The Australian private cloud: Who’s using it, and how?


feature It’s a breezy Monday afternoon in Sydney and Komatsu Australia general manager of IT Ian Harvison is talking calmly and at length about his company’s plans for its datacentre.

“The goal is that it will be shut down in two weeks,” he says.

A few years ago, such a statement would be have been laughed out of town. Shut down a datacentre? For a large industrial equipment manufacturer like Komatsu? How would the company track its assets on their journey around Australia? Provide basic IT services to its employees? Keep the telephone lines running?

A company’s datacentre, in our modern society, is its heart, pumping blood around its widely dispersed body; its nervous system, sending signals to every employee around the nation; its muscles, pushing information to suppliers and customers. And the IT department is king of that datacentre. Several years ago, Harvison would have been considered a crazy man.

But in technology — as in every other sphere of human endeavour — often it’s the crazy ideas that are actually the most logical, in another time or place. In 2010, Harvison’s approach to Komatsu’s IT assets is in fact the most rational course of action for a company which doesn’t specialise in IT services — it specialises in building construction and mining equipment.

And it makes the executive one of a new generation of Australian CIOs who are leading the drive towards sustainable forms of cloud computing in the enterprise — particularly private cloud.

Who’s doing it
When we set out several months ago to find large Australian organisations who had started to use private cloud computing services or who had started to examine business cases to do so, we didn’t have to go far.

“There is a healthy trend towards analysing the benefits of private clouds in Australia,” says John Wadeson, long-time Centrelink IT chief and now deputy secretary (ICT infrastructure) of the Department of Human Services. “A number of large organisations are either piloting or implementing private cloud solution in Australia.”

Dimension Data’s Virtual Data Centre general manager David Hanrahan points to the strong onset of private cloud in verticals where there is a strong transactional processing element — such as financial services and the banks.

Both Westpac and the Commonwealth Bank of Australia have talked publicly about their rollouts, and while not much is known about National Australia Bank’s plans, the company last month joined a global alliance of customers and vendors created by Intel to discuss cloud computing.

The rest of the private sector is also humming with cloud deployments. Qantas chief IT architect Chris Seller says the airline is in the process of virtualising its datacentre operations (run by IBM), and by 2015, it expects to be “extensively utilising cloud-based services” — with key services being targeted for cloud delivery including collaboration and messaging, IT security, application development — and “many” other back-office and line of business applications.

And Telstra has picked up several early wins, with Visy picking the telco for a wide-ranging cloud computing deal in July 2009. Having the cardboard manufacturer on board would later on in that year be one of the main driving forces between Kohmatsu picking Telstra for its own cloud migration.

“In order to remain competitive and achieve our commercial objectives in a tough economic environment, we need to change the way in which our IT resources are utilised and look at more innovative offerings around a user-pay model with our vendors, so we can share the risk and reward and allow us to grow together,” said Visy CIO Ken Major at the time.

“We now pay a monthly fee based on what we use for not only our telecommunications needs, but also our computing and storage needs so we no longer have the concern of investing in server and storage infrastructure for the future, as this is now available from Telstra as a service on demand. The capital that was earmarked for IT upgrades will now be better deployed into revenue generating assets across the business.”

Hanrahan says there’s also “quite a bit of work” emerging in education — for example, in the universities, which are often consolidating the IT resources of different faculties and departments together into shared services centres together. Curtin University of Technology outed itself in February as an early customer of Optus’ Elevate offering, which is built upon the Vblock stack promulgated by the VMware, Cisco and EMC (VCE) alliance.

“Researchers like to have the flexibility to manage their IT requirements based on a switch on, switch off basis,” said Curtin chief information officer Peter Nikoletatos when the service launched in September. “We see a real opportunity to provision bespoke environments for researchers so they can access computing on demand. This model could also be potentially extended to students as we progress along the cloud journey.”

Government is also a logical one — agencies such as the Australian Taxation Office are often compared to the big banks in terms of their heavy reliance on technology. State and Federal Governments have been cautious in talking about cloud publicly, but there is no doubt there is action behind the scenes — particularly as the move towards shared services gains pace.

“We are actively deploying and building cloud infrastructure to meet our specific needs,” says John Taylor, leader of the Computation and Simulation Sciences division at the Commonwealth Scientific and Research Organisation (CSIRO).

Taylor believes private cloud will pay a particularly important role in Government. “Private clouds are likely to remain essential for government going forward due to the need for security,” he says — although as security issues are resolved, the executive says public clouds may become more attractive.

According to Joseph Sweeney, an advisor with local analyst firm Intelligent Business Research Services, the Australian organisations that are currently looking at private cloud services may vary from medium-sized companies all the way up to the giants such as the major banks. But they have one thing in common.

“It’s anyone that has a dedicated enterprise architecture role,” he says.

When an organisation is large enough to employ someone whose job it is to purely look at the internal technological roadmap going forward, that’s when certain industry-wide lessons start to creep in. Things like standards and best practices for management of architecture. Increasing use of virtualisation, and the ongoing abstraction of various hardware and software chunks.

These are all things which lead end users down the private cloud computing path — as their datacentres become increasingly virtualised, the same picture forms in each individual organisation.

Sweeney’s colleague James Turner puts it another way. For the analyst, private cloud is really just a way of labelling an organisation’s internal maturity in terms of how they’re providing services. “When it comes to private cloud, from my perspective, it means the IT department has hit a capability maturity point where it can deliver IT as a service,” he says.

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How are organisations using private cloud?
When you talk to chief information officers about private cloud services and what they’re using them for, the conversation quickly turns to several key areas: Testing and development, and messaging and collaboration.

“There’s a big application in testing, a big application in development, a lesser application in production,” said Westpac group executive of technology Bob McKinnon recently, as the bank detailed its private cloud implementation.

