news SAP subsidiary SuccessFactors has opened a datacentre located in Australia from which it will sell its software as a service-based human resource management and business execution software to local customers, in one of the first known deployments of such dedicated Australian infrastructure by a global SaaS vendor.

In a statement issued this morning, the company said it “today announced the opening of its new datacentre in Australia as part of its commitment to the market and the Asia-Pacific region.” The facility will be located in Sydney and is a certified facility under the Federal Government’s purchasing guidelines, as well as adhering to relevant ISO standards.

“The Sydney datacentre will host the full SuccessFactors Business Execution (BizX) suite, including Jam, Workforce Planning, Workforce Analytics, Performance & Goals, Employee Central, Recruiting Management, Succession & Development, Compensation Management and Learning Management, which will all be delivered locally in the Australian cloud to clients throughout the Asia Pacific region – the fastest growing region for SuccessFactors globally,” the company said. “With demand for cloud-based solutions growing quickly, SuccessFactors is keen to fully expand into the market and maximise its local presence.”

“The new datacentre opening comes at a perfect time as it is designed to meet the rapidly growing hosting demands of the Australian government and local businesses customers,” said Murray Sargant, SuccessFactors vice president, Asia Pacific. “We have a very strong presence in Sydney, Canberra, Melbourne and Brisbane, so many of our customers will find it helpful to have access to a datacentre which offers premium support and optimal reliability in the country. We are committed to advancing Australia as a cloud computing hub for the region and we are very excited about the growth potential the datacentre will bring to the APAC market.”

The rollout of dedicated Australian datacentre infrastructure by SuccessFactors is a rarity in the SaaS market. Companies such as Microsoft, Salesforce.com, SAP, Google and Netsuite, which all sell SaaS-based enterprise IT services into Australia, do so from datacentres located in other countries such as Singapore, Hong Kong and the US, and have repeatedly declined to build local infrastructure.

The lack of on-shore IT infrastructure is particularly seen as limiting the ability of the public and financial services sectors — which are both large consumers of IT services in Australia — from deploying SaaS-style solutions. The issue has been repeatedly debated over the past several years.

In May 2011, for example, Victoria’s privacy commissioner issued a stark warning to government agencies about the use of cloud computing, warning that it may be “impossible” to protect personal information held about Australians when it was located offshore — or even just outside Victoria.

And in April this year, the United States’ global trade representative strongly criticised a perceived preference on the part of large Australian organisations for hosting their data on-shore in Australia, claiming it created a significant trade barrier for US technology firms and was based on a misinterpretation of the US Patriot Act.

However, where companies have deployed on-shore solutions, they have often been a success. In January this year, Oracle announced that various top Australian public and private sector entities had implemented its CRM On Demand software as a service suite, which has an Australia-hosted version, unlike many of its rivals.

Local customers who have been provisioned in the local datacentre on the Oracle CRM On Demand platform include the Victorian Department of Human Services, NSW government agency NSW Businesslink, NBN Co, AJ Lucas and Suncorp. In September 2011, Oracle had announced the rollout of the CRM On Demand platform for Telstra Wholesale. Telstra had elaborated then that it had chosen Oracle CRM On Demand because of its easy integration with the company’s existing IT infrastructure, such as Oracle’s Siebel software that helps manage billing for Telstra’s retail customers.

opinion/analysis
It’s fantastic to see SuccessFactors open an Australian datacentre; I welcome the move and I congratulate SuccessFactors on sailing against the conventional wisdom in this area. I can really only view this as a move stemming from the extreme reluctance which Australian government departments have in using offshore options. The public sector would be a key target for SuccessFactors, and it’s hard to see how the organisation would have gotten much traction in that segment of the market without local hosting.

Some will see SuccessFactor’s move as a limited test which could lead to a similar local rollout by SAP, and it’s true that the company has been considering the issue recently. But I would be cautious about making this kind of assumption. SuccessFactors has remained quite separate from the rest of the SAP business, and as I’ve previously written, the argument from SAP’s management would be that Australian customers can already buy hosted SAP services from partners such as Fujitsu and Oxygen. SAP tends to be quite a rigid organisation at times, and I would be very surprised to see the company push hard into on-shore SaaS any time soon.

Image credit: SuccessFactors

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2. “Intense” interest but no Aussie Google datacentre yet
3. SAP considers Aussie datacentre

news International technology companies such as Google, Facebook and Amazon may not be paying their fair share of Australian tax, Shadow Communications Minister Malcolm Turnbull said this week, with local tax laws not having caught up yet with the challenges of the digital environment.

In early May, Google Australia revealed that it expected to pay just $74,000 in corporate income tax for the 2011 calendar year in Australia, off claimed local revenues of $201 million, despite the fact that industry estimates have continually pegged the search giant’s Australian income at closer to $1 billion. The remainder of the company’s incoming is believed to be funnelled through its Irish subsidiary. Ireland is believed to offer Google a more favourable tax environment for its global revenues than countries such as Australia or the US.

In an article published on his website late yesterday, Turnbull said an important long-term issue in terms of Australian public policy was “the erosion of our tax base due to the growing significant of online commerce and offshore-domiciled service providers in many sectors and markets”. “Many transactions which previously generated economic activity and tax revenue in Australia no longer do so,” the Liberal MP wrote.

“An advertisement on a Google search page may be hosted by a server located overseas, and the advertisement may be sold by a company located in Ireland – but nonetheless from the Australian user’s point of view it is as “present” on his device as an advertisement on The Australian or the Sydney Morning Herald website. Equally the largest seller of books to Australians is Amazon – yet there is no GST levied on those sales, and no Australian tax is paid on the profits earned from them, as opposed to the taxes once paid by the Australian-based book sellers Amazon has, in many cases, put out of business.”

