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November 1, 2013 / The National Business Review

Special Report

Information technology – the cloud

Cloud computing at the tipping point How many New Zealand companies are heading for the cloud? All of them, according to IDC. The market researcher recently ran a survey that found around 30% are currently investing in cloud technologies – but 100% of NZ organisations are investing in cloud technologies or plan to invest over the next 12 to 18 months. In the process, they will leave traditional PC and server software and storage behind, instead relying on services that run over the internet. In this special feature, NBR’s independent editorial team profiles some of the companies that can take you to the cloud. We also take a look at cloud telephony, one of the hottest areas for companies who want to do more online and tackle the key issues of data sovereignty and local vs international hosting.

Why data sovereignty matters Michael Snowden Why does data sovereignty matter? Data sovereignty is the concept that information stored in binary digital form is subject to the laws of the country in which it is located. Data sovereignty is not a new issue. It has been around since the first offshore data centres were established. It is Edward Snowden’s recent revelations of the NSA’s PRISM snooping, among other reasons, which have made data sovereignty so topical. Jurisdictional issues cannot be ignored, regardless of how complex they may seem. If all your data resides in New Zealand, does this mean you are safely protected by New Zealand law? The answer is that it depends on who owns the data centre. Subsidiaries of US-owned corporations are subject to US laws. This means that data stored in a New Zealand data centre, which is ultimately owned by a US corporation, is equivalent to data residing in a US-based data centre, in terms of the USA Patriot Act. The USA Patriot Act of 2001 and the USA Patriot Improvement and Reauthorization Act of 2005, permits US government agencies to access any information stored within the US legal jurisdiction without your permission or notification to you. The acronym USA Patriot stands for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism. The US Congress passed the legislation on October 26, 2001, in response to the terrorist acts of September 11, 2001. It provides seemingly unlimited powers for the US Justice Department in terms of surveillance of American citizens and others within its jurisdiction. Essentially, it was intended to help detect terrorists within US borders.

As a practical matter, however, the US government is usually only interested in information relating to tax evasion, criminal acts and threats to national security. When data is sent from one location to another, the data is split up into fragments, or packets, and sent all over the planet before arriving at its final destination. That is how the internet works. This is not an issue. It is where the data finally rests that matters. A key recommendation is to make a risk assessment of data being stored. Once high- and low-risk data is identified, appropriate data storage policy criteria can be applied. The development of data storage policies is a task that the chief information officer should share with the firm’s chief financial officer and

Michael Snowden

advisers on corporate security, risk management and legal matters. Verifying that data is only located in the country specified by the cloud service provider is difficult. Reliance must be placed upon the service provider’s integrity and its compliance with its service level agreement. It is important to understand that data sovereignty does not relate to who owns the data or the security

If you have a commercial conflict, your opponent’s access to your digital data will depend on the discovery rules applicable to the country in which your data is held. If you do not know where your data resides, you should find out for your own protection.

of the data. These are separate and vital matters, which must also be addressed. Another reason to worry about data sovereignty is civil litigation. If you have a commercial conflict, your opponent’s access to your digital data will depend upon the discovery rules applicable to the country in which your data is held. If you do not know where your data resides, you should find out for your own protection. If you use software provided as a service, your service provider will hold your operational data to enable the function of the software being used. You will also need to understand how many parties hold your data. For example, a New Zealand-based cloud service provider may appear to hold your data in New Zealand. However, the provider’s services may have been “white labeled,” with the service actually performed by others, who may be located in other legal jurisdictions. If a service provider allows another company to rebrand their service, as if it were the cloud vendor’s own service, it is called “white labeling”. There may be multiple parties involved in delivering the service. Each link in the supply chain may have different legal jurisdictions to consider. The opaqueness of the legal relationships must be clarified if you expect to sleep well at night. If you do not know what parties hold your data and where it resides, you may be holding a loaded gun. If you use a local New Zealand-owned cloud service provider, which performs the service within New Zealand, from a New Zealand-owned data centre, your legal jurisdiction is likely to be New Zealand. Currently, intense global interest in government access to business and personal data has generated a new focus on data sovereignty. It would be prudent to pay attention. Dr Michael Snowden is chief executive of OneNet.

Street-legal cloud computing When your data’s stored offshore, you have to worry about a foreign government changing laws around privacy or your rights if the service you’re using goes belly up. But you also have to consider the New Zealand government’s position on shuffling your files offshore. When people talk about cloud computing, they mean software, services and files that are accessed via the internet (rather than sitting on server or PC in your office). It gets more specific still. When Xero says your files are in the cloud, it means a Rackspace datacenter in the US. “Section 22 of the Tax Administration Act (1994) requires taxpayers to keep their business records in New Zealand, unless they have our approval to store them outside New Zealand,” IRD group tax counsel Graeme Tubb told NBR last year. “The proliferation of cloud computing meant there was a risk taxpayers may have been storing their business records outside New Zealand without the necessary approval from Inland Revenue.” Things have improved this year, to an extent. The Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill passed late last year, cleared the way for a new IRD Standard of Practice, allowing a blanket exemption for a cloud provider’s customers. Xero immediately applied for a blanket exemption to keep all of its customers’ financial records offshore; that was granted on September 10 this year. Two other companies that offer cloud-based services, MYOB and Cargowise, followed shortly after. This issue has darkened the cloud, so to speak, since IRD first raised it in 2010 – although both Xero and MYOB have praised Inland Revenue and the government for working through the issues rather than cracking down on them and their customers at a time when they had possibly stepped over a line. The IRD is in the process of approving blanket exemptions for more providers. See its latest list at: www.ird.govt.nz/technical-tax/ general-articles/third-party-providers-e-records. html – Chris Keall

ROD DRURY: His Xero applied for and won IRD approval for a blanket exemption to keep its customers financial records offshore

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special report: Information technology – the cloud

