New Zealand companies eyeing the cloud

It’s still early days for cloud computing in New Zealand, but interest from local organisations is increasing, say two of the big players. Both IBM and Microsoft are preparing to compete directly in the space, which was previously dominated by Google’s App Engine and Amazon’s EC2.

Intergen, a local provider of Microsoft-based business solutions, has been involved in the Azure Services Platform for about two years, says Chris Auld, director of strategy and innovation at Intergen. Azure Services Platform — a cloud platform offering — marks Microsoft’s first step into the cloud computing space.

The Azure Services Platform uses a specialised operating system, Windows Azure, which serves as the development, service hosting and service management environment for the Azure Services Platform. It provides developers with on-demand processing power and storage to host, scale, and manage web applications through Microsoft datacentres.

Intergen got to have some input into early releases of some of the Azure technologies, through its Microsoft Partner advisory positions with various product groups, says Auld.

The company wrote some of the “hands-on labs” that were used at the Microsoft Professional Developers Conference, held in Los Angeles in October last year, where Azure was also announced.

Intergen is working on a few Azure applications. Auld’s team has built a “fairly large amount” of training content and lab materials for the Azure platform, and the company is also the key trainer for the Azure Services Platform technology stack in the Asia-Pacific region. When Computerworld talked to Auld he was in Bangalore, running Azure Platform training for systems integrators based in India.”

For Intergen and its customers, Azure has two key benefits, says Auld. “First, we can build applications that are able to scale to very large numbers of users. Secondly, and maybe more importantly, because Azure allows us to turn capacity on and off as needed, we are able to do this cost-effectively even when that huge demand may only be sustained for a few hours a day or indeed a few days a month.”

The biggest hurdles for the company at the moment are that it can’t yet deploy applications into production, as Azure is not out of the Community Technical Preview phase, and that it doesn’t have any information about pricing and Service Level Agreements yet, says Auld. The official launch of Azure is planned for the end of 2009, according to Microsoft’s website.

“There are some rough edges around the technology, but nothing that would hinder us going live pretty promptly after commercial availability,” says Auld.

Intergen is currently building a high-scale application for a “high-profile” national retailer. “This application needs to be able to support high-volume sales periods that might only happen a handful of times a year,” he says. “By using Windows Azure and the rest of the Azure Services Platform, we can easily scale up to meet those peak periods without having to over-invest in infrastructure for their day-to-day operations.”

Other cloud computing issues include data sovereignty, privacy, security and interoperability, according to Robert Varker, emerging technologies executive, IBM New Zealand, and Brett Roberts, Microsoft New Zealand’s director of innovation.

Governments, for example, will want to know exactly where data about their citizens is held, says Roberts. Issues could potentially arise from different legislation in different countries. Data could be hosted in for example India, by an American-owned company that has its head office in Europe. “There are many scenarios that haven’t been fully explored yet,” says Roberts.

Interoperability is also a potential issue. Roberts thinks it will take some time to “sort interoperability out”, given the fast pace of development of cloud computing. He says a number of large vendors, including Google and Amazon, have different ways of doing things, and are using different technologies, he says. However, many of the vendors in this space are heading down quite a similar path and have a common vision, he says.

Standardisation is an issue, says IBM’s Varker. One of the main benefits of cloud computing is reduced total cost of ownership and this is driven heavily by standardisation, he says.

The other main benefit is what Varker calls “increased velocity”, meaning that organisations can now grow and scale like never before. Given the standardisation and the reduced complexity, cloud computing providers can now offer clients the ability to scale in minutes to meet peak processing demands, rather than having to deploy a new server every time there is a peak, he says.

Another positive thing for users is the flexible charging model cloud computing offers. IBM uses nearly 30 different charging models for its cloud services, says Varker. These include price per user, price per mailbox and price per gigabyte.

Internationally, IBM offers a range of services based on the public, private and hybrid cloud, says Varker. The public cloud incorporates services that are delivered by a third party provider over the internet, while private cloud generally means services are managed within an organisation and hosted locally. Hybrid cloud computing is a combination of the two.

Varker says cloud computing is still embryonic in New Zealand. “We have some existing clients that are using early stages of infrastructure-on-demand and utility-based computing,” he says.

However, enquiries from organisations around cloud computing are increasing, which is why IBM created Varker’s role late last month. Varker, a ten-year IBM veteran who came over from IBM Australia five years ago, is specialising in cloud computing and other emerging technologies.

Varker and Roberts agree that the current economic climate is a driver for cloud computing. Organisations can’t afford to support underutilised environments and many see the benefits in outsourcing IT so they can focus on their core business, says Varker.

He says the industry will see a number of ISVs jumping on the cloud bandwagon and offering hosting solutions through the public cloud.

He also believes there is going to be an explosion of software-as-a-service and infrastructure-as-a-service offerings, as many more organisations are looking to go for the price-per-unit model and only pay for what they use.

Microsoft’s Online Services, announced last month, goes live this week. This offering provides local customers with the capability of using Microsoft for the hosting of Exchange, SharePoint and Microsoft Office Live Meeting, says Roberts.

Microsoft’s Software+Services model is different from the SaaS model in that it allows users to move between different hosting options, he says.

Users can choose to host applications themselves, or use Microsoft or another third party for hosting, rather than having all applications hosted in the cloud, he says.