Turnbull said debate currently underway in Europe over the issue illustrated that there was “no quick fix” to the issue, or “indeed any broadly agreed consensus as yet that a fix is necessary”. Also, the Liberal MP added, he wasn’t as yet proposing any specific change to existing tax laws, flagging a shift in Coalition policy or even suggesting that Google’s activities were illegal. However, Turnbull said, there was a question about whether current taxation law was adequate in the new, converging digital world — and broader issues were at play.

“In the case of advertising dollars once spent at Australian media outlets but now increasingly diverted abroad, a diminished local tax base is only part of the challenge created by this shift,” he said. “It also reduces the resources available for gathering and publishing news, which reduces the media’s ability to hold political, corporate or institutional interests to account. And it adds to pressure for consolidation. Scrutiny of powerful interests by a robust, fearless, professional and diverse media is fundamental to the operation of any democracy.”

“All of this is entangled with free trade issues and Australia is by no means unique,” the MP added. “Just about every country in the world, or at least those with open access to the Internet, is facing challenges and questions of this kind.” Turnbull linked the issue to several inquiries which the Federal Labor Government has recently held into the future of the media, stating that neither inquiry had bothered to examine these sorts of taxation issues in any depth, “despite their critical importance to the financial viability of our publishers and broadcasters of news, and the threat to Australia’s tax base”.

The way that Google Australia accounts for its revenue does not appear to be consistent with the way other major technology companies account for their revenue in Australia.

In January, Apple, a major rival of Google, published its own financial statements for its 2011 financial year, noting that it made $4.88 billion from its Australian division in the year to 24 September 2011. The company made $190 million in local profits, and paid $94 million in tax in Australia. IBM Australia also filed its financial results over the past several weeks. The company made local revenues of $4.5 billion, with Australian profits being $428 million, and taxation taking a $119 million chunk out of IBM’s pocket.

In January this year, Mashable reported that Apple maintained much of its profits in so-called “offshore tax havens” which allowed it to stop the US Government from taxing it to the full extent possible in its home country.

In 2010, The Huffington Post wrote about IBM’s taxation purposes: “In December 2008, the Government Accounting Office reported that 83 of the 100 largest publicly-traded companies in the country — including AT&T, Chevron, IBM, American Express, GE, Boeing, Dow, and AIG — had subsidiaries in tax havens — or, as the corporate class comically calls them, “financial privacy jurisdictions.’”

However, in Australia, neither Apple nor IBM appear to use the same technique as Google with respect to tax accounting. The pair’s financial statements do not contain references to similar international subsidiaries in locations such as Ireland that Google Australia’s do, and both pay significantly more corporate income tax in Australia.

opinion/analysis
Turnbull’s approach here is characteristic of his much wider approach to policy formation. In short, he reads widely about international affairs in his portfolio, consults with key Australian stakeholders, and attempts to discern how the global experience can be translated into solid Australian policy, with local expertise and knowledge. In theory, this is the right approach, and I wish more Australian politicians would take it. However, in this sort of situation, I would have to say that it’s clear that Turnbull is taking the wrong approach on this issue. Why do I think this?

Firstly, it’s important to understand that the Federal political and media arena is currently a nightmarish, populist bullpen, where supposedly mature figures from both sides of politics are constantly backstabbing each other and feverishly checking the daily opinion polls in order to ascertain whether their latest weasel moves have had any impact on moving the needle of political opinion. Turnbull’s attempts to interject rational, reasoned debate into this raucous cacophony come across as a relic of a bygone era. Sure, many of us in the media and political spheres would dearly love to see that era come back, but frankly it doesn’t look like that will happen any time soon. In short, Turnbull’s intellectual consideration of this debate needs to get a bit more emotional oomph to make any headway.

If Turnbull really wants to tackle the issue of Australian taxes going offshore (as they very clearly are), he needs to make this a populist issue. Instead of conducting calm interviews with the Financial Review and issuing rational statements raising questions on the issue, he should be standing up in the House of Representatives and lambasting Google, Facebook and Amazon for their ridiculously transparent attempts at avoiding their Australian tax obligations. He should be dragging these companies before parliamentary inquiries on the matter. And he should be raising these issues with populist media outlets such as the Daily Telegraph and commercial radio stations.

Only then will it become the sort of national issue it could be.

Why do I know that Turnbull should be doing these things? Because we’ve seen these tactics succeed spectacularly with Labor backbencher Ed Husic, who for six months has been pushing a very similar popular bandwagon: Local pricing markups on technology goods and services in Australia.

While Turnbull is beating around the bush on transfer pricing and being featured in calm editorials in the AFR, Husic already has his parliamentary inquiry being set up on the matter; he already has national press coverage; and he already has local technology vendors running scared. If Turnbull is at all serious about the taxation issue, he should be aiming for the same outcome and using every weapon at his disposal. To do anything less is to reveal that he wasn’t truly serious about it at all. Right now, light touches get nowhere in Australia’s tragically dumbed down political discourse. Those who wish to enact serious change need to apply the sledgehammer every chance they get.

Image credit: Office of Malcolm Turnbull

Related posts:

1. Turnbull confronts Google over NBN support
2. Malcolm Turnbull and the great Google conspiracy
3. Turnbull secretly “loves” the NBN, claims Internode

news The Victorian State Government has reportedly decided to walk away from its troubled central electronic health project HealthSMART, which has reached only a limited number of its goals over the past decade since it was initiated, despite soaking up several hundred million dollars worth of government funding.

The HealthSMART project was initiated under the Bracks Labor government back in 2003 with a pricetag of $323 million and a due date of 2007. In July 2010 it was reported that it had since had another $37 million pumped into it, with the due date gradually extending, and in November last year the Victorian Ombudsman reported that the project would cost another $243 million to complete.