November 1, 2013 / The National Business Review

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Adam Dodds and Chris Morris Cloud computing is the single most disruptive technology facing all organisations today. It is real and it is here; 100% of New Zealand organisations intend to invest in cloud-based services in the next 12 to 18 months according to the recent IDC Cloud Survey (IDC Asia Pacific Cloud Survey April 2013). Coupled with mobile solutions, big data, analytics and social business there is an operational transformation taking the world by force. Cloud helps organisations to be more efficient in use of time, money and other resources while enabling more effective ways in which they reach their customers. However, as in the world of meteorology, clouds don’t appear without a certain degree of danger. Cloud presents a level of risk that must be considered and managed appropriately. Cloud is a delivery model built on a set of technology and services (hardware, software, connectivity and people) that leverages a centralised investment of scale to provide customers with a highly elastic consumption model at a granular price (Cloud is often termed “as a service”). Essentially, cloud providers build a single solution and offer it to many customers in many locations (local and global), at a reasonable price, providing the same or similar consumption experience to all. Organisations evaluating when, where, how and why they should consider cloud computing services must first understand that cloud computing spans a wide range of IT-enabled capabilities, from lowlevel infrastructure to high-level business processes. Because of this the organisational willingness to adopt cloud services is prolific.

Reducing expenses IDC’s CXO survey (June 2013) of chief information officers, chief financial officers and chief marketing officers shows cloud services are

NZ companies moving to the cloud en masse the top technical initiative to reduce expenses, accommodate budget adjustments and deliver growth and higher revenue opportunities. All organisational departments understand the opportunity that cloud offers. They all agree that there is an opportunity to become more agile and dynamic and all see the opportunity to become more connected with the customers and the organisation’s supply chain.

Know the risks The challenge of using cloud to its best advantage lies in understanding the associated risks. Where is your data (your organisation’s intellectual property and DNA)? How secure is your IT and who has access to your IT infrastructure and information? The recent media surrounding the open acknowledgement that – at least at a government level – there are those that will access the information if deemed necessary created a lot of discussion regarding the value of cloud. There are other important considerations based on the availability of the service, the accessibility of the information both during the service and when you decide to shift suppliers or should the cloud provider cease to exist. The risk with cloud is you trade a level of control of your information and the ability to understand where it is at a point in time.

Ask two questions When evaluating this risk, an organisation should determine a value for its information and the collective intellectual property of its operations.

This value can be applied to the associated risks of cloud by asking two questions: how can you operate without the information and what would happen if the wrong party gained access to the information? With this awareness a set of governance policies about how and when cloud can be used should be developed.

One-stop cloud What we now call cloud computing has been around for more than a decade. When Appserv started doing business in 1999, there was an early form of cloud computing known by the uninspiring acronym ASP (application service provisioning, if you must know). What has improved since then? Bandwidth, certainly. Broadband is now much cheaper and faster and arrives with bigger data caps. And the software and services you can use over the internet are not perfect but are now as reliable, secure and user-friendly as their officebound alternatives – if not more so. But there are still a lot of moving parts. Which services do you need? Where should they be hosted? What kind of bandwidth grunt is required for your office internet connection? As a company that has grown up with the technology, Appserv offers an A-to-Z service, offering to manage all of the cloud services used by your organisation. Managing director Graham Clarke tells NBR clients range from startups with five people to professional services outfits

Beyond the geeks The responsibility to establish these policies on cloud lies across the organisation. It is no longer the sole responsibility of the chief information officer (CIO) to articulate the boundaries of the use of technology. Senior executives and organisation owners must participate in the process and actively manage to the like law firms, to publicly listed companies with several hundred staff. Appserv typically offers desktop as a service (usually Microsoft Windows), telephony as a service and sometimes also video conferencing as a service. Customers usually nominate their own business applications (such as enterprise resource planning – ERP – or customer relationship management – CRM – software), then Appserv integrates them into its cloud setup. For cloud telephony, Appserv has traditionally used Cisco product but Microsoft Lync is an increasing part of the mix, Mr Clarke says. A desktop-as-a-service setup means your company doesn’t need such powerful PCs. But the managing director also stresses his company provides one cloud service that can be accessed via many devices, from laptops to smartphones to tablets. Mr Clarke says there will always be bigger outfits that can sell cloud services more cheaply. Appserv’s pitch is that it can be closer to customers and offer better advice. Right now, that’s all centred on the cloud, but he says “we don’t chase rainbows.” He’s looking for a long-term relationship rather than pushing the latest online technology – a lesson learned by Appserv starting its business life at the wrong end of the dot-com boom.

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agreed governance process. The role of the CIO therefore becomes the enabler of the technology, supporting the governance model and, more importantly, assisting the organisation to be more effective with its customers. The CIO must also work to support the organisation in becoming more connected and less rigid in its structure as this drives organisational agility. From a technical perspective, IDC recommends the following steps for considering the cloud for all organisations: ■ Understand the different cloud service delivery models and how they are best applied to your environment, and assess your organisation’s ability to implement cloud services without external help. ■ To start developing experience in cloud computing, evaluate opportunities for low-risk, non-missioncritical applications to benefit from cloud-based infrastructure and development services but exploit cloud computing services selectively based on potential business value and cloud service category maturity. ■ Thoroughly understand the possible degree of proprietary lock-in and develop plans to move to alternative providers or internal systems, if needed. ■ Establish governance models and guidelines for evaluating cloudbased services and their integration with internal systems. ■ Plan for integration of cloud management and security with existing enterprise tools and processes Adam Dodds is market researcher IDC’s IT Services Research Manager – [email protected]; Chris Morris is associate vice-president, IDC Asia/Pacific

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November 1, 2013 / The National Business Review

special report: Information technology – the cloud

‘Private cloud’ telcom system catapults Aussie health insurer into NZ market Grant Dennis In November 2012, leading Australian private health insurer Nib acquired Tower Medical Insurance (TMIL). Since then Nib has rebranded TMIL as Nib New Zealand and launched a health insurance product into the New Zealand market. Nib’s approach was to build the New Zealand infrastructure from scratch, in an effort to maintain a focus on innovation and create a high-value customer service and industry-leading IT infrastructure. To find the best business partner, Nib invited a number of New Zealand telecommunications companies, to meet its core telecommunications requirements.

