Clouds gathering

Beyond the hype, many Australian CIOs are deep in their own cloud implementations
Curtin University of Technology CIO, Peter Nikoletatos
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Curtin University of Technology CIO, Peter Nikoletatos
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What a difference a year makes. Twelve months ago it was almost impossible to find Australian organisations that had embraced cloud computing. Now pretty much everyone is planning, piloting or executing some form of migration to the cloud.

If there was ever doubt that cloud was little more than hype, it was eradicated in April 2010 by Commonwealth Bank of Australia (CBA) group executive for enterprise services and chief information officer, Michael Harte. In a speech to Committee for Economic Development in Australia, Harte declared that never again did he wish to be locked into using proprietary hardware or software and cloud computing was his escape route.

Harte is one of many CIOs who have been able to satisfy concerns that initially arose regarding the data security, accessibility and governance of cloud computing.

The bank has been investigating ways to buy software and infrastructure as a service for several years. A trip to the US in May 2007 included a meeting with Google and a chance to investigate its cloud-based services for messaging and email.

“It freed up so much resource,” Harte says. “And we thought, ‘Wow, wouldn’t it be nice if you could do other enterprise-scale activities on public infrastructure, and you could partition and secure that’.”

At the time, however, there simply wasn’t the business motivation for suppliers to make the switch.

“The incumbent service providers, whether it’s IBM or EDS, were really struggling with the model because they tend towards their own accounting standards,” Harte says. “They still have their own strong business models. They still wanted to continue to ‘lock’. They do resist contestability. And those things are the antithesis of what we were trying to do.”

We want to get out of infrastructure computing and into fine-grain components and highly granular data, so that our customers enjoy new services.

CBA’s adoption of cloud computing is more a matter of business philosophy than technological evangelism.

“We only want to pay for what we use,” Harte says. “We want to get out of infrastructure computing and into fine-grain components and highly granular data, so that our customers enjoy new services. This is not about some technical breakthrough; it is about supplying customers the services they want — and doing that at value.”

An initial area of activity has been in test and development, which Harte says can account for up to 40 per cent of the bank’s server resources. CBA is utilising capacity-on-demand from Savvis and Amazon Web Services for part of the workload.

“Once we’ve developed and tested those capabilities, and we have them operating at full production, we can determine whether they stay outside in the public cloud or [should be] brought back inside the corporation,” Harte says. “We can provision those in under 10 minutes and we can do it at up to a tenth of the cost.”

Read the full interview with Commonweath Bank CIO, Michael Harte

Harte is not alone in his thinking. For many CIOs, the cloud is a chance to move away from technology strategy and embrace business strategy, although the definitions of cloud computing remain a grey area. Westpac, for example, has completed a trial of an internal private cloud and plans to bring the service into production.

This is not about saving money; it is about reducing risk and improving business continuity.

Curtin University of Technology CIO, Peter Nikoletatos, sees cloud computing as part of a strategy to move away from managing assets to managing information. Curtin is working with Optus to investigate taking its virtualised servers and desktops to the cloud using VMware’s vCloud technology. Curtin has also signed on with Microsoft’s Live@edu hosted service for e-mail, calendaring and collaboration, and is examining Microsoft’s Azure cloud platform as an application development layer that can grow with the university.

“[We want to] move away from a capital demand-driven budget to one that’s a utility-based model, that is much more predictable and reliable in terms of determining what our ongoing costs will be,” Nikoletatos says. “But this is not about saving money; it is about reducing risk and improving business continuity.”

He says that the experience for students is going to change significantly in the next 10 years, requiring greater flexibility in how data is handled.

“Unless you have a bottomless pit of funding to help build things organically, you have to be thinking differently about how you deliver services,” Nikoletatos says. “It's about getting the foundation right and, as you mature areas that you can move to the cloud, you slowly progress them and move them once you satisfy the governance-related issues.”