The initiative was slated to replace the complex patchwork of e-health records systems used across Victoria’s public health sector with a series of more modern and standardised clinical IT applications, with major contracts having been signed with e-health vendors iSOFT (now part of CSC) and TrakHealth. However, as early as 2008, the Victorian Auditor-General had expressed significant concerns about whether HealthSMART could deliver as a project.

“The original HealthSMART budget, involving health agency co-funding capacity, was not realistic. Lack of certainty across health agencies about costs and funding sources have inevitably led to delays in implementation,” Victorian Auditor-General Des Pearson wrote in a media release in April 2008, following an audit of the project.

Pearson also found that targets for implementation were too ambitious. “Had there been more realistic estimates of the capability of the sector to implement technological change in a compressed period and a better appreciation of the poor state of information technology assets in health services, the Department of Human Services would have more effectively managed expectations around the timing of the roll-out of the strategy,” he said. At the time, Pearson said: “Despite these issues, HealthSMART still has the potential to fulfil the original vision of a patient-centric model of healthcare, supporting public sector health clinicians with knowledge and technology. However, to date, that vision has yet to be fully realised.”

Late last week a number of media outlets quoted Victorian Health Minister David Davis as stating that the State Government had now scrapped the project. The ABC quoted David as stating that it would now be up to individual hospitals to determine what their IT needs were in future. “We will no longer mandate particular health ICT projects,” he reportedly said. “There will be targeted approaches and we will work with health services in the forthcoming period.”

Similar e-health records problems have also been experienced in other states, with few government health departments in Australia having successfully tackling the issue so far. However, despite the problems, the Victorian branch of the Australian Medical Association, which represents doctors, last year called for the State Government to continue to invest in e-health initiatives. “Improved ICT will not solve all the problems in our health system, but these problems cannot be solved without improved ICT,” the AMA said at the time.

The AMA wanted the funding spent on an Apple iPad tablet for every doctor, which could display electronic drug charts, medication management systems and patient records, as well as funding specifically allocated to roll out medication management systems, build better interfaces between hospitals, general practitioners and aged care providers, and build wireless support in hospitals.
In addition, the group advised steady, recurrent funding could be spent on up to date computers for use by medical staff, remedying a lack of standardised software between hospital networks and providing for the replacement of “sub-standard hardware and software systems”. “To build these missing links in Victoria’s ICT systems, we need to ensure that there is adequate ongoing investment,” the AMA wrote. “AMA Victoria recommends recurrent funding of $60 million per annum to ensure an adequate level of ongoing investment.”

The news comes as the Victorian Government continues to suffer wide-ranging problems relating to ICT governance. In November last year, Victoria’s Ombudsman handed down one of the most damning assessments of public sector IT project governance in Australia’s history, noting total cost over-runs of $1.44 billion, extensive delays and a general failure to actually deliver on stated aims in 10 major IT projects carried out by the state over the past half-decade.

opinion/analysis
Firstly, let me say that it has been expected for some time that the Victorian Government would walk away from HealthSMART. With a decade and hundreds of millions of dollars to deliver the project and only a handful of implementations to show for it, this is truly a project which needs to be canned or at least substantially modified, and I think most people will applaud the move. I’ve been getting inside leaks and reading audit reports on HealthSMART for half a decade now and I’ve never been of the belief that it was really getting anywhere.

However, setting that aside, I think the following phrase, published by the ABC last week, should strike horror into the hearts of every public sector IT worker in Victoria (quoting Health Minister David Davis):

“He says it will be up to individual hospitals to work out what suits their own computer needs in future.”

It is clear that HealthSMART’s centralised approach was the wrong one. But let me say this in the strongest possible terms: An approach which simply lets every hospital decide how to run its own IT systems is also the wrong one, and represents the opposite end of two bad extremes.

If every Victorian hospital is literally left, over the next half-decade and beyond, completely to its own devices, with no oversight, to implement their own IT systems and upgrades, what will result is a colossal spaghetti mess of gargantuan proportions which will prove a nightmare to untangle when the state eventually seeks (again) to standardise its e-health platforms statewide.

In an organisation as large as Victoria’s Department of Health, you simply cannot leave individual units such as hospitals to their own devices when it comes to IT. This will result in long-term disaster. Hospitals will be unable to share records between each other’s systems. Every time a medical professional of any stripe joins a new hospital, they will need to be trained in new systems — different from their old workplace. Standardised reporting of the whole sector to the upper reaches of government will become a bad joke. And as various hospital-specific IT initiatives fail, there will be no overarching strategy and resources to fall back on.

I say again: It turned out that a completely centralised e-health strategy was not the answer to health IT problems in Victoria’s health public sector. But neither is stepping away from those problems entirely and letting each hospital solve their own problems. That will result in an even greater tragedy down the track — mark my words.

I think much of the difficulty in e-health at the moment is related to the relative immaturity of the technology platforms available in this area, coupled with a similar immaturity when it comes to the integration of those platforms in clinical environments.

Hospitals are complex environments with complicated, highly-specific business processes, and the feedback I have received repeatedly over time from many in the health IT sector is that often the available software platforms (iSOFT, TrakHEALTH, Cerner and so on, to name a few) are not quite mature and flexible enough yet for the task at hand. And when you try and implement these platforms in hospital environments, the medical workers are often highly reluctant to change their work practices to accommodate the new systems. So you often get a worse of both worlds scenario — where the technology can’t quite adapt right to the needs of its users, and where the users themselves won’t quite adapt right to the needs of the system.

These are problems which every government health jurisdiction in Australia is grappling with, right now — and, no doubt, many private sector health organisations. And these are tough problems. But walking away from them entirely, as Victoria’s State Government appears to be doing, is simply not the right answer. That represents an abrogation of responsibility which Victorians will pay a high price for in the long term. I would say I’m glad that I don’t live in Victoria — but then, NSW isn’t doing much better in this area.