Komatsu’s Harvison concurs on the test & dev front. He points out that under a traditional infrastructure sourcing model, his company would need to acquire servers and storage to build environments for each project. Then as a project ramped down, utilisation of the assets would sink.

“We’d still find a utilisation model, but utilisation would drop,” he says. Under a private cloud model — or, as Harvison terms his company’s contract, infrastructure as a service — the servers and storage can simply be provisioned up and down as required and billed as operational expenditure. The resources don’t sit around on an organisation’s balance sheet if they’re not being used.

Westpac has already shifted much of its testing environments into the cloud, with chief technology officer Sarv Girn pointing out that it couldn’t afford to build a complete new traditional processing environment whenever a new technology project needed to be tested.

Another area which Australian organisations are quickly moving into the cloud is their email and collaboration products — generally software such as Microsoft’s Exchange and SharePoint suites. It’s unclear whether the shift of such products into hosted environments purely constitutes what is called ‘private cloud’ (or whether they could better be described as software as a service), but there is no doubt that some of the service providers offering such outsourced environments have platforms which share most of the attributes of private cloud.

Financial services giant AMP, for example, in July revealed it would dump its Lotus Notes/Domino installation and shift to a hosted Exchange platform with CSC. Coca-Cola Amatil is undergoing a similar move to Microsoft’s Business Productivity Online Suite, and online real estate giant REA Group has migrated its in-house staff email system to Telstra’s T-Suite platform.

However, test & dev and messaging and collaboration are generally considered ‘edge’ or non-critical services for many applications. Far more rare are the organisations which have shifted their entire production IT environments in the cloud.

When this shift comes, it tends to arrive as organisations approach the 100 percent mark in terms of virtualising their server environments.

The big shift for Kohmatsu was migrating its SAP installation off physical servers and into a fully virtualised environment with Telstra. Harvison says before the Telstra move took place, his team had virtualised “everything but SAP” internally previously.

Part of the impetus to shift, he explains, is that the actual physical servers which were running the company’s SAP platform were coming to the end of their useful life. “We actually had to make a decision about going out and buying new equipment to replenish the SAP environment, or look at something different,” he says.

It was a similar case when business support specialist Corporate Express recently took the choice to deploy Cisco’s Unified Computing System combined server and network infrastructure to create its own private cloud. The company, according to infrastructure and operations centre manager Andrew Grech, was already heading down the path towards 100 percent virtualisation — and is on track to hit that boundary before the end of this year.

When organisations reach this 100 percent mark — which IBRS would no doubt see as reflecting a relative maturity of their capability — it makes many things easier in their IT environment. Disaster recovery, backup and provisioning all become a matter of software support and changes — with the hardware mostly abstracted out of the picture.

In Kohmatsu’s case, its contract with Telstra stipulates that the telco will manage its entire environment up to and including the operating system layer in its virtualised servers — including O/S security patching and so on. Harvison’s team manages everything on top of that — the application stack.

The degree to which Harvison’s thinking has changed as his company has shifted its infrastructure out of its own datacentre is evident by the changed way he thinks about the physical servers that are actually processing Kohmatsu’s data.

“From our perspective, we don’t care what the hardware is at all,” he says — whether the servers are made by Sun, HP, IBM or whoever. “We didn’t actually talk at all with regards to the server platform,” he says of his discussions with Telstra. “At the end of the day, their relationship needs to be more with the cloud partners as opposed to the end customer.”

Harvison says although Komatsu did discuss Telstra’s virtualisation and storage platforms with the telco, in general it it’s not interested in the underlying technology beneath the services its buying — because it has “quite robust service level agreements” with the big T. “As long as Telstra delivers the SLAs … who they partner with and what they’re running on, is a Telstra-driven initiative,” he says.

Making the decision
One big question that end users will need to think about is which provider they will go with when they eventually migrate their datacentre into the cloud. Komatsu’s Harvison says that decision was the most critical thing about his company’s migration process.

Komatsu talked to three suppliers when it was making its cloud decision — HP, Telstra and Fujitsu. The company had experience working with all three in the past. Ultimately, HP declined to put in a bid for the work, and Komatsu ended up picking Telstra over Fujitsu because at that stage, Telstra’s cloud was up and running with a large existing customer — Visy.

“Instead of a proof of concept model, they had runs on the board, and they had investment in place,” says Harvison. In addition, Telstra had a different pricing model than Fujitsu was proposing.

Today, Harvison says the market is different — Fujitsu has recently formally launched its own cloud infrastructure in Australia, and other players are rapidly entering the market. But the executive says there still “aren’t that many players” in the market that have “proven solutions”.

Apart from choosing a cloud partner, Harvison says the other important thing is to make sure a supplier will stay current with the ongoing development of technology — despite the fact that you’re paying them the same amount as things progress. Komatsu has regular “technology refresh windows” where it meets with Telstra and discusses the new technology entering the market. “The last thing you want is to get stuck on old technology,” he says.

And the converse applies as well — Komatsu needs to know about any changes that are made to its underlying platform (even upgrades), so as to be able to ensure that its business applications are still supported and certified. “That’s why partnering is key — and making sure you are constantly reviewing,” he says.

Ultimately, the way that Australian CIOs are talking about private cloud in 2010 in Australia is the same way they’ve talked about any other product or service for years. It’s all about making sure the technology is aligned with the business and that good value is being gained.

The response of the CSIRO’s Taylor to the question of what he would recommend to CIOs looking at private cloud speaks volumes to this basic idea. “Establish the business case to demonstrate that their will be real benefits to the organisation,” he replies.

Just like anything else.

Image credit: BasicGov, Creative Commons