As the deputy chair of the Council of Australian University Directors of IT (CAUDIT), Nikoletatos says many other universities are looking to cloud computing as a way of reducing costs and increasing functionality, including through collaboration. “The University of Melbourne, Monash and RMIT are all working collectively on a model with a Fujitsu data centre in mind,” Nikoletatos says. That large organisations are treating cloud computing seriously reflects the rapid maturity of the capabilities of many service providers. According to the chief technology officer at Melbourne IT, Glenn Gore, much has been learned in a short period.

Melbourne IT has been running VMware’s vCloud Express service since September 2009 and is now switching over to a full vCloud implementation, with vCloud Express to be relaunched as an SME-focused service later this year.

“What I have realised is that some really good things come along with cloud, but with those good things come a different set of responsibilities and accountabilities,” Gore says. “Supporting cloud-like infrastructure is more complex than we anticipated, and that’s even with our decade of hosting experience.”

Melbourne IT is one of several service providers to launch cloud service offerings, and they are finding customers quickly. The earthmoving equipment maker Komatsu, for example, has signed with Telstra to have its IT infrastructure delivered as a service. Komatsu CIO, Ian Harvison, says the decision was catalysed by the expiration of the leases on several of its servers, coupled with the infrastructure in its data centre beginning to show its age. Harvison supports 1200 staff spread across 43 branches around Australia, New Zealand and New Caledonia.

He invited three organisations — Hewlett-Packard, Fujitsu and Telstra — to investigate Komatsu’s requirements and propose a new infrastructure plan. HP withdrew, and the solution that stood up from a cost perspective was Telstra’s. Komatsu has signed a five-year, whole-of-business agreement for Telstra to provide infrastructure-as-a-service in a virtual private cloud, and has also renewed its communications contract with Telstra. “This really is about aligning our resources to focus on the strategic and the core things we need them to do,” Harvison says.

“And in running infrastructure, it's [Telstra’s] core capability. They can do that — we don't need to be doing it.”

The problem in the traditional model is you have to go and buy a server, put it in, and put the whole disaster recovery environment in place.

The first phase has been to port Komatsu’s SAP environment to the cloud, followed by ancillary applications including Microsoft Exchange and file and print servers. Komatsu will also co-locate its mainframe and remaining servers in the Telstra facility. Its data centre will be shut down, but all data will remain in Australia. Harvison says the decision enables Komatsu to take advantage of new technologies such as Microsoft’s managed enterprise services for the smartphones.

“It was something we’d wanted to do but the problem in the traditional model is you have to go and buy a server, put it in, and put the whole disaster recovery environment in place,” Harvison says. “This model means we don’t have to worry so much about having to procure the servers ourselves and get them up and running.”

Next: Do it yourself cloud

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Do it yourself cloud

Komatsu turned to an external provider, but other organisations are choosing to create their own clouds as a more effective way of servicing clients.

The Australian Bureau of Statistics (ABS) is one example. The constrained resources available to the ABS have meant that it has long operated a chargeback model for its 3200 staff and 1000 field researchers.

But whereas the old model was based on CPU cycles, ABS director of infrastructure, Tony Marion, says that by reorganising its data centre using virtualisation technology, it has been able to configure it as a private cloud and charge clients based on variable overall resources.

“It is a variable charge, but it allows areas that want to do a lot of research and run really long jobs that don’t necessarily need a lot of capability [to not be] charged horrendously per CPU cycle,” Marion says. “So it is more enabler or an ‘evener’ for everybody — all receive an even share of the pie.”

Chargeback is handled through VMware’s Virtual Centre, with the ABS recording the main variables of CPU, memory and disk. Marion says the ABS is now able to provision a test and development environment for its offices almost instantaneously, whereas previously it might have taken two or three months.

Marion is also looking into desktop virtualisation within its cloud to enable staff work from anywhere on any device.

“Everybody has a virtual machine, so that your data never leaves the bounds of ABS,” Marion says. “And if we want to allow people to connect with us from outside, maybe we can set them up with a virtual machine. “These are the sort of things that we are thinking about — giving people more and more capability — because what we want to do is get the statistics out there as easily as possible.”