Image credit: Cathy Kaplan, royalty free

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news Global technology giant HP has finished building its colossal $119 million new datacentre in Western Sydney and will launch the “world-class” facility next month, with a speech slated to be given by Communications Minister Stephen Conroy.

Details of the facility were revealed in February 2011. At the time, HP South-Pacific Vice President of Enterprise Services, David Caspari (pictured above at the site after it was levelled), said the new datacentre would respond to the growing demand for services that businesses and government face from their customers and communities. The project will involve a building cost of $119 million and is part of HP’s US$1 billion transformation to retire legacy assets and build new facilities. The new facility will occupy an area of more than 130,000 square metres and was previously expected to be fully operational by the end of 2011.

In a press invitation today, HP invited journalists to “the grand opening” of the datacentre in mid-June. “You will have an opportunity to tour the world-class facility and learn first-hand about how this datacentre will help HP Enterprise Services drive transformation and modernisation for organisations in Australia,” the invitation reads. “There will be an address from Senator The Hon. Stephen Conroy, Minister for Broadband, Communications and the Digital Economy.”

Due to the “high security requirements” of the datacentre, cameras and smartphones will not be allowed inside the facility on the day, although HP is planning a “photo opportunity” with Conroy, and is planning to supply its own photography of the facility.

In February 2011 when the facility was first unveiled, Caspari said HP’s next generation datacentre significantly expanded HP’s and Australia’s infrastructure capabilities, enabling local enterprise to transform their system into a more flexible and modernised “everything as a service” environment, reducing both costs and risks, while driving predictability.

The HP chef added the rollout of the NBN would enable an increasing number of organisations to adopt new IT delivery models. He said cloud computing services would take off in the near future and that delivery models would be about connecting users to the services they want.

Paul Brandling, Vice President and Managing Director of HP South Pacific, said the investment was driven by recent shifts in the use of technologies — including in telecommunications — which created an environment of media and IT convergence to which Australian organisations and institutions needed to adapt. “Investment in IT infrastructures — such as this and such as the NBN — are as critical to the economy as traditional investments in things like water, power and transport,” Brandling said at the time.

Conroy joined a HP press conference at the time to congratulate the company on the new datacentre. He said HP was making a significant investment that would further drive Australia’s participation in the digital economy, as in the next four years — Senator Conroy said — more data would be produced than in the whole of history.

opinion/analysis
Given the massive cutbacks HP is undertaking globally, its Australian management team is lucky to have gotten this project across the line when it did. It represents a huge investment in Australian infrastructure, and I anticipate HP will be successful in attracting many large customers inside its walls. I applaud the company’s investment in Australian infrastructure and wish it well at the launch, and as things get ‘bedded down’ in the datacentre’s operations over the next little while. Congratulations, HP! Some more photos of the huge site prior to construction starting:

Image credit: HP

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analysis This morning the Sydney Morning Herald published a series of articles claiming that Australia’s technology startup ecosystem is unable to support local entrepreneurs, causing them to increasingly head to the US in search of the financial backing they are unable to attract in Australia. The only problem is, the evidence doesn’t support this assertion.

If there is one thing which Australians love, it is to have a big fat whinge about why they can’t access the same goods and services locally that residents of larger first-world countries such as the United States can. In the nation’s technology sector, this kind of complaint is an ongoing theme with respect to a number of disparate issues. From the inflated cost of gadgets, software and video games locally to the availability of high-speed broadband, from the delayed launches to geo-IP-blocked content, Australians simply love to criticise the powers for be for not giving them everything the Americans have, and we love to do it loudly and proudly.

Nothing illustrates this trend more than a series of articles published by the Sydney Morning Herald this morning on the topic of technology entrepreneurship in Australia. Headlined by the case of high-profile and glamorous young entrepreneur Nikki Durkin, who recently joined the Y Combinator technology startup incubator program in the US after her Australia-based startup 99dresses shut down following financial issues and a need to re-work its business model, the SMH’s articles paint a story of doom and gloom.

Durkin’s dream, she says, is to “build a billion-dollar” company. But Australia “won’t let her”, so she’s heading to the US.

The rest of the articles are similarly inflammatory. US venture capitalists chip in with comments that local startup BigCommerce could become the next Microsoft, but “Australia ignores its innovators”. According to local entrepreneur Kate Kendall, the local market is “conservative”. Australian investors “scoff” at local entrepreneurs. There’s a “constant flow” of talent overseas and so on. Virtually every big name of note in Australia’s technology startup scene has their say, and the vitriol is incredible. Criticism is heaped upon many parties, but principally it’s venture capitalists — those evil, evil, greedy financiers holding the nation back — and the Government who are the target of most of the scorn.

Now, if this series of articles had been published seven to eight years ago, I would have broadly agreed with them. At that stage, in the wake of the dot com bust, very few Australian technology startups existed, and those that did found it very hard indeed to obtain early stage angel investments or venture capital. With the exception of a handful of companies like Wotif.com and Seek, Australian dot coms of any stripe found it hard to get off the ground in that threadbare period, and I pity the lot of those that tried.

But over the past few years, Australia’s technology startup scene has completely changed, and the truth is that it now offers Australian entrepreneurs a very supportive environment and plenty of funding opportunities.

