Small business latches onto cloud computing

By Merri Mack
Monday, 19 September, 2011

With all the words written about cloud computing this year, one wonders why Rob Livingstone wrote a book on the topic, with the title Navigating through the cloud.

Essentially, Livingstone says it’s because he could not buy a book that allows individuals and organisations alike to make an objective and well-informed assessment of the value of the cloud. The book is a plain English guide to surviving the risks, costs and governance pitfalls of cloud computing.

Livingstone is an academic with an impressive IT pedigree, having been a CIO of a number of multinationals. He currently runs an independent advisory business.

This month Livingstone hosted a panel session comprising a number of businesses from the VMware ecosystem in Australia to discuss the revenue opportunities which have emerged as businesses evaluate the adoption of cloud computing.

Some of the issues discussed included lack of portability to move from one cloud provider to another; legacy systems holding back enterprises from adopting cloud; security and data residency; and jurisdiction.

Duncan Bennett, Managing Director, VMware ANZ, has just returned from the international VMware talk fest in Les Vegas, which was attended by 19,000 delegates. There are 5600 partners in the partner program.

“Partners are important. If partners are successful, then VMware is successful, and the more revenues we get,” said Bennett.

This year VMware has recruited over 300 partners locally to the partner program, which has tripled the number of partners here.

New Lease is an ex-hosting company which now focuses on subscription software licensing, solely to the service provider community for the private cloud sector, but it also helps them tap into the hybrid cloud.

Doug Tutus, Managing Director of New Lease, said, “The company has been around for eight years growing at a rate of 40% year-on-year for the last seven years, but in 2011 we have grown by 54% and signed up 125 partners this year compared to a hundred last year.

“Partners are doing much more too. And there is the phenomena of accidental cloud providers such as franchisers who supply cloud services to their franchisees. In a nutshell this is the benefit of the cloud.

“For example, four childcare centres in the same group started with public cloud mail services, another service provider provided MYOB accounting services. New Lease aggregated all services into one cloud service for them and we did it all within three days,” said Tutus.

New Lease’s Head of Cloud Strategy, Stephen JK Parker, said, “A business definition of cloud is anything you want. Cloud is really not a technical discussion, it’s really a business discussion.”

As part of his role, Parker holds roadshows around Australia to educate providers on what the cloud is. A year ago, 10% of his audience told him that their customers were asking for cloud services. This year, 90% of service providers reported that customers actively want cloud services.

10% of these service providers are ready to provide cloud services and another 20% are preparing to provide cloud services.

“There will be a tipping point which is driven by customers incrementally, who go viral on the successes of using cloud services,” said Parker.

Nicki Pereira, General Manager ZettaGrid, said, “Cloud can bring technologies only available to the enterprise to SMBs. SMBs are now talking about enterprise concepts such as disaster recovery and data resiliency. It gives SMBs more opportunities as cloud ticks the entry points to provide more services.”

It seems when customers do sign up for cloud services from a cloud provider they stick around. Tutus said churn is less than 1% and this is with a wide range of customers from small to large enterprises. Pereira agreed, “Customers are more sticky in the cloud with very little churn.”

Perth-based IntegraNet Technology Group uses ZettaGrid’s infrastructure as a service (IaaS) to help its SMB customers to adopt cloud computing infrastructure. Director of IntegraNet Peter Peou said, “We are seeing unprecedented interest and we are refocusing our business in order to capitalise on this business opportunity.”

Partnering with Canberra-based Dialogue IT, IntegraNet has built a managed service offering on infrastructure which has been successful within the ACT. It has also helped a Norwegian company with its IT refresh program in Perth and has been asked to do this for the same company in Kuala Lumpur.

“The great benefit of cloud is that we can reach out to the rest of the world,” said Peou.

All panel members agreed that a AU$300 monthly subscription VMware licence fee gives a 3- or 4-person SMB the opportunity to start operating and growing a business as it provides a low barrier to entry level. The panel commented that university students are starting up businesses based on this offering.

Bennett said he would love to see another Google emerge out of Australia, and that it is within the realms of possibility with cloud.

The last word goes to Livingstone. “With all the positives of cloud computing, people are realising it is not a silver bullet and not a panacea,” said Livingstone.

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