Business needs “The installation period was critical to the success of this project. We realised that the timeframe was very tight to have a brand new communications system up and running within two months. We were confident in partnering with OrcaCom it was possible to do this with VOIP systems,” Nib New Zealand chief executive Rob Hennin says. Nib is New Zealand’s second largest health insurer, and provides health and medical insurance to more than one million people. With an established IT business strategy, Nib is focused on leveraging IT infrastructure that drives its business goals of providing health great products and first class customer service.

The solution Nib followed the RFP process to invite a selection of New Zealand telecommunications companies, to propose a complete telecommunications system to meet its complex business requirements. Nib specifically requested proposals from vendors providing hosted PABX (cloud) systems, with full geographic redundancy options, to meet its regulatory and disaster recovery requirements, as well as contact centre and standard business telecommunications requirements. OrcaCom was selected to provide a “private cloud” solution that met all Nib’s business and regulatory requirements, as well as

introducing new features to deliver further business productivity. Separate private IP connections from OrcaCom’s Auckland and Christchurch data centres were allocated to each of Nib’s data centres. OrcaCom’s virtual PABX platform replicates all data in real time from its Auckland data centre, to the Christchurch data centre to ensure full service availability in the event of a natural disaster. “It was exciting to see this system come together so quickly and work so well,” Mr Hennin says. High quality Polycom IP phones were installed on each desk, including the contact centre, using OrcaCom’s auto-provisioning system. This allows all phones to be shipped directly from Polycom NZ and simply plugged into the Nib network, automatically configuring user details without any IT support requirement. Apart from standard network switch equipment, no further onsite infrastructure was required, dramatically reducing deployment time. No traditional phone lines are required onsite (or within data centres), as OrcaCom’s national and international VoIP network provides all inbound and outbound calls, significantly reducing operating costs, deployment complexity and time. All inbound and outbound call-flow management requirements were carefully reviewed and documented by each of Nib’s business units and service functions, to ensure the most customer friendly experience while all regulatory requirements are met. OrcaCom’s online call-flow visualisation tool is used to review and test call-flow management policies before live deployment. The project ran smoothly and the system implementation went to plan. As the project progressed, OrcaCom was able to contribute strategic advice about the infrastructure in general and we were very pleased with the level of technical expertise within the company,” Mr Hennin says. The new hosted PABX at Nib New Zealand was implemented within the required timeframe. The system had met and exceeded the RFP requirements, with the added benefit of international scalability in the future.

Q&A NBR talks to OrcaCom managing director Grant Dennis NBR: What’s OrcaCom’s background as a company? GD: OrcaCom is a five-year-old VoIP carrier and specialist hosted PABX (private cloud) service provider. I established the business after returning from the UK where I spent 10 years deploying hosted IT solutions to European companies. We’re based in Auckland, with six staff. NBR: What does OrcaCom see as the chief advantages of a cloud PABX over more traditional on-premise solutions? GD: ■ Rapid deployment: both small business and enterprise companies can be deployed significantly faster than onsite systems. ■ Lower up-front and on-going operating costs – typically 50% lower than traditional systems ■ Increased reliability – operates with guaranteed uptime (99.99%) due to data centre hosting (with redundancy) location. ■ Complete geographic redundancy to comply with disaster recover scenarios and regulatory requirements. ■ Increased flexibility; phone numbers are fully portable between office locations; system can be used from any international location; OrcaCom has data centres in New Zealand, Australia,the US and the UK presenting a single phone system view to all international office locations; no onsite engineers arerequired for moves,adds or changes, which are implemented remotely and immediately. ■ Superior features – to increase business productivity; built-in granular inbound and outbound reporting to support enhanced sales/ marketing/operations; seamless integration with CRM/contact management/workforce management and many more business systems, for example, click to call; call recording included as standard; no feature compromise required with moving to OrcaCom’s private cloud solution; full API available

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OraCom managing director: Grant Dennis for systems integration. NBR: Where does OrcaCom have the edge over other VoIP providers? GD:OrcaCom is one of the only private cloud providers of hosted telephony solutions where customers are connected directly to their nearest OrcaCom data centre (Christchurch or Auckland for New Zealand customers) using an OrcaComprovided IP connection (typically but not limited to fibre). This ensures data privacy but, most importantly, “quality” of service for our customers. Standard cloud phone systems do not offer a private IP connection to the data centre, meaning call quality and privacy cannot be guaranteed. The company offers the only fully featured hosted PABX solution with dual data centre hosting options for full geographic redundancy, for example, in the event of a natural disaster in Auckland, systems could automatically switch to Christchurch for continued operation. OrcaCom owns and operates an International Data Centre network, offering customers the ability to operate hosted phone systems in multiple international locations, while maintaining a single company phone system view. OrcacCom operates fully featured hosted phone systems; the organisation can compete directly with fully featured “onsite” phone systems supplied by major telecommunication companies. The end-to-end solutions supplied by OrcaCom incorporating all required components (VoIP carrier/IP connections/ Hosted PBX/Phone hardware support) has the benefit of providing a single point of contact for our clients.

