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Enterprise IT, Featured, News - Written by Renai LeMay on Tuesday, May 1, 2012 16:29 - 12 Comments
Offshore cloud an adoption barrier, finds KPMG
news A research study partially funded by major offshore cloud computing vendors Salesforce.com, Microsoft, and Google has found that one of the major barriers stopping Australian organisations from migrating to cloud computing platforms is the lack of cloud infrastructure based in Australia, with legislation such as the US Patriot Act cited as key concerns with offshore hosting.
The study, entitled Modelling the Economic Impact of Cloud Computing, was launched by consulting firm KPMG in Sydney this morning, at a launch attended by Communications Minister Stephen Conroy and other senior figures in Australia’s technology sector. You can download the full report in PDF format here.
In general, it found that, should Australian organisations adopt cloud platforms over the next few years, as the experience of “more mature markets” such as the US suggest is likely, then the benefits for both enterprises and the economy as a whole could be “substantial:, lowing ICT operating and capital expenditures significantly, while still boosting overall gross domestic product by a figure of around $3.32 billion per year. However, ultimately KPMG concluded that the Australian cloud computing market was still “at the early stages of adoption”, particularly in comparison to the US and Europe.
The report was commissioned by industry lobby group the Australian Information Industry Association, in coalition with Conroy’s Department and Salesforce.com, and with the support of other vendors such as Microsoft, IBM, Optus, Fujitsu, Google, CSC, Hitachi, IPscale and Macquarie Telecom, all of whom have some skin in the cloud computing game. In its report, KPMG noted that many executives it contacted while conducting research on attitudes towards the cloud “believed that the Australian ICT market does not yet have mature offerings in cloud-deployed solutions”, with some therefore declining to participate in the study.
Additionally, in the “barriers to uptake” section of its report, KPMG noted that issues included the “location of data and related security and data sovereignty issues (including implications of the US Patriot Act)”. A 2009 survey, KPMG noted, had found that although cloud computing made it possible to access services located anywhere in the world, “there is a strong desire for services located within Australia’s borders”. Other issues also included the issue of latency when accessing cloud computing services; which would especially be an issue for services located offshore.
The comments represent something of an irony for companies like Microsoft, Salesforce.com and Google. All three have repeatedly declined over the past half-decade to invest in dedicated cloud computing infrastructure in Australia, as has rival company Amazon.com. In part because of this issue, Salesforce.com and Google have particularly struggled to make headway in Australia’s public sector, which has expressed a particularly strong interest in on-shore facilities, due to regulatory concerns associated with storing information in the US.
Microsoft is known to provide local services from Singapore, and Salesforce.com from Japan, but many Australian organisations have still continually expressed doubts about storing data even in such jurisdictions, which are not known to have the same laws allowing government access to corporate information.
At the event this morning, Conroy reportedly (click here for iTNews’ article on the subject) outlined plans to visit Google’s US headquarters, in an attempt to promote Australia as a potential cloud computing hub, especially associated with the rollout of Labor’s National Broadband Network project over the next decade.
However, the Senator’s lobbying may fall on death ears. Google has over the past several years continually refused to commit to constructing Australian datacentre infrastructure. In February 2010 the company acknowledged “intense interest” from local customers in Australia-based application hosting, but said it would be hard to say that local infrastructure would be “the right path”.
Some of the companies supporting the KPMG study, however — such as Fujitsu, CSC, Macquarie Telecom and Optus — do have Australian infrastructure, and have won significant customer contracts to use that infrastructure over the past several years, with companies as large as top-tier bank Westpac getting involved.
Another vendor-supported report produced by a consulting firm, broadly concluding that Australian organisations should adopt new technologies. We’ve seen this a billion times before. So what’s new? Interestingly, quite a lot.
Firstly, let’s be under no illusions. As anyone with any industry experience would expect, KPMG’s report attempts to paint a rosy future for cloud computing in Australia, no doubt with the intention of at least paying lip service to the interests of its corporate sponsors. Although these kinds of reports are, on paper, “independent” — as in, the AIIA and the other sponsors technically can’t pay KPMG to conclude any in particular, there’s always a fine line, and KPMG obviously knows who’s funding its research (and potential future consulting engagements).
But reading between the lines, it’s clear that KPMG has at least done an honest job here. Reading the report, one can’t help but conclude that cloud computing vendors are finding it tough in Australia just now. The hype has died down, early adopters are losing their enthusiasm for the various platforms around, and the whole industry is clearly in what Gartner would call “the trough of disillusionment”.
This, again, is no real surprise. Many within the industry have been aware of this for a while.
But what is interesting is the extent to which a great divide is emerging between the various cloud players. On the one side of the line are companies like CSC, Fujitsu, Optus, Macquarie Telecom and so on, which are implementing on-shore cloud computing solutions and winning early success. Much of what these companies are doing isn’t really technically “cloud computing”, or at least not the “public cloud” that so many people associate with true cloud computing. It tends to be things like “private cloud”, which gives customers much more control over their infrastructure.
On the other side of the line are companies like Salesforce.com, Google, Amazon and Microsoft (although Microsoft has a foot in both camps — public cloud with Azure and private through partnerships with companies like CSC and Fujitsu). These companies are struggling to win public cloud customers in Australia, due to their nature as offshore hosters. As KPMG notes in the report: “Firms are more likely to be using private than public cloud at this point.”
None of this is really a surprise. Companies which invest in Australia, meet the demands of local customers and don’t stick to hardball philosophies which mandate only public cloud and nothing else (I’m thinking here of Salesforce.com’s antiquated concept that software is dead, or Google’s refusal to acknowledge that the idea of private cloud has any merit). But it is interesting to see it spelled out this way, in a report, ironically, sponsored by both sides of the coin.
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Blog, Enterprise IT - May 17, 2013 11:49 - 10 Comments
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