Cloud computing - the perfect storm?

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This article appeared in the June, 2009 issue of CRN magazine.

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Cloud computing - the perfect storm?

A belt-tightening recession and national broadband network came together at the right time for proponents of cloud computing

'Many trace modern cloud computing to 1999 when Marc Benioff and his partners founded, a service to track sales leads, in a San Francisco flat.

Three years before, a Punjabi immigrant to the US, Sabeer Bhatia, founded a service for users to transact emails through a web browser wherever they were in the world. It was called HoTMaiL.

Today, search engine Google provides office productivity tools and maps for anyone, anywhere, to access their applications through a browser.

Welcome to cloud computing, where as user, reseller or integrator you do what you want, when you want without managing the gears whirring in the background to get your jobs done.

You buy the building blocks of services and they run on the internet (the "cloud" depicted in network diagrams).

Exponents say they benefit from the speed, simplicity, scale and lower overhead costs that the cloud offers over traditional networking systems such as client-server.


When fast-food maker McDonald's was looking to build a hardened, family-friendly wi-fi network for its 700 stores in Australia, it had just 90 days to select, plan and finalise the topology of the network.

McDonald's IT project manager, Anthony Rosenkowitz, says such an implementation would not have been possible with a provider that couldn't respond swiftly.

American Express had a similar issue, says the card company's Australian head of marketing, Jeffrey Evans.

Coming off the back of staff cuts and a budget slashed from $3 million to $450,000, Evans was tasked with upgrading Amex's customer systems.

It turned to and cut implementation times and costs by about 85 percent over a traditional solution, with payback within six months.


Straitened spending will lead organisations to spend less on low-margin hardware and more on higher-margin services, says Bobby Napiltonia,'s worldwide channel vice president.

He says resellers make 6 to 8 per-cent profit from hardware, "losing money on the transaction and making money on the services".

Cloud services have margins of 40 to 55 percent, he says, and resellers are more likely to win repeat business from happy customers.

Risk and innovation

Even in tough times, the lower risks associated with the cloud may lure businesses to take chances because they can't fall as far if the deployment stumbles.

At a recent roundtable run by US think tank the Aspen Institute, the founder of data centre optimisation software maker Cassatt Corporation, William Coleman, said those who don't use the cloud may soon be left behind.

"We're at an inflexion point in which we are about to commoditise all of computing as we have known it by turning it into the cloud. (It) will become the platform for the web just as the telephone system has been the platform for voice communication."

University of Melbourne distributed computing researcher, Rajkumar Buyya, says the big advantage of cloud technologies is they no longer require a huge investment.

Dr Buyya says that to avoid cloud providers locking organisations into their offerings, an exchange like that used to trade commodities is needed.

"There is a need for a 'Cloud Exchange' modelled after a virtual economic exchange such as the ASX or Futures Exchange."

From nimbus to NBN

Telarus is a Melbourne IT services reseller that provides private clouds for its customers over it's national infrastructure service, itself cobbled from other providers.

It's working with Microsoft and partners such as VMWare, EMC, Fortinet and Cisco to streamline its customers' workflow.

Telarus chief executive officer Jules Rumsey sits on the board of the Communications Alliance and says from that vantage point, the national broadband network is a great benefit for those shifting to the cloud.

"(Fibre to the premises) will lead to better bandwidth and for a business client (if) they want to do a lot of VoIP and (unified communications)."

Rumsey says the cloud "will create a new world order but it will take time to get used to it". He expects to see a hybrid model for the foreseeable future.

Transition to the cloud

Myriad Minds in Melbourne, which integrates and Google applications, says it gets a lot of work from companies that are moving into the cloud but want to keep what they have back on earth - in their data centres and on their own premises.

Myriad Minds managing director Glenn Elliott says there's a split between cutting-edge work done by smaller customers and what happens at the big end of town.

He says customers tend to start with a set of customer and sales tools such as but

smaller businesses see it as a way to compete with the big boys and are using cloud technologies to manage every aspect of their supply. Part of this fl exibility, he says, is because "offers the best of both worlds" by integrating Java and custom applications.

Those conversations are aided because "tends to have relationships at the higher end of town", he says.

Microsoft deserves credit for kicking off cloud computing through its late 1997 purchase of Bhatia's pioneering Hotmail. What Microsoft does now with its cloud services (its "Software Plus Services Strategy") is an extension of that pioneering work, says Gianpaolo Carraro, Microsoft's software as a service director.

"What we're realising is there's an evolution that requires software not to be run on servers or desktops but out there in economical clouds," Carraro says.

"We don't believe the cloud is a replacement of what people have or want - it's a nice complement." Its investment extends to building data centres around the world and spending billions of dollars on supporting the infrastructure because customers are "not moving wholesale to the cloud".

Such talk raises the ire of those such as Google product manager, Matthew Glotzbach. He calls such approaches a "fallacy". "(Private clouds) should be renamed 'data centre optimisation'," Glotzbach says.

Quoting Forrester research, he says that the cost each month of a user is US$8.47 ($11.16) for Google Apps compared to Microsoft online email service at US$20.32 and an onpremises email service of US$25.18.

Dark skies

But there is no way to fi nd and attach new services easily, says Andrzej Goscinski, professor of computing at Deakin University in Geelong, west of Melbourne.

"There is a need for discovery of published services," professor Goscinski says. "Our study shows this aspect has been neglected by the major vendors and their solutions are primitive."

Security is a concern of many, as is governance and handling private information.

Forrester advises organisations considering cloud services to write a checklist.

"Early adopters have run into road blocks, including not knowing where their data resides, what happens to the data when a decision is made to change services and how the service provider guards customer privacy," the analyst group says.

"When you outsource the requirements developed internally, the vendor has to be at least as secure as you are," says the author, Chenxi Wang.

And as Google's widely Twittered May 14 outage showed, even the best processes can fall foul of error.

Commenting on the outage that blacked-out a signifi cant portion of the internet, Arbor Network's chief scientist Craig Labovitz said if you're a normal organisation "you don't worry about making the nightly news.

But if you  happen to be Google and your content constitutes up to 5 percent of all internet traffi c, people notice."

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