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special report: Information technology – the cloud 23

Q&A: Catalyst boss faces down crunchy cloud questions

Chris Keall NBR caught up with Don Christie, the outspoken boss of one of New Zealand’s largest open source and solutions companies, Catalyst IT. NBR: When Catalyst clients are after advice on whether to use New Zealand or overseashosted services, which direction do you nudge them in? And why? Don Christie: If the clients are a New Zealand organisation, we host them here, unless their target audience is mostly overseas based. The “why” is convenience and latency [the slight lag on international connections] – although New Zealand’s pathetic peering model does undermine the latter a bit. NBR: A lot of people are broadly aware of the controversy over the GCSB and Telco Intercept bills. Most probably see it framed as a security versus privacy debate. But could the legislation also stop cloud providers and ICT services companies from offering the best services, and otherwise hinder New Zealand businesses?

DC: Yes. The definitions of “telecommunications services” and “network operator” are incredibly broad and badly defined in the current TICS (Telecommunications Interception Capability and Security Bill). As technology has changed, the internet-based services New Zealand digital companies can provide have broadened. The government claims that the updated bill is a response to new technology but that its intention is only to capture the old telcos (think Telecom) in their definitions. That means they needed to update those definitions. But they have not done so.The scary thing about the TICS Bill is that it gives the GCSB oversight into the design of a network operator’s systems. For a small Kiwi company this means civil servants having sign-off on services we would like to create and compete with. I am sure NBR readers understand that having government designed IT systems is not the best recipe for speed-to-market, agility and cost effectiveness. We also have overseas clients, particularly in Europe, who are concerned about any hint of US oversight of their business. The closer New Zealand is tied to the US when it comes to spying networks, especially of the economic kind, the worse the light in which they view our services. Right now, for example, New Zealand

business are on the cusp of being able to offer localised and open cloud services that rival those being offered on a massive scale by large overseas corporates. It would be a shame to see these opportunities undermined by ill-conceived legislation. [Mr Christie is also a co-founder of lobby group NZ Rise. See nzrise.org.nz/assets/ NZRiseTICSBillSOPResponse.pdf] NBR: Can you explain the OpenStack project? How does it address some of the drawbacks of cloud computing? DC: OpenStack is a collection of about 40 open source projects. It was initiated in 2010 by Rackspace and NASA and is now the fastest growing open source project since the Linux Kernel. It offers fully automated and programmable cloud infrastructure, with no licence fees. That means that users of OpenStack can

The scary thing about the TICS Bill is that it gives the GCSB oversight into the design of a network operator’s systems commission virtual servers, networks and platforms in seconds and at a very low cost. Up until now the choice has been to go with Amazon Web Services or Rackspace – which is flexible but overseas – or build your own, as the government essentially did with Infrastructure as a service (IaaS). The problem

round trip latency within New Zealand * Truenet Broadband Report July 2013

with IaaS is that it is very expensive and based largely on on a proprietary stack of VMWare and EMC2. Even things like the automatic provisioning of servers is expensive so rarely switched on as an option for clients. OpenStack, along with the object storage layer, Ceph, runs on commodity hardware, is fully functional and developing fast. We see it now pushing into the platform and application stacks with business intelligence, database provisioning and web analytics. We are getting better performance out of our commoditised storage layers than very expensive storage area network (SAN) technology. NBR: What drew Catalyst to support the Cloud Code of Practice? DC: When we joined the IITP [Institute of IT Professionals NZ] CloudCode project we had no idea how it would turn out but it seemed an important initiative which had broad national and international support. The code is about open disclosure, that’s all. There is no excuse for cloud providers not to be offering, clearly and concisely, the sort of information requested in the code. This includes which country’s laws apply, who owns the data, whether it is possible to shift from one platform to another and who owns the software that runs the service. More importantly, it gives potential consumers a list of about 13 questions they should be asking before they use a cloud based service. This is very empowering and all Kiwi SMEs would benefit from having a quick read and applying the questions to the services they use, whether it be Dropbox, Mega or Catalyst’s own open cloud, “Open Ao.” [email protected]

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November 1, 2013 / The National Business Review

special report: Information technology – the cloud

David Mitchell Smith Cloud computing is no longer a new concept; many organisations have been consuming cloud services for the past several years. The use of cloud computing is growing and, by 2016, will increase to become the bulk of new IT spending, according to Gartner. While it is still a visible and hyped term, I believe it has now clearly passed the phase of overenthusiasm into unrealistic projections. There are signs of fatigue, rampant “cloudwashing” (services marketed as cloud that aren’t really cloud) and disillusionment, particularly from highly visible failures by high-profile payers. Despite this, it remains a major force in IT. What we are now seeing are businesses changing their buying behaviours. Improving efficiency, delivering operational results, reducing enterprise costs and improving IT applications, infrastructure and legacy, are all top business priorities for chief information officers (CIOs) in Australia and New Zealand, according to Gartner’s CIO Agenda Survey for 2013. ANZ CIOs ranked cloud computing as their No 2 technology priority this year, after mobility. Although it is unlikely businesses will completely abandon on-premise models or soon buy complex, mission-critical processes as services through the cloud, there is a movement toward consuming services in a more cost-effective way and toward enabling capabilities that are not easily done elsewhere.

The year cloud gets serious Gartner believes cloud computing will reach an important transition point in 2014, as

Cutting through the misconceptions, hype many organisations will look to move cloud computing past the early phase of it being used for low-hanging fruit and constrained business cases, into more widespread, production adoption. We believe businesses will spend 2014 considering and planning how they will use cloud services for more strategic and value-generating business cases. The time is ripe for transition because businesses and providers are both evolving and patterns for hybrid cloud, applications and risk management are taking shape. As aspects of the cloud move into mainstream adoption, each technology needs to be looked at and assessed separately. No doubt there will be misunderstanding and confusion specific to each aspect of the cloud, not just to the overall term. Driving a lot of this confusion is “cloudwashing.” Technology vendors are grabbing hold of the term cloud and using it for marketing purposes in an attempt to jump on to the cloud bandwagon, even though what they are offering isn’t really cloud computing. Hosting solutions, for example, which have a pay-peruser-per-month pricing model, but without shared elastic capabilities, are being labelled

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“cloud.” As cloud is used to apply to an ever-widening set of external services, without regard to sharing, elasticity and the other characteristics that set it apart, the term becomes even more unclear. Often what we see are companies that buy these cloud services, are then surprised to find that they do not get the agility and cost savings promised by cloud computing. Since it does not live up to its overinflated expectations, cloudwashing is creating a sense of disillusionment. Cloud computing is really about a very simple idea – consuming and/or delivering services from the internet. There are, however, many issues about the types of cloud computing and the scope of deployment that make the details not nearly so simple.

