The Australian private cloud: What is its future?


feature When you ask people in Australia’s technology sector what they most like about their jobs (and we do this every week in our Friday Five series), you’ll find that they normally give the same answer: Change.

Australian technologists love the pace of change in their industry. They love seeing the development and maturity of new technologies, and the way that they change people’s lives for the better. They love it every time Apple releases a new iPhone, or Google launches a new online service, or when they discover a new open source application which solves a tricky problem.

Over the past six weeks, in our series on private cloud computing services in the Australian market, we’ve primarily looked at and analysed the status quo — from what the term itself means to who sells such services and who’s using them, and how.

But the fact is that it’s not enough to look at what is currently happening. If you work in technology you have to constantly think about what comes next — or else you’ll make a bad architectural decision and get stuck with legacy technology. So in our last feature article on the Australian private cloud, we’re taking a peek into the future. Over the past few months, we asked local players to cast their eye into their crystal ball and predict what would happen next in cloud computing.

Most, as it turned out, agreed upon what the future has in store.

When you talk to Australian technologists about what the likely evolution of the Australian private cloud might be, they will usually tell you that the term refers to a journey and not a specific product or service.

“We see cloud computing as an evolutionary journey to a more dynamic and flexible IT infrastructure rather than a specific product or end state,” says an Australian spokesperson from Linux and open source software vendor Red Hat, echoing comments a month ago by local VMware chief Paul Harapin and many others.

And the first step on that path, according to many, is for Australian organisations to virtualise as much of their applications and platforms as possible, with the eventual aim of hitting the 100 percent virtualisation mark.

That mark has started to creep into conversations with early Australian adopters of the private cloud. Komatsu general manager of IT Ian Harvison mentioned it when discussing his company’s ongoing project to shut down its datacentre and shift all of its applications into Telstra’s cloud, and so did Corporate Express’ IT management when they revealed several weeks ago that they had bought Cisco’s Unified Computing System, which has been deployed in several organisations around Australia for private cloud rollouts.

“Many organisations … are starting down the path to private clouds by virtualising more and more of their servers,” says the Red Hat spokesperson.

Australia is currently one of the most highly virtualised countries on Earth. But cases where large organisations have achieved 100 percent virtualisation of their datacentre are still rare. In the short to medium term, many organisations will remained focused on abstraction through virtualisation as an important goal on their cloud journey.

And virtualisation is really only one part of the bigger picture of what many are coming to call ‘datacentre automation’.

“As customers gain experience and confidence by automating their virtual environments they will move their focus into the other 80 percent of their infrastructure where the real business benefits exist and start to automate the infrastructure that supports the applications that cannot be virtualised,” says Paul Allen, the head of Unisys’ Asia-Pacific datacentre transformation division

“The significant business benefits are driving this transformation at a rapid rate. A key to success for vendors as the market develops will be deep understanding of application and data as the complexity resides in the applications and data types, not the underlying infrastructure. Once customers have automated their own data centre automation (private cloud) they will be able to take greater advantage of public cloud and be able to move to a true hybrid cloud type model.”

The shift to public
Another major trend which most pundits are predicting is a long-term shift from private cloud services to public cloud.

“We believe that in the short term there will be high growth in private cloud but over time, private cloud will be superseded by public cloud services in the mid-long term as security and data protection services mature,” says Melbourne IT chief technology officer Glenn Gore.

One of the reasons that private cloud is emerging as a strong force in Australia specifically at the moment is due to the legal structures used in technological hubs such as the United States.

When Komatsu shifted its servers into Telstra’s cloud, the company built a stipulation into its contract that its data must stay in Australia. “When it’s in Australia, we’re cognizant of the legislation and we’re kept up to date,” says Komatsu’s Harvison. But in other jurisdictions, it’s not so easy — especially in the US, where the country’s Patriot Act gives the government certain rights over data which many Australian organisations are uncomfortable with.

Gore — and others — believe that this issue will eventually be resolved through the sheer scale that global public clouds will eventually accomplish.

“The future path of cloud services will mean Australian providers will face competition from massively large cloud environments in the US, Europe, the Middle East and Africa (EMEA) and the Asia-Pacific,” he says. “As the standard building blocks for cloud architecture standardises, they will begin to look the same globally. As this happens, Gore says, overseas cloud providers will be able to provide services at a cheaper price — but with similar levels of service.

“While there will be privacy and data protection concerns, the cost differentiation will likely become so great that the savings made on their cloud investments will allow customers to spend on data protection initiatives (encryption etc) to offset those privacy and data concerns,” he says.

Adrian De Luca, director of pre-sales & solutions at Hitachi Data Systems, agrees. “Looking further out to 3–5 years, public cloud offerings will mature and provide the type of service levels, guarantees and data sovereignty environments to satisfy enterprise organisations,” he says.

When you couple IT environments that are 100 percent virtualised with powerful security tools and cheap offshore cloud computing centres, it’s not hard to see why the private cloud will likely act as a lead-in for what many people believe is a more pure form of cloud computing. And it’s even possible that regulatory environments internationally will become more standardised in future specifically to support the development of such services.

Please take a moment to review the cloud computing services offered by our sponsor Fujitsu, without whose assistance this article series would not have been possible.

