Archimedes' lever - how cloud is shifting the IT world

The cloud is enabling Australian start-ups to rapidly build new businesses that are taking on the world.

While larger enterprises have taken to the cloud with a vengeance, many smaller enterprises that could benefit from cloud services are yet to take the plunge. According to the Australian Bureau of Statistics, there are 800,000 SMEs in Australia. An ACMA report into cloud computing shows that SME take-up of cloud services has been slow, with only 44% of SMEs presently actively using cloud services … mainly for email and online storage.

Yet the demand for cloud services has been growing, with Frost & Sullivan estimating the total value of Australia’s cloud computing market in 2013 at $1.23 billion, projected to reach $4.55 billion by 2018.

We spoke with representatives from three companies - one of them a large multinational and the others smaller local start-ups - to get a feel for how the cloud has benefited each of them.

Darren Warner is the Regional Director for Infrastructure and Operations for CBRE Asia Pacific, a large real estate company that spans the region from Australia and New Zealand to China and India, and pretty much everywhere in between. It has a private cloud spread across two data centres, one in Sydney and the other in Hong Kong.

What sort of a difference has cloud made? “I think in terms of our private cloud it’s meant that we’ve be able to have all of our data more centralised and more available, without having to worry about infrastructure in local countries and local offices,” said Warner. “Just being able to pull all that together has really given us an advantage, and its meant that we’ve been able to do more with that data in terms of digesting it and processing it. We’ve also had some significant achievements in our disaster recovery capabilities as a result of bringing all that data into two locations.’

Disaster recovery (DR) is a major factor in the company’s considerations, partly born out of a scare associated with the Brisbane floods. The company uses Veeam backup and replication tools.

“The Brisbane floods actually pushed us down this path far more rapidly, because we had a number of key applications hosted in Brisbane,” said Warner. “We were really, really lucky, because we were pretty much the only building in the CBD of Brisbane that did not lose power for that duration. It was enough of an alarm bell to say, ‘Hey, we really must ramp up our DR capabilities, we really must move to true hosting facilities - this isn’t good enough for us anymore.’ Sometimes it takes a bad thing to get a good thing.”

How much harder would it be to run an always-on operation without the cloud? “From a manageability point of view, yes it would be much harder; from a DR point of view, certainly much harder,” said Warner. “The key would be that we wouldn’t have those levels of redundancy without cloud, and that’s something that’s really important to our business.”

Scaling up

Australian start-up Productify has developed an open source API that businesses use for importing, managing and exporting product information.

Its business is “all about solving the flow of product information from supplier to retailers,” said Doron Ostrin, Productify’s CEO. “There’s the other side [of business] which is managed by all the ordering systems, the ERP systems, but there’s never really been a great tool that helps manage the data around those products - the images, descriptions, bullet points etcetera.”

What was it that convinced them to go to the cloud? “The numbers of products we deal with have been scaling up very quickly, and if we just had it on a single, dedicated server, then we’d have a much bigger overhead,” said Ostrin. “Being a start-up we don’t have the time and the money to be constantly managing servers in a dedicated environment. For example, when we onboarded certain retailers our database grew by a factor of 100 overnight, so you can’t be running something yourself that can accommodate that.”

If the cloud didn’t exist, how feasible would Productify’s business model be? “We would have had to turn down customers early on, or at least give them a longer wait list, and that’s not what they want,” said Ostrin. “When they want to move, they want to move. They don’t want to wait for you.”

“Being a start-up, you obviously want the best solution, but you also need something that’s very cost-effective and something that you don’t have to worry about,” said Dean Steingold, the company’s COO. “You want to try and minimise every expense [while having] great service, which is what Rackspace gave us.”

Setting up the service on the cloud involved a number of brainstorming sessions around how best to architecture it. “We went to their office, sat down and said, ‘Okay, if we need to resize 100,000 images on the spot, how are we going to scale that up [without paying for it full time] … as it’s not something that happens every hour,” said Ostrin. “So we sat with the team and just worked on the architecture - How do we set this up? How do we minimise the costs? How do we ensure it is resilient and redundant? And that was a big help.”

Moving the world

Another fairly new Australian company is Vend, which provides a cloud-based point of sale information system. It has around 15,000 active customers, from high-end fashion boutiques where the only sales equipment to be seen is an iPad, to traditional corner cafes and everything in between.

“We’re trying to get people to replace their clunky old cash registers,” said Morgan Pyne, Vend’s CTO. “We’re essentially replacing the brains of [the cash registers], the bit that tracks the sales, that keeps track of the products. We are not a payment company - we integrate with payment providers all over the world.

“We have been globally focused from day one. We are now used in about 140 different countries, and that means we provide a 24/7/365 service because people all over the world depend on us to run their businesses,” said Pyne. “We had a lot of growth challenges, but the ability to be able to react quickly and innovate quickly has probably been our biggest strength during this period.”

How much of Vend’s business is located in the cloud? Is it just customer data, or applications as well? “Everything is in the cloud,” said Pyne. “When we started out we were a fairly traditional kind of web business. Our founder wrote the original prototype of the app, and when we got our first customer it was a single virtual machine running on Rackspace’s public cloud. We’ve rapidly grown into a much more interesting and complicated infrastructure because of course we need to build in redundancy and availability and performance as well.

“We reached a point in our growth a couple of years ago where we were running quite a few virtual machines in the public cloud, and we realised that we were at one of the inflection points in the growth of the company where we needed to decide where we were going to go next,” added Pyne.

“Our business is very transactional by nature, so we use relational databases. We found that it would be better value for us to move back to hardware but we really liked the flexibility of everything else in cloud and in virtual machines,” said Pyne. “So we spoke to Rackspace and they had a very good offering allowing us to do a hybrid set-up where pretty much anything that didn’t depend on heavy I/Os would be virtualised, and everything else would be physical.”

If the cloud didn’t exist, could a business such as Vend succeed? “I’ll be honest with you, we probably couldn’t,” said Pyne. “We would probably be looking at buying hardware, figuring out where to put it, making a deal with some sort of low-level hosting company in the US probably. We’d probably be getting on aircraft a lot of the time. It probably just wouldn’t happen really.”

“I think we’ve been really fortunate to be living in a time when this sort of thing has reached the point now where it is universally available,” Pyne added. “Archimedes said: ‘Give me a lever long enough and I can move the world.’ It seems like we’ve been given an extremely long lever with cloud at this point.”