Misconceptions remain Everyone has a perspective and an opinion and, although some aspects are coming into focus, confusion remains the norm. Many misconceptions exist about potential benefits, pitfalls and, of course, cost savings. Cloud is often part of cost-cutting discussions, even though its ability to cut costs is not a given.

There are also many reasons to talk about the capabilities enabled by cloud computing: agility, speed and innovation. These are the potential benefits that can be overlooked if hype fatigue sets in. Although the term “cloud computing” is relatively new, it incorporates derivations of ideas that have been in use for some time. Hosting, software as a service (SaaS) and virtualisation are well-established and are being used in many ways. The prevalence of inexpensive computing power, inexpensive bandwidth and companies that have developed extensive capabilities in managing large data centres are all relatively new and are all required for the cloud to come to fruition. Some concepts born in the cloud have begun to take on largely hyped lives of their own. Private cloud computing and platform as a service (PaaS) are now more hyped than the term “cloud.” Big data is becoming a popular term and phenomenon. One term in particular, “hybrid cloud computing,” is in many ways replacing cloud computing as a catch-all category that vendors (and busiContinued on facing page

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The National Business Review / November 1, 2013

special report: Information technology – the cloud 25

The Cloud Computing Code of Practice: What is it and why? Paul Matthews The Cloud Computing Code of Practice (or “CloudCode”) is a voluntary disclosure-based code of practice that has been developed to improve the transparency and standard of services being provided by cloud service providers.  It also provides cloud service consumers with the ability to view and compare disclosure statements from cloud service providers and make informed choices when considering a cloud service provider. The CloudCode was created to provide professional cloud service providers with the opportunity to benchmark and demonstrate their practices, processes and ethics. In turn, users of cloud services could then be assured that a signatory to the code meets a high standard of cloud service delivery. Signatories to the CloudCode commit to operating transparently and openly with their customers and the public, including agreeing to proactively disclose a full set of technical and other information about their service and not to market products as “cloud computing” unless they really are. Both of these

commitments are hugely important to users of cloud services. The disclosures made about every cloud service cover 17 areas including security, ownership of data, geographic diversity and what a provider will do when a data breach occurs or a service ends – all very important factors to consider when moving into the cloud. Most disclosures are outlined in plain English, meaning cloud users

Code signatories believe all cloud providers should operate openly and transparently and provide this information to their customers can have confidence that they’re able to make an informed decision, whether they themselves are cloud experts or not.

Importantly, the CloudCode doesn’t define what a cloud product or service should look like or set minimum requirements for the service itself – that’s a decision for cloud users depending on their needs. For example, eHealth records require an entirely different set of security safeguards than a storage service that hosts publiclyavailable brochures for the Ministry of Health. However the CloudCode does ensure that all aspects of the service in both cases are disclosed so an informed decision can be made. Development of the CloudCode was facilitated by the Institute of IT Professionals, the independent professional body of the ICT sector, on behalf of and at the request of the cloud community and was developed in consultation with more than 250 cloud computing providers, individuals and other stakeholders over a two-year period. Users of cloud services in New Zealand should ask their providers if they are signatories to the CloudCode and for their CloudCode disclosures. “These disclosures are what the

NZ cloud community and users have agreed are important. CloudCode signatories believe all cloud providers should operate openly and transparently and provide this information to their customers.”

Who’s signed up The CloudCode’s Register of Signatories launched as part of the 2013 New Zealand Cloud Computing Conference earlier this year and meant that companies could formally become signatories to the CloudCode. Early signatories include leading organisations from all corners of the cloud computing industry such as accounting software provider Xero, as well as Revera, OneNet, Webdrive, SMX, Equinox IT, Catalyst IT, and a number of others. The CloudCode is reviewed on a regular cycle and it is expected minor changes will be made every six months, with an annual review conducted to ensure it remains relevant and up-to-date with changes in cloud technology. Among industry stakeholders to welcome the CloudCode was Privacy Commissioner Marie Shroff, who said at the launch:“By setting

a standard for local cloud providers to follow, the code makes sure that participating providers will give the right information to consumers to help them make good decisions. This is a very positive initiative from the IITP and I hope it will be widely adopted.” The Cloud Computing Code of Practice is world-leading and there has been very strong interest from a number of countries in potentially adopting the CloudCode globally. Australia has just completed a formal consultation round to consider adoption and it’s likely that, in time, it will be adopted in other countries in the region and around the world.

See more More information about the CloudCode is at www.thecloudcode.org Paul Matthews is CEO of the Institute of IT Professionals NZ (www.iitp.org.nz)

Cutting though the misconceptions, hype From P24

nesses) are using as the overall umbrella term. Cutting through the hype surrounding cloud computing is challenging. It is important to be educated to assess how your business can leverage the benefits of cloud computing. While the term is being used in many contradictory ways, cloud heralds an evolution of business – no less influential than the era of e-business – in positive and negative ways.

