data centre or on premise facility.

KALESKI: The investments are being driven by both demand from customers, and the technology innovations that are brought to us by Fujitsu internal providers including the big hardware business out of Germany and the massive software business out of Japan.

The most important this is that you've got to listen to your customers' needs. Customers often see a presentation from software providers, then come back to their trusted provider – Fujitsu – to see whether we can offer it as a service. It isn't an easy thing to do but it's one thing we've managed to do very very well. We have a proven track record of being able to provide those offerings, and to make it easy for customers to consume things as a service.JamesB-W-NogginIT

MCGEE: In speaking with government agencies, within four to five years they don't expect to be hosting much infrastructure themselves at all. Some of those are medium sized departments, while others are larger and looking at becoming either private cloud providers in their own right, or whole of government cloud providers.

AYYUCE: They're now saying that they want the benefits of products and solutions that we're known for, but want to consume them on a utility or consumption basis. That's having a huge impact on the way our salespeople go out there and engage them: we're seeing demand for this always-on, mobility type of demand from enterprise IT.

GTR: What constraints have there been on the local market that kept clients looking to overseas providers?

DAN: One of the most limiting factors when it comes to the Australian market is its size relative to the global markets. Notwithstanding Australians' strong take up of technology and innovation, larger markets allow for different ROI profiles when it comes to investment decisions. However, Australians are very discerning when it comes to the expectations of performance, price points and proven capability. Thus, they look for providers that have demonstrated track record, and have the means to deliver the performance and reliability so critical when it comes to cloud computing.

AYYUCE: If we go back a few years ago, we saw the GFC causing a further tightening of belts and IT departments considering how they were going to spend. That's when we saw the word 'cloud' being discussed more openly and prevalent. Yet if we look at the type of things that stopped us from moving on, a couple of years ago, the key was the whole concept around job preservation. IT departments and CIOs were lucky to move onto the cloud, because they weren't going to put their critical issues in the cloud.

SCROGGIE: Scale matters; in particular, the cost leverage large global providers are able to bring to local customers is significant. Innovations from offshore certainly drive local companies to look overseas for new ways of doing business. Local industry participants are continuing to change their offerings and many today provide competitive technology and commercial offers relative to overseas entrants or find ways to leverage or integrate some of that global scale into local offerings rather than try and compete directly against them. Over time we will see if local companies can continue to find competitive advantage outside commoditisation of compute power.

PURDY: Perhaps this was an issue of confidence on the part of the customers, not the providers. Local providers have proven that they can meet the highest expectations. That said, the scale and worldwide footprint offered by some international providers will always be attractive to some customers. To date the taxation that exists in Australia has stopped or limited the investment that the global players have put into the market. And with the increased levels of tax and cost of living, that ultimately gets passed back to the customer in base price – which can make on shore solutions less cost effective than going to somewhere like Singapore where they have incentives.

The other limitation is just payback on investment for the globals. Each service or deployment of a node is a serious capital investment, and there’s not a lot of point in launching a service or node in a location unless the market is ready for it.

To take full advantage of the mega-scale facilities such as AWS and Azure, application software needs to be written appropriately. Unfortunately, each provider has their own APIs and idiosyncrasies, which creates a platform lock-in which may or may not be significant. Consortium based standardisation efforts such as Openshift and Cloud Foundry will help at the application layer in the medium term, and portability is helped by initiatives like Docker. In the meantime, VMware and Hyper-V based clouds offer customers hosting environment flexibility between inhouse and local providers.

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

Related Articles

Putting people at the centre of aged care means investing in technology

The stories of limited access, substandard care and systemic problems in Australia's...

Socitm publishes public sector cloud adoption guide

Public sector IT association Socitm has published a guide full of advice for CIOs on procuring...

Transforming contact centres via cloud technology

Cloud-based centres can facilitate better training and guidance for employees, improve caller...

  • All content Copyright © 2021 Westwick-Farrow Pty Ltd