The CeBIT Australia trade show in Sydney this week was branded a cloud festival so we sent one of our operatives down to speak to the emerging providers and find where its all headed.
The big vendors were scattered around the exhibition floor but we know their pitch. Also we didn’t want to be blindsided by wearing our cynical goggles, and be too damning of the hype cloud cycle. After all, Deputy.com lives in the cloud too and we don’t own any hardware.
Thankfully, of the ten or so cloud providers we spoke to, reality was exceeding hype. A consensus exists around the main issues. Offshoring data and the security question looms large for many businesses. Chief executives remain wary, and CIO’s are treading gingerly into this new web computing world. Cloud apps will come to the fore, trumping the pure infrastructure players.
Still, with all the buzz around this space, businesses are still figuring out how to use the cloud, a point not helped by its many definitions and offerings. “Everyone is keen for the cloud, but they don’t know what they need,” said Damien Stephens, Country Manager of OS33, a New York-headquartered cloud provider that has just landed in Australia. As a browser-based provider, Stephens believes self-service and speed of deployment will be the winning card in the cloud vs traditional hardware war.
There were – of course – some naysayers on the CeBIT floor, who complained there was a lack of stunning innovation from exhibitors. Their complaint was that some providers are trumped up hosting and infrastructure players. Remember the ASP boom in 2000? Not much has changed, they said.
Maybe the cloud space doesn’t need more innovation. Perhaps its about marketing the sheer business friendly nature of the cloud. Companies are realising they can now scale up and down their computing resources quickly. The cloud apps companies have to prove they offer better value than the datacenter players, said some other exhibitors, a point proven by one corner of the CeBIT show room being dominated by the physical rack providers. That opportunity will likely be presented when IT budgets are freed up.
“The big point of entry for the cloud providers in the next two to three years will be when businesses go through the refresh cycle and they will either decide to buy new hardware or enter the cloud market,” said Angus Thomson, Managing Director of platform as a service provider Fluccs.
Others believe that the sheer weight of momentum, and the cost, speed, and competitive advantages of outsourcing business operations into the web world, will mean that this cloud caper is real.
“The cloud is here to stay and every software company wants to transform themselves into a cloud player,” said Dr Gaurav Srivastava, Managing Director of Sydney-based Absolute Vision Technologies, which specialises in CRM and ERP cloud. The financial investment to provide that scale is not cheap at the moment though.
“A huge investment is required for vendors to have the scalable capacity to provide to the business user,” said Dr Srivastava. “We need cost-effective data centers in Australia to achieve that.” He sees the biggest opportunity in the mid-market, where companies simply cannot afford to invest in IT training. Hence, it’s better for them to put their business IT functions into the cloud.
An IT distribution executive said some vertical sectors, such as education, simply need a cheap solution, and had no fears about putting their data into the cloud. Certain services were ripe for the cloud, especially non-confidential information.
The BYOD (bring your own device) challenge will force IT managers to enter a new generation of people and network management, and that will include expert management of cloud apps across the enterprise. Everyone uses smartphones to run their work lives now, so the mobile access, usability, and security issues will become paramount.
In summary, we picked up these other points:
- The next few years will see the rise of hybrid cloud models that allow companies to shift some of their data and applications to the cloud.
- Cloud providers need to have a good answer when asked, where is my data sitting?
- The small to mid-market is ripe for the picking because they simply do not need a large enterprise CRM system.
- CEO’s will be targeted with compelling reasons to become more competitive and agile and they will be presented with cost-benefit analysis tools that force them into the cloud.
- Traditional IT managers and solutions providers that earn revenue from maintenance and project management will be threatened by the application providers, and they need to reinvent themselves in the medium-term.
- Businesses will have to be presented with cloud applications that are easy to use, and not just by the IT manager.
- Mobile will change everything again, but you already knew that, because you are addicted to your Apple device.
We will be back next year to see what has changed and where the buzz is.