Contact OneNet directly on 0800 66 36 38 www.OneNet.co.nz Work with a OneNet Business Partner by contacting Steve Victor, Business Partner Manager on (09) 376 7643 or [email protected]

Overall, there are trends toward cloud platforms and massively scalable processing. Virtualisation, service orientation and the internet have converged to sponsor a phenomenon that enables individuals and businesses to choose how they will acquire or deliver IT services with reduced emphasis on the constraints of traditional software and hardware licensing models. Services delivered through the cloud will foster an economy based on delivery and consumption of everything. Developing a business case for using a

cloud computing solution largely remains an unstructured process because of the hype. As a result, organisations fail to identify or communicate the key benefits of the right solution. This results in poor backing for strategic initiatives, insufficient funding and correspondingly poor results. To be successful, it is important to understand the context of the current cloud computing market and the key trends, understand the potential risks and opportunities, then determine how you can apply these trends to benefit your organisation.

David Mitchell Smith is a vice-president and Gartner fellow at Gartner, where he specialises in the impact of catalytic technologies such as the internet, web technologies (such as the mobile web and HTML5), cloud computing and consumer technologies. During his 17-plus years at Gartner, he has played a leadership role in several of the company’s efforts in these areas, including the emergence of cloud computing and consumerisation of IT

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• Run your software on our servers

• 1 to 5,000 user firms wanting to:

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• Gain stronger IT security • Build an innovative future

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November 1, 2013 / The National Business Review

special report: Information technology – the cloud

Another box bites the dust as PABX moves to the cloud Bill Bennett If you’re in business, there is a good chance a private branch exchange looks after your telephones. You may not know it because they’re often invisible. And anyway, no one ever uses that term. Most of us call it a PBAX or a switch. Soon they will be even less visible: PBAXs are moving to the cloud. PBAXs were originally designed for large companies. Trained operators controlled them. Just as minicomputers became PCs, large scale PBAXs gave birth to smaller, unattended switches. Now physical PBAXs are on their way out. Typically, a PBAX costs thousands to buy. You pay many times the hardware price over the years because PBAXs generally come with maintenance contracts. And even making minor changes requires expensive specialists. Although PBAX makers will have you believe there’s magic in the box, they are just simple computers running basic software. Increasingly, VoIP or voice over IP is replacing old-school copper telephone lines. VoIP technology digitises voice signals and uses computer networks instead of dedicated cables. Make the change to VoIP – with fibre networks arriving around the country you soon will – and it makes sense to drop physical PBAXs. Paul O’Brien, managing director of MHA Cloud Computing, says when he was first offered hosted PBAX in 2008 the technology was ahead of its time. He says: “People weren’t talking about the cloud. When Microsoft introduced Lync in 2010 we saw interest. We’ve been going gangbusters since the launch of Office 365 with Lync 2013 six months ago.” MHA originally targeted travel trade companies before adding real

Managed video conferencing takes pressure off IT

Alan Shannon

estate to the mix. Today he finds his customers in all sectors but focuses on businesses with fewer than 100 users that don’t have internal IT support staff. Mr O’Brien says he has positioned MHA as Lync experts: “We’re trying to own the Lync cloud in New Zealand. We’ve taken Microsoft’s product and productised it, adding our own dashboard. We have one customer where there’s a single user and some with only a few employees.” He says one of the advantages of hosted Lync is that adding extra users is just a matter of clicking an on-screen check box. This compares with physical PBAXs that might need a hardware upgrade to go from, say, 10 to 11 users. It’s also scalable; you can go on adding users until you have hundreds of thousands. Servitel started out as a taxi communications specialist and still has many customers in that industry but now offers telephony as a service and hosted PBAX to medium-to-large companies and government departments. General manager Alan Shannon says there is also a data centre in Palmerston North and a 24-7 contact centre that operates on behalf of customers. Shannon says the advantage of

With the government-sponsored fibre network being rolled out around New Zealand, video conferencing is set to take centre stage. It can be a powerful business tool, but it’s tricky to run successfully and the required skills are not the same as keeping the rest of a business’ information technology ticking over. Managing director Rick Renner says Communications Partners provides a hosted video conferencing service where specialists monitor traffic to ensure customers get the best quality and bandwidth at all times. “We can see, but not hear your communications on our screens. If we see an issue we can step in to fix it while the meeting is in progress.” Communications Partners provides managed video services on a per port basis – that’s effectively a communications channel. It’s what Renner describes as an “all-you-can-eat” service leaving nothing to manage at the client end. You can join conferences from fully equipped suites with cameras and high definition screens or from PCs, tablets and smartphones. Mr Renner says until recently it has been hard to integrate video conferencing with Microsoft Lync. “It uses a different protocol that didn’t talk to video conferencing. Now we have a box that allows users to join conferences where they can see high definition video directly from Lync.”

telephony-as-a-service over running your own PBAX is that you buy a business outcome. He says: “There’s a lower cost of ownership, generally you halve the cost and there’s no upfront capital expense. There are also predictable costs, which helps with planning. Set-up is much quicker because you’re not building something from scratch.” Being in the cloud allows more rapid innovation. For example, one new Servitel offering is a smartphone app that routes voice traffic to a wi-fi network while on premises and then operates as a mobile when further afield. CallPlus has offered customers a hosted PBAX under the Connect brand for the past three years. The company’s Connect service is for up to nine users while Connect Plus is for small to medium companies. General manager Kelvin Hussey says the service is a direct response

Kelvin Hussey

to customer demand and he deliberately steers away from competing directly with traditional PBAX makers. Customers pay on a straightforward per user, per month basis for a service that includes phones.

There is no upfront investment, no maintenance contract, no worrying about upgrades nor the usual headaches associated with owning computer equipment. Mr Hussey says Connect moves telecom spending from capital expenditure to operational expenditure: “But for us the real story is about the speed and ease of making everything happen.” He says the service has proved especially popular with Jucy car rental. “The company came for the cost savings but says it appreciates the flexibility cloud PBAX hosting brings.” Bill Bennett is a freelance writer, based in Auckland. He is a former NBR technology editor.