Similarly, the Catholic Education Network has created its own internal private cloud. CENet services the IT needs of 15 Catholic dioceses encompassing 705 schools across NSW, Queensland and the ACT and Darwin, with a student population of 250,000 and 20,000 teachers.

CENet chief executive officer, Bede Ritchie, explains that when faced with the need to refresh its server environment, the network opted in January 2010 to virtualise using technology from NetApp and VMware, giving it the basis of a private cloud. The initiative has also taken advantage of the Catholic Network Australia program that has improved the bandwidth to the majority of schools across the country. The new configuration enables CENet to offer infrastructure-as-a-service to the dioceses to run their own discrete services.

“The big benefit from my perspective is taking away the responsibility for them to have to worry about hardware,” Ritchie says. “A diocese can request a VM, request some storage, run it up, and three months later just make it disappear and go back in the pool again.

“They can be freed to use their smarts to assist teachers to implement ICT in classrooms, rather than having to kick tin.”

Next: The business case

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The business case

The reasons for adopting could services are often very specific. For the property company Savills, it was about commoditising certain backend functions, particularly disaster recovery.

Infrastructure manager, Justin Gillfeather, says Savills is trialling Optus’ cloud service. By connecting across the Optus network he does not have to risk reaching out to public services.

“We expect it will take some load off our internal IT department,” Gillfeather says. “Especially things like disaster recovery — that all becomes somebody else’s problem.

“The reason we are in beta is to find out whether it is going to be cost effective for us to do this, whether it is really going to save us as much money as we thought, and the degree of flexibility it will really give us.”

Gillfeather says Savills is currently geared towards acquiring other businesses, which means potentially needing resources at short notice.

“If we had cloud running we might be able to do that far more easily than we are currently able to,” Gillfeather says. “If we can buy those resources from somebody else and know upfront how much it is going to cost, that allows us to do longer-term planning that we are otherwise able to.

“If we were starting a brand new business tomorrow would I buy any server hardware at all? At the moment I would, but two or three years from now, maybe not.”

Australian surfwear retailer City Beach certainly isn’t keen to spend the money to find out. When it came to upgrading from a static Web page to a full e-commerce service based on WebSphere Commerce, it opted to host it on Brennan IT’s infrastructure-as-a-service platform. City Beach is Australia’s largest independent retailer of surf, skate and urban wear, with 60 stores nationwide and a turnover of about $300 million. CIO, Paul Downs, says that hosting with Brennan was more cost effective than what he could achieve himself, and it enabled the company to deploy its site in less than 100 days in the lead-up to a Christmas deadline.

“I have quite a lean-team here, so my strategy is to outsource as much as possible, because we just don’t have the resources to provide 24 by 7 monitoring and break-fix,” Downs says. “When you stack up the cost of the wrap-around services versus the cost if I had to employ two or three people to provide the coverage over a year, it’s significantly cheaper, and Brennan places an SLA around it.”

Next: Reality check

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Reality check

The enthusiasm with which many CIOs are embracing cloud computing in no way detracts from satisfying their concerns around data security, accessibility and governance.

According to CBA’s Harte, these issues are not all settled all at once, but they are not all necessarily new, either. Security, for example, has been a concern with each new IT delivery model, including outsourcing, offshoring and virtualisation.

“Security is definitely a concern, but wherever there is a large arbitrage to be had people will decide whether or not they are going to have it," Harte says. “If they need further compliance, you can work with regulators and the risk community to figure out what to build back to ensure that robust security.”

Komatsu’s Harvison says it is important that CIOs investigate these models now to meet the agenda being placed upon them to do more with less, because hands-on experience is the only way to answer these concerns.

“The technology now is there, it's proven,” Harvison says. “And as long as you have some comfort around the security aspects and the partner you've chosen, then I don't think there's reasons to put it up as a barrier anymore.”