Now, I don’t want to fall into the same trap that the Sydney Morning Herald has with its series of articles this week. In my analysis of this situation, I don’t want to simply have a “he said, she said” style of debate. I have stated again and again that the debate in Australia’s technology sector should be based on evidence. So what evidence do I have that Australia’s startup scene is thriving right now? Firstly, let’s look at the history of investment in Australian technology startups over just the past six months:

• April 2012: Just a few months after launching, Web 2.0 collaborative consumption firm Airtasker gets $1.5 million in local funding, after raising an initial $140,000 in seed capital
• April 2012: After launching in 2009, field management cloud company Connect2Field gets $600k in funding from local ASX-listed company Reckon
• February 2012: Visual data startup Thereitis.com wins $2 million worth of angel investment, after winning an initial grant from Commercialisation Australia of $250,000
• February 2012: Car-pooling startup Jayride gets $400,000 funding
• January 2012: Pollenizer portfolio company Pygg gets $600,000 in funding
• January 2012: Pollenizer portfolio company Friendorse gets an investment from local publisher APN News & Media
• January 2012: Bug-tracking software company BugHerd gets $500,000 in funding from Melbourne venture capital firm Starfish Ventures
• December 2011: Local video game studio Halfbrick open Sydney studios with funding from the NSW Government to develop the next version of their Fruit Ninja game, as part of a $3 million fund the state is using to invest in interactive media
• November 2011: Local investment firm the Future Capital Development Fund invests in two local companies, The AgendaDaily.com and BlueChilli technology, bringing the total number of local companies it has invested in over the past 2-3 years to 14
• November 2011: Local cloud computing startup OrionVM gets several hundred thousands dollars of investment from investors including local PIPE Networks co-founder Stephen Baxter
• November 2011: Australian startup consultancy and incubator Pollenizer raises $1.1 million for local startup funding
• November 2011: Local crowdsourcing startup DesignCrowd gets $3 million in investment from Melbourne VC firm Starfish

It’s a huge list, isn’t it? And these are literally just the startup investments in Australian technology startups which have happened in the past six months since November 2011. And they’re also only the investments which are believed to have come primarily from Australian sources. In addition, these are only the investments which have been reported by Delimiter.

Do you get what I’m saying here? I’m saying that just in the past six months, Delimiter has reported on a dozen major investments by Australian investors in Australian technology startup companies. That’s not counting major investments by international investors in Australian startups remaining in Australia (there have also been plenty of those), or major acquisitions of Australian startups by global companies. I have also not listed here many of the government-backed investments by groups such as Commercialisation Australia.

I also want to highlight a secondary list of news stories which highlight the strength of the Australian technology startup community at a lower level — pre-angel investment. These are startups which need basic help in starting their operations, but aren’t yet really ready to take funding. A number of technology startup incubators have arisen in Australia over the past several years to help get local startups off the ground. These are basically programs like the Y Combinator program which 99dresses’ Nikki Durkin has gone through.

• March 2012: Brisbane-based incubator River City Labs is officially opened and invites applications for its program this year
• February 2012: Melbourne incubator AngelCube invites invitations for its funding program this year
• February 2012: Sydney incubator Startmate invites applications for its funding program this year (in the same article)
• December 2011: Sydney incubator Pollenizer invites applications for its program for this year
• December 2011: The University of NSW creates a new IT startup incubator
• March 2011: Local IT startup incubator PushStart opens its doors and invites applications

Do you see where I am going here? There are at least half a dozen sizable technology startup incubators in Australia which are constantly touching base with Australian startups at the moment and acting as nexus points through which startups can connect with business and technical resources, attract funding, meet other entrepreneurs and seek staff. Most of these incubators also receive direct technical support from technology vendors like Microsoft, Ninefold, Amazon and so on to a allow them to get off the ground quickly.

Now, I don’t want to harp on this topic too much. And it is definitely also true that, as the Sydney Morning Herald’s articles mention, some Australian IT startup entrepreneurs such as Durkin, especially those whose initial business models have failed (this often leads to disillusionment) have found it frustrating and limiting dealing with the Australian technology startup ecosystem.

It is also true — in fact, it should be blindingly obvious — that Australia will never be able to offer IT startups the same level of support or infrastructure that exists in the US. We are a much, much smaller country, and we don’t have the same global technology and financial institutions headquartered here. It’s always going to be easier if you take your company to the US, to get a level of scale and open doors for larger and easier deals than you can get Down Under. This is a fact of life, and we need to accept that comparing Australia with the US is not a fair fight. We need to run our own race, and recognise our own significant milestones for what they are.

But hard work and breaking through barriers is part of every entrepreneur’s journey (if you don’t believe me, ask me over a beer sometime what I’ve gone through with Delimiter itself). What I wanted to prove with this article is that many Australian IT startup entrepreneurs have not found it frustrating or limiting dealing with our local ecosystem. For those that are positive and enthusiastic (qualities every entrepreneur needs), the technical backing, staffing resources and financial funding is definitely available in Australia. If dozens of companies can attract millions of dollars in any given six month period in Australia, this ecosystem is very far from being a wasteland.

Indeed, from where I sit, I can see a thousand flowers blooming.

No related posts.

news The New South Wales State Government this week announced the Leighton subsidiary Metronode as the winner of its long-running and wide-ranging datacentre overhaul project, with the company to construct two new substantial facilities which will allow the state to consolidate its IT operations drastically.

A number of the state’s departments and agencies are currently believed to be hosting datacentre infrastructure in dilapidated facilities across Sydney and the rest of the state, often in back-office environments which are not consistent with modern datacentre practice. The state’s datacentre consolidation strategy — which has been under way for a number of years — will see it shift that IT infrastructure into two new, purpose-build datacentre facilities to be built by Metronode in Silverwater in Sydney and Unanderra (on the South Coast).

“The two centres will provide up to 9MW each of IT load allowing the NSW Government to consolidate Government datacentres and reduce unnecessary technologies used in its daily operations, with the decommissioning of existing data capacity to begin once the new facilities are complete,” said NSW Minister for Finance & Services Greg Pearce in a statement issued yesterday. “Much of the Government’s existing capacity is out-dated, inefficient and does not deliver a viable, cost-effective service for government agencies. These will be gradually closed and data migrated to the new centres as they open, enabling significant cost savings.”

The state estimates that 250 new jobs will be created across the construction sites on a short-term basis, as well as additional network and ICT-related jobs once the facilities are operational.
New South Wales will maintain exclusive rights to the ICT equipment and exclusive access to the data stored within the facilities, but Metronode will also be able to use the facilities to provide data storage capacity for other, non-NSW Government clients.