Lynced in Microsoft pitches the main benefit of its unified communications product, Lync, as that it works from inside regular software. Microsoft NZ Office division business group lead Zaid Alkadhi tells NBR that tight integration is the name of the game. If you’re inside an Office app, or Outlook, for example, you can click on a contact’s name to see if they’re available, for example (“presence” in unified comms lingo), and see options to contact them with an instant message, an email or a Skype, video or voice call. Lync also integrates with Microsoft Sharepoint, provides a virtual whiteboard feature, and supports conferences with people outside your organisation, even if they’re not Lync users. Lync Online is sold standalone, and also arrives as part of the cloud version of Office, Office 365.

The National Business Review / November 1, 2013

HR and payroll takes to the cloud NBR staff Christchurch-founded PayGlobal, was a pioneer in taking HR and payroll software online. The company now has 500 customers across Australasia, including The Warehouse, ASB, Vodafone, Gallagher, Kmart, Avis, TradeMe, St John, Restaurant Brands, Noel Leeming, Juicy Rentals, Silver Fern Farm and AUT. PayGlobal says its private cloud solution offers benefits including strong return on investment, always up-to-date software, outsourced IT management and risk and rapid disaster recovery. Yet neither is the company head-over-heels for cloud. It also offers an on-premise version of its product. How does it help the customer decide which to go for? PayGlobal head of services delivery, Warwick

Hutchins says: “Organisations need to consider the suitability of each solution based on their requirements for availability, performance, security and cost. Having a mature cloud solution allows us to present a context for considering each of these and allows the customer to evaluate based on business needs rather than technical details. “Typically, the advantages of an end-to-end solution designed and managed to provide critical payroll services, a simplified ‘single point of contact’ support structure and a scalable transparent pricing model, make a compelling case for adoption of the cloud.” Mobile access to its product is another area of focus for PayGlobal. “Having information accessible, available and giving people awareness of it can streamline a company’s business processes and empower its workforce.”

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Internet telephony, messaging, without reinventing the wheel Chris Keall If cloud technology looks familiar, your staff are more likely to pick it up faster, and you’ll make business gains more quickly. That’s why despite offering a range of solutions, Softsource often settles on Microsoft Lync for new clients, general manager Pablo Garcia-Curtis tells NBR. Like other unified messaging products, Microsoft Lync offers telephony, video conferencing and instant messaging and presence features, among others. But Mr Garcia-Curtis says Lync’s tight integration with Office and Outlook often makes it the best – and more to the point, easiest – option for clients. “They don’t have to reinvent the wheel,” the Softsource general manager says. Staff access Lync functions through familiar Office and Outlook menus, so you see business productivity gains faster. “It integrates really well, day-to-day,” he says. “It’s a natural progression.” A number of customers combine Lync with another Microsoft product,

Skype. Lync is often used for internal communications, or talking to partners, while Skype is popular for outward communications, or reaching customers through social media.

Local vs international cloud Similarly, while Softsource works with a number of international cloud services, it tends to utilise Microsoft’s Azure. “Every customer is different,” Mr Garcia-Curtis says. It depends in part if a client’s focus is on infrastructure-as-service, software-

as-a-service, desktop as a service or a mix. And it often depends on where a customer is at in a project. They might do early development work on Azure, then deploy locally, where it can be cheaper and they have more control (Softsource maintains two of its own data centres in Albany, Auckland). Azure can also be popular when a client wants to do a regional or global marketing push, the Softsource GM says. [email protected]

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It looks after all brands!

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November 1, 2013 / The National Business Review

special report: Information technology – the cloud

Should you choose a local or Qualms over data sovereignty, connection speed, the ability to scale usage and services up and down, resilience, ease of management, performance consistency and return on investment all have to be considered as businesses mull cloud conversion Andrea Malcolm Which type of cloud service is better suited to a New Zealand business? A private cloud service hosted on a local data centre and generally accessed via the customer’s own wide area network (WAN), a local public cloud facility or a public cloud service hosted by one of the international behemoths such as Amazon, Microsoft or Google and accessed solely via the internet? Or what about a hybrid approach? Support and relationships are one important factor when choosing between local and international solutions, or onshore or offshore web hosting.

Appserv managing director Graham Clarke says his company can’t compete with the likes of Amazon Web Services on price. But he says it can get closer to the customer and provide them with neutral advice across a range of services (for its part, Amazon Web Services or AWS has a number of local reps, including Fronde and Datacom – although Datacom tells NBR it is agnostic, recommending onshore or offshore services, or a mix, depending on a client’s situation). Appserv maintains its own data centre in Auckland’s Freemans Bay. As well as customer relationships, Mr Clarke sees qualms over data sovereignty as another strong draw

Just make it work

or a web developer. However, once they are here, their needs are actually quite simple – they just want it to work.” A key Webdrive cloud customer is Silverstripe, the Wellington company that recently won an all-of-government web platform contract. And TVNZ used a Webdrive-hosted service to capture real time feedback during New Zealand’s Got Talent where there was a need to cope with large traffic spikes. Mr Dickie says, when it comes to cloud computing, customers want them to either “just make it work” or to provide the tools that allow them to do so, without significant investment in underlying technology and staff resources. “With us, customers can build infrastructure with 10 servers one day, 50 the next and pay nothing other than the daily operating cost of the servers.”

ROBIN DICKIE: Customers’ needs are quite simple Auckland-based Webdrive caters to developers and businesses that require web infrastructure ranging from small websites through to large complex web-based infrastructures (hundreds of servers), general manager Robin Dickie says. The Auckland-based company provides infrastructure as a service as defined by the New Zealand Cloud Code of Practice (see P25). “Or more simply, we provide the foundation for Kiwi companies to successfully deploy their online service, be it a website, app or SaaS (software as a service) offering,” he says. “SMEs don’t buy our cloud services directly. They tend to come to us through a solution provider like a software company

Private Cloud Telephone Solutions

Questions to ask Questions SMEs should ask when moving to the cloud include: do they need someone to build and manage this or do they just need the tools? How is their data backed up? How secure is their infrastructure and who is responsible for managing it?, Mr Dickie says. When it comes to assessing local versus international options some people have specific data sovereignty requirements and need to host in New Zealand. “However, largely we see infrastructure as a commodity that can sit locally or globally – what really matters is the support and relationships that goes with it,” the Webdrive boss says.

