Australia’s market for cloud computing services so far lacks a “dominant leader”, according to one local analyst – and the title could be anyone’s as the market starts to pick up pace.
Last week Telstra revealed it had inked a three-year partnership deal with IT services giant Accenture which will see the two companies work together to deliver cloud computing services to large Australian organisations. Optus, too, has recently joined the scene, launching a service it calls ‘Elevate’. And traditional IT services giants such as Fujitsu and CSC have also recently unveiled pushes into cloud computing down under.
However, according to Steve Hodgkinson, a research director at analyst firm Ovum, no one party has pulled out in front just yet. “The enterprise cloud market in Australia remains largely unexplored territory – a market awaiting a dominant leader,” he said last week in the wake of the launches.
Hodgkinson said one particular issue affecting the development of the local market was a strongly stated preference by large local organisations for their data to remain onshore – within Australia’s legal jurisdiction. Most large cloud computing multinationals such as Microsoft, Google, Salesforce.com and Amazon have so far refrained from building datacentres in Australia, with some claiming the economies of scale make such efforts impossible in the near term.
“This is compounded by the knowledge that the elastic properties of cloud require scale,” said Hodgkinson. “No chief information officer wants to be a big customer of a small cloud provider.”
Some cloud computing vendors have emphasised the self-service aspects of cloud computing, which have the potential to allow large organisations to manage their use of the technology themselves.
However, Hodgkinson noted that Telstra and Accenture would focus their efforts on leveraging their existing relationships with big business and government clients, rather than simply providing a ‘self-service cloud portal’ through which their cloud services would ‘sell themselves’.
“This is a sensible approach, given the cautious nature of the market,” said Hodgkinson. “Selling cloud computing is all about persuading enterprise and government CIOs and IT managers that they can trust this new model of sourcing ICT services. The sales process requires considerable ‘handholding’ to demonstrate the value, to plan and manage the transition of services, and to assist CIOs to manage the new cloud-sourcing model.”
According to the analyst, Telstra’s main challenge will be its ability to adapt its telco-centric marketing and sales operations to selling and service “this more complex IT-centric relationship sale”.
“This will take time to develop,” said Hodgkinson – although he noted that partnering with Accenture would fast-track Telstra’s ability to sell and implement the new cloud computing deals it was chasing.
Image credit: Katarzyna Lipińska, royalty free
Good article and I agree with Hodgkinson. Also, his point “No chief information officer wants to be a big customer of a small cloud provider” goes to something deeper – namely that is is no such thing as “a small cloud provider”. Where the line is drawn is a matter scale. In my own opinion unless you are an Amazon or Microsoft or Google then you don’t have the scale, what you have, in the case you are smaller, is just lipstick on a pig – as Amazon’s CTO says. The real cloud provides a once in a generational platform for agile businesses to turn the tables on their larger enterprise competitors who are bogged down in “why not”, whereas the agile companies are asking “how” and “when”?
Possibly, Walter, but that would seem to preclude the definition of private cloud — more info here:
http://delimiter.com.au/2010/10/12/the-australian-private-cloud-how-do-you-define-it/
There are various opinions on it, but to my mind, there is such a thing as a smaller cloud, or a private cloud, that has most of the same attributes that an Amazon or Microsoft cloud does. The reason this definition is so important in Australia, as well, is the focus on hosting data onshore in the local legal jurisdiction.
Will these sorts of smaller clouds eventually give way before bigger, truly multi-tenanted environments? Of course they will. But in the meantime there is still quite a ways to go in terms of transition.
Exactly, so called “private clouds” are just lipstick on a pig. Tammy Bruce said of Jesse James last married to Sandra Bullock “you can take the boy out of the ghetto but not the ghetto out of the boy.” In a kind of similar vein you can take the computing out of cloud computing but not the cloud.
You can stick as many new toys in the shed as the salespeople can sell you and you still just have business as usual. Meaning that in the continuous improvement of service delivery there are cloud-related technologies which will improve efficiency. That’s just owning more “stuff” and business as usual.
Cloud isn’t the biggest shift in IT and business for the last 20 years because it enables “business as usual”. It’s what it is because is it not business as usual. Now, if you are in an industry where business as usual is good enough, of which we can all think of examples in Australia, then you can afford to keep painting your shed and sure it won’t make any difference. Businesses in other sectors, the competitive ones, will have to start thinking harder….
Definitions are irrelevant. All that needs to be said is that business CEOs who get FUDed into investing in private cloud are heading in a strategic direction which may very well hamper their future ability to compete effectively. Agree it is not an overnight shift, and will take 4 to 5 years, but what’s the time horizon of most strategic plans – about that period. So not is the time to think seriously and not go back to the future. My opinion!
Chuckle … you are right with the ‘lipstick on a pig’ thing Walter. I often use the phrase, “Can you make a silk purse out of a sow’s ear?” with regard to the merits of trying to renovate a traditional IT department into a shiny new cloud. Sure, some organizations can just about do it if they have a lot of cash and very good people, but this is beyond the ken of the average corporate on both counts. Too many CIOs are being sold the magic snake oil by the IT vendors in the hope that it will stave of the inevitable demise of their sub-scale, under-resourced, under-skilled IT operations.
The point is, of course, why would you bother building when you can buy … and then focus the internal resources on more business-value-added activities than running the corporate ICT utility? CFOs are waking up to this new reality and starting to ask the right questions, but what we need in Australia is more local enterprise-grade cloud providers of the scale that only the biggest ICT specialists can provide. Cloudy is as cloudy does … we need more action and less talk about cloud.
Steve, I’m sure that it will be a golden 5 years for “private cloud” salespeople, there’s enough FUD for that especially in collaboration with the IT iron-huggers. I wrote a piece “Next Generation Data Center – 4 years forward 3 years behind” about that http://www.walteradamson.com/2010/09/next-generation-data-center-4-years.html
Even the issue of local “cloud” providers is a bit of FUD for the vast majority of businesses. If you have genuine regulatory or compliance requirements then sure. But how many companies really have those beyond FUD? Very few, let’s be generous and say 5% of enterprises? But it’s a good FUD selling point and Fujitsu and others have set up here for that purpose and should do well.
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