The news comes as the NSW Government a little over a week ago revealed a new wide-ranging ICT strategy, which it said was slated to make it “the leader in ICT” when it came to public sector service delivery and the development of the state’s technology sector as a whole.

“We are committed to making it easier for NSW citizens to interact with Government, to harness the opportunities provided by ICT to improve Government operations and to develop the ICT industry in NSW,” said Pearce. “The NSW Liberals & Nationals are committed to improving service delivery for residents in NSW, who expect fast, efficient and timely services. The NSW Government is committed to driving growth and investment in Western Sydney and the Illawarra and this news reaffirms our commitment to providing the necessary infrastructure and growth in ICT.”

opinion/analysis
To be honest, the NSW Government’s datacentre strategy confuses me a little.

While I understand that the state needs a stack of datacentre infrastructure, does it really need to build new physical datacentres to gain access to this level of infrastructure? When we’ve got HP rolling out a new colossal facility in Western Sydney (check out the photos; I think you’ll agree it’s going to be large), Bevan Slattery’s NextDC rolling out a new facility every minute or so (I’m exaggerating, but you get the point), and others such as Fujitsu constantly investing in this area, does it really make sense for the Government to build its own massive facilities like this? I’m unsure at the moment. It seems like there’s the potential for overbuild … especially when you consider the facilities which companies like Global Switch and Equinix already operate locally.

What I do know is that it’s overwhelmingly positive that the NSW Government is going to shift its IT infrastructure out of back-office mini-computer rooms and into dedicated, modern, datacentre facilities. To be honest, this kind of activity is more or less basic IT hygiene in 2012 (as is the state’s plan to virtualise everything it can), but often that’s too much to expect from state governments in Australia. I expect a number of departmental CIOs in other states are currently looking at NSW’s political mandate for positive IT change with envy.

Related posts:

1. NEXTDC finalises Sydney datacentre site
2. HP completes giant new NSW datacentre
3. HP GETS BUILDING: New datacentre revealed

news Several major New South Wales Government agencies have unveiled major and wide-ranging plans to imminently purchase Software as a Service-style IT solutions, in moves which have the potential to re-cast the dynamics of the perceived relationship between Australia’s public sector and the burgeoning class of SaaS-delivered IT packages.

Australia’s public sector has in the past notoriously been averse to purchasing IT solutions which are delivered as a service.

While pure play SaaS vendors such as Salesforce.com, Google, Netsuite and others have experienced a solid level of success in various aspects of Australia’s private sector with their solutions, which are typically delivered through a web browser rather than hosted on a customers’ premises, the fact that most such services have been hosted offshore has prevented such companies from making strong in-roads into Australian governments at any level — federal, state and local. Similarly, companies such as Microsoft, Oracle and SAP which offer both SaaS and on-premises models have continued to see strong public sector demand for their traditional solutions, with only slow uptake of their SaaS options.

However, if the NSW Government has its way, much of this may be about to change. Over the past few months, several major NSW Government agencies have kicked off large IT purchasing initaitives which specifically highlight a preference for SaaS solutions, as opposed to on-premises deployments.

The most recent of these tendering initiatives was kicked off in late April by the NSW Department of Trade and Investment, one of the new super-agencies, or ‘department clusters’ created when the new Coalition NSW Government won power in March 2011. In tender documents released in April, the department revealed that the creation of this new umbrella department brought together a range of “disparate systems, data and shared services provision”. “As a result,” it added, “NSW Trade and Investment is carrying significant operational risk such as effective controls, audit compliance, lack of informed decision-making capability and inadequate reporting.”

Because of this, the department wrote, it wanted to source a new overarching enterprise resource planning system, with a target date for implementation of December 2012. “The purpose of the project is to provide a prerequisite minimum capability and technology platform to integrate people, processes and technology into the new whole of cluster mode of operation,” it said. The rollout will affect some 7,000 total staff.

In the past, such initiatives would generally have been rolled out as on-premises solutions, with companies like Oracle and SAP providing the technology and integrators like IBM, Fujitsu, HP or others doing the leg work. However, in this case the department noted it specifically wanted a SaaS platform. “A SaaS ERP solution has been identified as the preferred model to transition NSW Trade and Investment to a single integrated platform,” the tender documents state.

Across town, another NSW super-agency, Transport for NSW (which was formed from the merger of the NSW RTA, maritime, transport construction authority and Country Rail groups) is also currently talking to the industry about SaaS packages.

The tender documents have now gone offline, but an article by ZDNet.com.au details the fact that in March, the agency went to the market with a proposal to abandon in-house infrastructure and migrate 35,000 email accounts, 25,000 desktop environments and some 2,000 BlackBerry devices to new systems, all labelled “as a service”. ZDNet quoted Transport NSW’s tender documents as follows:

“The group CIO is actively promoting a strategy of ‘as a service’, recognising the potential for leveraging the economies of scale and expertise of the private sector in the delivery of core technology platforms and capabilities to government.”

According to the NSW Government’s tendering site, a large group of IT suppliers have responded to the request. The companies who are interested are: AC3, Capgemini, Citrix, CPW Group, CSC, Data#3, Datacom, Dell, Dimension Data, Ethan Group, Fujitsu, HP, Housley Consulting, IBM, Microsoft, Mnet, NEC, Optus, PolicyPoint, SAP, Satyam, Sybase, Telstra, UXC and VMware.

The ZDNet article doesn’t mention whether on- or off-shore hosting is a key issue for Transport for NSW, but there is no doubt the organisation will consider the location of data hosting during its procurement process. However, if the organisation takes its lead from the NSW Department of Trade and Investment, location may not turn out to be such a headache.