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The National Business Review / November 1, 2013

special report: Information technology – the cloud 29

international cloud provider? for local providers (see more on the data sovereignty issue P18.) Another issue is speed. The Southern Cross Cable (New Zealand’s only major broadband connection with the outside world) has scads of free bandwidth but not all providers are willing to stump up for the fastest connection options. And, to a degree, geography is destiny where the internet’s concerned; there is always a small degree of latency, or lag, inherent to international connections (Vocus, another of Amazon Web Services’ local agents, is touting its dedicated bandwidth on the Auckland-Sydney leg of the Southern Cross Cable). Mr Clarke says local broadband is cheaper and faster. That’s important for everyone but especially some of his corporate customers on 1Gibit/s or 10Gibit/s network links. For them, every millisecond counts.

Horses for courses Telecom’s Gen-i services division takes a more catholic approach, offering both local and international cloud options. Gen-i networked ICT products marketing manager David Reiss neatly summarises key benefits of moving to cloud as including business agility, or the ability to scale usage and services up and down according to business needs as they grow and

david reiss: International players can’t be beaten in some areas

shrink; and flexibility – being able to choose and only pay for what you use, when you need it, rather than tying up capital in IT. “This allows customers to focus on their core business functions and business continuity,” Mr Reiss says. But while Gen-i is a cloud booster, it’s not prescriptive about a single, “right” way to move computing online. As well as building its own cloud solutions, Gen-i partners public cloud providers (typically based in Singapore or the US) such as Salesforce.com and Microsoft. Mr Reiss says to help people assess the best cloud option for their organisation, Gen-i has

Microsoft, Google, Amazon spend billions investing in their platforms and you’re never going to get anyone in New Zealand to provide that

David Reiss

come up with a four step process called Pathway to the Cloud (www.gen-i.co.nz/solutions/ cloud/pathway-to-cloud). Issues to be considered are resilience, ease of management, data sovereignty, performance consistency and return on investment and not all parts of the business will be suitable, says Mr Reiss. He says when deciding what to put in the cloud, people need to consider the IT infrastructure – security, backup and software services such as Microsoft Office 365, Xero, Google apps or lineof-business applications such as CRM (customer relationship management), point-of-sale, or business function applications such as voice, email, messaging or video. Gen-i’s private cloud solutions include collaboration, video, mobility, Revera cloud infrastructure services, GMS and its public offering covers professional services, Salesforce.com, Microsoft Office 365, mobility, broadband and internet services. Sister company Revera, which Telecom acquired in May for $100 million provides local IT infrastructure and hosting. Mr Reiss says the international players can’t be beaten in some areas. “Microsoft, Google and Amazon spend billions investing in their platforms and you’re never going to get anyone in New Zealand to provide that. Global providers are never really going to exist in New Zealand,” he says. “Obviously there’s a real economy of scale with public cloud solutions. Their ability to consolidate and virtualise is massive. They can invest in things like automation tools. I signed up for Microsoft Office 365 three weeks ago and jumped on my Windows 8 machine and was up and running within 15 minutes of putting my credit

card number online.” Mr Reiss says because customers access cloud services via the internet they can work from anywhere and run a range of devices but a drawback for New Zealand international public cloud customers includes running a risk with performance consistency. “Performance is not bad but not able to be guaranteed. A lot will come down to how well the application has been written to work across networks in New Zealand or up to Singapore where a lot of them are hosted. Ironically, services hosted in the US seem to run better.” Mr Reiss says setup costs can bite when you move to an international provider, or switch between international providers. “Often you’re buying a product or service for x dollars per month and that covers the cost of a raw service, not including migration to that service. You

might need to move terabytes of data to their cloud and if you’re going to do that over the internet it’s going to take a long time. If you’re using a New Zealandbased service you can send a hard disk and they load that up. So be aware, getting information into the cloud can require specialist support,” he says. The Gen-i manager also warns it can sometimes be expensive to get data out of an international provider – or at least cost a lot more than getting the data in. So what’s the right course? “Most organisations are doing a mixture of on-premise hosted private cloud and public cloud and we expect that to continue for quite a while. It’s about understanding the needs and characteristics of each system,” Mr Weiss says. Andrea Malcolm is an NBR contributor and former Compterworld chief reporter. [email protected]

Crucial link in the chain Cloud computing is for nought if you don’t have a fast, reliable connection to the internet. Internet service provider Snap pitches itself as the provider of that crucial link. There is little point in customers spending money preparing their IT systems for the cloud unless they also ensure their Wide Area Network (WAN) is cloud-ready, says Charlie Boyd, who heads Snap’s new Snap Enterprise division. Organisations moving their systems, especially critical business apps, to the cloud need to consider their choice of network provider just as they do their IT services provider and hosting company, Mr Boyd says. Mr Boyd is a heavyweight signing for Snap. He arrived in May from Kordia, where he was general manager, wholesale. He is based in Auckland, where he’s expanding Snap’s team in the city (although it operates nationally, the two-time Telecommunications Users’ Association ISP of the Year has its headquarters in Christchurch). Snap has invested heavily in recent years in creating the network infrastructure, including dedicated capacity on the Southern Cross cable, achieving cloud certifications and building direct relationships with cloud providers, such as Amazon Web Services to help these organisations make the most from their cloud strategy, Mr Boyd says. Existing clients include district health boards and large hospitals, nationally supported by a New Zealand 24/7 customer support team.

– Chris Keall