Specific applications
There is little evidence so far that large Australian organisations are shifting much data into public cloud providers such as Microsoft’s Azure platform yet, however. Where they are doing so, they’re typically smaller organisations such as web 2.0 startups or even medium-sized technology-focused companies like Altium tinkering with Amazon’s platform, for example.

However, the shift to public cloud might have already started in a fairly small way.

In late August this year, Australian investor services giant Computershare revealed it had rebuilt its most highly trafficked sites on Azure and sent the projects live. Much of the reason for the Computershare shift represents the standard cloud computing business case. The company had ‘spikes’ of traffic around certain dates that made it economical to shift its work into a larger facility that could scale up and down on demand to meet its needs.

Where other Australian organisations might have hosted the sites in the increasingly elastic onshore clouds offered by Melbourne IT and Hostworks, however, Computershare chose Azure — which is most definitely not hosted in Australia (yet). It appears in the company’s case that the offshore hosting was appropriate because the company was serving the information needs of Asian investors, with Microsoft’s Singapore Azure facility suiting Computershare well.

Most other cases of Australian offshore cloud deployments so far appear to be more in line with what might be broadly called ‘software as a service’ applications, rather than the infrastructure or even platform-as-a-service offerings which are increasingly coming under the private cloud banner in Australia.

And most of the data which is being pumped into these applications is not the sort of highly critical stuff that organisations would need encrypted. Often it’s applications such as customer relationship management (CRM) or email that are heading into the -as-a-service camp, with vendors like and Google continuing to win major Australian customers at the moment, despite their lack of Australian hosting.

When Australian companies Flight Centre and Ray White last week revealed they had dumped Microsoft’s Outlook/Exchange collaboration platform for Google Apps, the word ‘cloud’ wasn’t mentioned — Google prefers its “Gone Google” marketing term. However, there’s no doubt that the pair are leveraging Google’s public cloud services for their corporate environments.

Ray White has even taken an additional step and is running a number of its own custom applications on Google’s App Engine platform — such as a new property management system it hopes will simplify things greatly for its staff and customers.

Even Telstra — which operates vast swathes of its own infrastructure, for customers and for its own operations, will use applications built on public cloud computing where appropriate — such as when it deployed’s Ideas application last year to better communicate with its staff.

Currently, organisations are ‘cherry-picking’ certain services to shift into the public cloud as the business case becomes apparent, with early targets being collaboration services (email, for example) and customer relationship management.

“We think we will see organisations continue to test the water with private cloud offerings, such as archive-as-as-service and back-up-as-a-service over the next year before true enterprise applications-as-a-service take hold (that is, email, ERP, etc),” says Hitachi’s Adrian De Luca.

Of course, with any attempt to look into the future there is an element of unpredictability — the chaos factor, if you like. And the evolution of private cloud services in Australia is no exception to this rule.

One factor is the rollout of the National Broadband Network, which some observers believe has the potential to dramatically accelerate the use of cloud technologies in general in Australia. “The Australian government’s investment in the NBN will act as an accelerator for organisations to take up private cloud services, further fuelling the demand for data centre space,” says Aidan Tudehope, managing director of Hosting at Macquarie Telecom.

“The NBN will enable increased communication and data sharing speeds, delivering WAN at LAN speeds, which means communication between separate offices will be as if it were occurring in the same office,” he adds. “Business communications will move to a centralised model, and rather than the head office, the data centre will become the new centre of business.”

Of course, the NBN rollout remains a political football. As this article is published this morning, key legislation associated with the restructure of Australia’s telecommunications sector is deadlocked in the Federal Senate, and there is little certainty about what precisely the future of the rollout will look like, with one key factor being the deal with NBN Co and Telstra on access to Telstra’s infrastructure.

Another phenomenon which onlookers believe will have an impact on the cloud journey in Australia is the notion of ‘cloudbursting’, which refers to the ability for organisations to temporarily shift services into the public cloud as they need increased resources for short-term situations. But so far examples of cloudbursting applications in Australia remain rare.

John Wadeson, deputy secretary of ICT infrastructure for the Federal Department of Human Services, says for him three main factors are coming together in cloud: Web-based applications, improved data carriage services, and a third, crucial one — the proliferation of hand-held devices.

Stuart Driver, the director of IT services at Citrix Systems Australia, says the company is currently seeing an intense wave of Apple iPads coming into large local organisations. And those organisations are increasingly using cloud-based services on the tablet devices.

Applications like the Dropbox file storage platform, for example, have exploded in popularity recently as executives use the cloud to store data so that they can access it anywhere — on their iPad, desktop or even smartphone. And Dropbox is a true public cloud application — built on Amazon’s infrastructure.

It’s this kind of viral adoption of new technology that has the potential to dramatically shift how cloud services are used in Australia — and ultimately shape the evolution of private cloud. And of course, nobody knows just what Apple supremo Steve Jobs has up his sleeve next.

In other words, despite the fact that most onlookers agree about the broad roadmap of private cloud services in Australia, uncertainty remains a significant factor.

However, one thing remains sure. Cloud computing may have been a hyped up term several years ago, or maybe even six months ago. But now it’s speedily becoming reality in Australia. “Cloud is an idea whose time has come,” says Human Services’ Wadeson.

It’s about time.

Image credit: Ewen Roberts, Creative Commons


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