In the tender documents associated with its SaaS ERP procurement effort, the NSW Department of Trade and Investment specifically explores the issue of data hosting. And there is a great deal of good news for vendors with offshore datacentres. The department notes that vendors will need to provide details of their arrangements for data hosting, including the “data storage location”. However, it also mentions that vendors should detail “options for data replication in Australia”.

This is a small, one-line clause in the department’s document, but in the wider debate about Australia’s public sector hosting data offshore, it’s an important clause. It appears to reveal that the NSW Department of Trade and Investment is working under an assumption that data will be stored offshore in an SaaS ERP scenario, with data being replicated in Australia for backup and other purposes.

This approach marks a sharp departure from the general approach taken by Australia’s public sector; which has been characterised in the past by a strong desire for data to be hosted onshore, within Australia’s legal jurisdiction. If the NSW SaaS projects are successfully rolled out over the next year, this may provide the stimulus for agencies in other jurisdictions to deploy similar SaaS projects.

The news comes as the NSW Government a little over a week ago revealed a new wide-ranging ICT strategy, which it said was slated to make it “the leader in ICT” when it came to public sector service delivery and the development of the state’s technology sector as a whole.

The strategy does mention that the state is planning to create dedicated ‘service catalogue’ of corporate IT services which departments and agencies will be able to purchase from in a standardised way, and it also mandates the implementation of virtualisation technology in all government agencies, and the development of a trusted Government private cloud. However, it does not explicitly mention the kind of software as a service solutions which Transport for NSW and the Department of Trade and Investment had already gone to tender for.

opinion/analysis
To say that I am surprised to see these kinds of SaaS-style initiatives and open-minded thinking about offshore hosting coming from within the normally slow-moving and traditionally-minded NSW Government is an understatement. The new Coalition State Government has clearly already had a major impact on how the state is running its IT operations, and this is something to be praised.

There is no doubt that the SaaS initiatives within NSW will be very closely watched by the CIOs and line of business decision-makers of other jurisdictions. The NSW departments concerned have set themselves some pretty sharp timelines for their projects, and in particular I don’t believe the SaaS ERP platform can be delivered in the timeframe which has been set for it. However, if the projects go well, they will be viewed as visionary examples of SaaS solutions being implemented in state government, and probably replicated to a certain extent elsewhere.

Are we beginning to see the cracking of the locked down control attitude which Australia’s public sector has had towards offshore hosting? Well, it’s a little early to call. But it certainly is fascinating to see things being shaken up in this manner. It will be even more fascinating to re-examine the situation 12 months down the track.

The other thing which I think is fascinating about these SaaS deployments do not appear to be about cost. And, although this will also be a benefit if they are successful, they do not appear to be about agility. What these deployments appear to be about is avoiding the disastrous problems which state governments in Queensland and Victoria appear to be suffering when it comes to IT projects. Right now, as I have written many times, Australian state governments do not appear to be capable of successfully managing IT projects, maintaining their IT infrastructure, securing their systems or managing vendors.

What NSW’s SaaS efforts appear to be based on is realising this fact; the departments concerned appear to be recognising that IT is not their core capability and that they want external specialist organisations to take care of the whole kit and caboodle for them. The tendering initiatives detailed in this article go beyond managed services or traditional outsourcing. They represent attempts by government departments to simply hand off whole chunks of their IT platforms to outside vendors.

Now, everyone has their problems with vendors, and these departments will need to establish very strong governance controls over their eventual partners in these areas to make sure they don’t screw everything up. Vendors will be vendors, after all. But overall, given the ridiculously incompetent way in which most Australian state governments appear to be managing their IT platforms at the moment, I can’t help but see what NSW is doing right now as overwhelmingly positive.

Related posts:

1. Oracle adds Telstra notch to SaaS belt
2. SAP’s SuccessFactors deploys Aussie datacentre
3. Amazon CTO hits Australia in cloud push

news Non-profit Australian organisations such as charities are adopting Microsoft’s Office 365 Software as a Service platform in large numbers, according to non-profit technology enablement group Infoxchange, which has recently helped 20 such organisations shift into Microsoft’s cloud.

In a statement co-released with Microsoft yesterday, Infoxchange said the shift to the cloud had enabled the not-for-profit (NFP) organisations to lower their IT costs, increase productivity and strengthen the communications they had with their partners, stakeholders and donors. The organisations have benefited from special charity pricing for Office 365, which Infoxchange has negotiated with Microsoft and its Australian partner Telstra.

David Spriggs, General Manager, Infoxchange said: “Many organisations in the public, private and charitable sectors have seen that cloud computing has opened new opportunities for them to better achieve their missions and accelerate their impact. We’ve seen NFPs dramatically improve their operations through cloud technology enabling them to do what they do best – positively impact people’s lives – but more effectively, efficiently and at less cost.”

Two such organisations to have shifted into the Microsoft cloud are Brainlink Services, a Victorian organisation which is devoted to helping residents affected by brain condictions, and Leisure Networks, another Victorian group devoted to working in partnership with the community sport and recreation sector to ensure access to recreation and physical activity for all residents.
“Office 365 has empowered our staff members to forget about technology and get on with their jobs,” said Vanessa Marrama, Communications Manager, BrainLink Services. “We don’t rely as much on our in-house IT support because the cloud has proven to be so reliable and user friendly.”

“Office 365 has enabled us to future proof our investment and provide a secure, easily accessible way to bring together our information and communication systems,” added Rob McHenry, Chief Executive Officer of Leisure Networks. “What is important to us is to have an easy to use system and central place for all the information we need when we are working from our main office, at home or somewhere around regional Victoria.”

Some of the key benefits which the NFP organisations are deriving from the shift to Office 365 included access to the platform from home or via mobile devices (with NFP staff often working away from their head office), reliability, manageability and cost aspects of Office 365 (most smaller NFPs do not have a dedicated IT team), the ability to access document management and collaboration tool Sharepoint, often for the first time, and access to data in emergency situations, such as during floods.

In addition, organisations are also benefiting from access to shared calendars and online meetings.

The news isn’t the first time Microsoft has been publicly known to be involved in Australia’s NFP/charity sector over the past year. In March, the company revealed it would give a $10 million grant to the Australian Red Cross to modernise its infrastructure. The group last upgraded its IT systems in 2002 and had been running on outdated infrastructure.

opinion/analysis
Of course, while the pair do have some altruistic motives, Microsoft and Telstra aren’t involved in this kind of initiative totally out of the goodness of their hearts. In Australia over the past several years, software as a service suites such as Office 365 have had their most success in deployments where organisations often need to provide IT infrastructure to people such as students who need to access such IT resources but may not need the kind of full-on desktop enterprise support which is so standard in large enterprises such as banks and government departments.

The non-profit sector is another example of this kind of deployment. These organisations typically need quite standardised IT infrastructure, they often have a lot of workers who commit part-time hours, work from home, change roles relatively frequently and so on. Because of this, and their lack of resources in general, productivity suites delivered online are going to be a very quick and easy solution for these groups to get access to decent IT infrastructure.

Along the way, Microsoft and Telstra get the chance to entrench a whole sector with their values and working habits; habits that often cross-over into the commercial or public sectors. This is the kind of deep seeding initiative which will ensure Microsoft’s dominance over Australian desktops for decades to come, and which will help drive acceptance of the SaaS model as a valid one in much larger organisations.

Related posts:

1. Telstra to cut Microsoft Office 365 prices
2. Telstra wants on-shore Office 365
3. Microsoft hikes Aussie Office 2010 prices

news The nation’s second-largest telco Optus today said it would appeal its Federal Court loss over its TV Now cloud-based personal video recording software to the High Court.

“Today we can confirm we will appeal the TV Now decision in the High Court,” the telco’s chief executive Paul O’Sullivan said in a statement this afternoon. “We believe the TV Now case is extremely important in deciding the future for innovation, consumer choice and competition.”

“Increasingly, developments like cloud computing will see Australians using applications held online and wanting to store online rather than just using fixed hardware based in the home. Australian consumers want legitimate access to content on any device regardless of the genre and we want to continue making the latest technologies available to Australians to meet this demand.

“This is a very important public policy issue that needs to be determined by the highest court in the land, to give clarity to both consumers and the industry. As innovations like TV Now are readily available in other parts of the world, Australia must remain globally competitive and embrace the rapid convergence of technologies as we head towards an NBN world.”

The Optus TV Now service allows customers to have free to air television programs recorded when broadcast, using Optus’ centralised systems, and then played back at the time of a customers’ choosing on their Optus mobile device or PC. This technique is known as “time-shifting”, and attracted the legal ire of the NRL and other groups such as the Australian Football League, which had granted Optus rival Telstra an exclusive licence to make their broadcasts available online.

Late in 2011, Justice Steven Rares of the Federal Court had found in Optus’ favour in the case which the telco had filed against the NRL (later joined by Telstra and the AFL), stating that Optus’ technology was similar to recording a TV show using a video recorder in a loungeroom. However, in a new judgement after an appeal, the full Federal Court found several weeks ago that Optus’ technology could not come under the auspices of the Copyright Act.

In its judgement, available online here, the Federal Court wrote that there were two issues at the heart of the case — who recorded the TV shows, and if Optus’ act in recording the device constituted an infringement of the copyright of the NRL, AFL or Telstra, could Optus invoke the “private and domestic use” defence under Section 111 of the Copyright Act, which allows limited recording of content for personal use.

The initial judgement had found that customers made the recording. “Ours is a different conclusion,” wrote the full Federal Court. “The maker was Optus or, in the alternative, it was Optus and the subscriber. It is unnecessary for present purposes to express a definitive view as between the two. Optus could be said to be the maker in that the service it offered to, and did, supply a subscriber was to make and to make available to that person a recording of the football match he or she selected.”

“Alternatively Optus and the subscriber could be said to be the maker for Copyright Act purposes as they acted in concert for the purpose of making a recording of the particular broadcast which the subscriber required to be made and of which he or she initiated the automated process by which copies were produced. In other words, they were jointly and severally responsible for the act of copying. That is our preferred view.”

Following on from this determination, the court found that Optus could not use the Section 111 defence under the Copyright Act.

The case has been viewed as a test of such services in Australia. However, the Federal Court warned against taking its implications too broadly. “We should emphasise that our concerns here have been limited to the particular service provider-subscriber relationship of Optus and its subscribers to the TV Now Service and to the nature and operation of the particular technology used to provide the service in question,” it wrote. “We accept that different relationships and differing technologies may well yield different conclusions to the “who makes the copy” question.”

Optus has reportedly suspended the TV Now app.

opinion/analysis
I think most people viewed this appeal as being fairly inevitable.

Image credit: Optus

Related posts:

1. NRL, AFL win appeal in Optus TV Now case
2. Google to launch High Court ad challenge
3. High Court agrees to hear iiTrial

news As you might have read, yesterday Victorian IT shared services agency CenITex told its staff that it was planning a round of 200 redundancies. Thanks to a source, we’ve gotten our hands on the internal document outlining the changes. You can read CenITex chief executive Michael Vanderheide’s message to staff on the cuts below.

We’re not surprised by the fact that these kinds of cuts are happening at CenITex. You can find some more background on the issues which the agency is suffering here. There is also some information here on what Vanderheide is referring to when he says “Efficient Technology Services”. In our opinion, this is just more evidence that Australia’s IT shared services paradigm is dead and should be eliminated, at least when it comes to state governments.

“Colleagues

Michael”

Related posts:

1. Data#3 flags job cuts: Read the internal email
2. CenITex failure kills govt email for “up to a week”
3. Vic Govt to sack CenITex board