cio_cloud_aug10

Q JuIylAugust 2010

Ref: 74690185Copyright Agency Ltd (CAL) licenced copy.

CIOAugust, 2010Page: 40General NewsBy: Brad HowarthMarket: NationalCirculation: 10695Type: Australian Magazines BusinessSize: 3224.82 sq.cmsFrequency: Monthly

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Beyond the hype, manyAustralian CIOs are deep in their

own cloud implementations

BRAD HOWARTH

What a difference a year makes. Twelve months ago itwas almost impossible to find Australianorganisations that had embraced cloud computing.

Now pretty much everyone is planning, piloting or executingsome form of migration to the cloud.

If there was ever doubt that cloud was little more thanhype, it was eradicated in April 2010 by Commonwealth Bankof Australia (CBA) group executive for enterprise servicesand chief information officer, Michael Harte. In a speech toCommittee for Economic Development in Australia, Hartedeclared that never again did he wish to be locked into usingproprietary hardware or software and cloud computing was hisescape route.

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



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Commonwealth Bank of.Australia.ClO and groupexeeotiua,far errprfse sarxices,. Michael NarTY.

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

"It freed up so much resource," Harte says. "And wethought, `Wow, wouldn't it be nice if you could do otherenterprise-scale activities on public infrastructure, and youcould partition and secure that'."

At the time, however, there simply wasn't the businessmotivation 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 towardstheir own accounting standards," Harte says. "They still havetheir own strong business models. They still wanted to continueto `lock'. They do resist contestability. And those things are theantithesis of what we were trying to do."

CBA's adoption of cloud computing is more a matter ofbusiness 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 ourcustomers enjoy new services. This is not about some technicalbreakthrough; it is about supplying customers the services theywant - 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'sserver resources. CBA is utilising capacity-on-demand fromSavvis and Amazon Web Services for part of the workload.

"Once we've developed and tested those capabilities, andwe have them operating at full production, we can determinewhether they stay outside in the public cloud or [should bedbrought back inside the corporation," Harte says. "We canprovision those in under 10 minutes and we can do it at up toa tenth of the cost."

Harte is not alone in his thinking. For many CIOs, the cloudis a chance to move away from technology strategy and embracebusiness strategy, although the definitions of cloud computingremain a grey area. Westpac, for example, has completed atrial of an internal private cloud and plans to bring the serviceinto production.



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Curtin University of Technology CIO, Peter Nikelotatos,sees cloud computing as part of a strategy to move awayfrom managing assets to managing information. Curtinis working with Optus to investigate taking its virtualisedservers and desktops to the cloud using VMware's vCloudtechnology. Curtin has also signed on with Microsoft'sLive@edu hosted service for e-mail, calendaring andcollaboration, and is examining Microsoft's Azure cloudplatform as an application development layer that can growwith the university.

"[We want to] move away from a capital demand-drivenbudget to one that's a utility-based model, that is much morepredictable and reliable in terms of determining what ourongoing costs will be," Nikelotatos says. "But this is notabout saving money; it is about reducing risk and improvingbusiness continuity."

He says that the experience for students is going tochange significantly in the next 10 years, requiring greaterflexibility in how data is handled.

"Unless you have a bottomless pit of funding to helpbuild things organically, you have to be thinking differentlyabout how you deliver services," Nikoletatos says. "It's aboutgetting the foundation right and, as you mature areas thatyou can move to the cloud, you slowly progress them andmove them once you satisfy the governance-related issues."

As the deputy chair of the Council of AustralianUniversity Directors of IT (CAUDIT), Nikoletatos saysmany other universities are looking to cloud computing as away of reducing costs and increasing functionality, includingthrough collaboration. "The University of Melbourne,Monash and RMIT are all working collectively on a modelwith a Fujitsu data centre in mind," Nikoletatos says.

That large organisations are treating cloud computingseriously reflects the rapid maturity of the capabilities of

Tickit SvstemMany Australian ocgani tions ere willingly adopting cloud,eh+rC@5, but tam a may find themselves with few alternatives.

The success of web-hosted applications such as5alesforce-corn is not just insperi*rg the cre on of loear,born-in-tlte-cloud applications such as S.ascr and Xero, it isalso leading Borne application developers to migrate theirofflirse applications to the doud-

It is exactly what Tickit Systems has done with its riskmanagement and compliance application, rewriting itssoftware to run oc Amazon Web Services.

"We'+re Found it to be a differentiator for us," says salesand rrrarketirig director, Tarun Philip. "We have new featuresgoing out pretty ms,6eh every t varter, with new reports and

many service providers. According to the chief technologyofficer at Melbourne IT, Glenn Gore, much has been learnedin a short period.

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

"What I have realised is that some really good thingscome along with cloud, but with those good things come adifferent set of responsibilities and accountabilities," Goresays. "Supporting cloud-like infrastructure is more complexthan we anticipated, and that's even with our decade ofhosting experience."

Melbourne IT is one of several service providers tolaunch cloud service offerings, and they are finding customersquickly. The earthmoving equipment maker Komatsu, forexample, has signed with Telstra to have its IT infrastructuredelivered as a service.

Komatsu CIO, Ian Harvison, says the decision wascatalysed by the expiration of the leases on several of itsservers, coupled with the infrastructure in its data centrebeginning to show its age. Harvison supports 1200 staffspread across 43 branches around Australia, New Zealandand New Caledonia.

He invited three organisations - Hewlett-Packard,Fujitsu and Telstra - to investigate Komatsu's requirementsand propose a new infrastructure plan. HP withdrew,and the solution that stood up from a cost perspectivewas 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 renewedits communications contract with Telstra. "This reallyis about aligning our resources to focus on the strategicand the core things we need them to do," Harvison says.

new functionality. And clients love that, because we are quitere5oonsive to their feedback "

Customers have v ted with their chequebooks as well,with Philip Saying that almost all have moved across to thecloud service.

"We had a few that had customisations that wereparticular to them,. he says- One decided to n ovq on toanother platform, and the other one decided they wouldtake the old code and rrtairltain it themselves."

The rest are now using Tickit On Demand, including thefederal Department of Treasury, Phil Ip says tlrat the software'stenancy on an offshore server has riot been an issue-

"We actually offered them a local hosting option," Philipsays. "But they decided that they would in this instance gowith Amazon Web Services-

"So lar there have been questions about it, but it hasn'tbeen a stumbling block.,,



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"And in running infrastructure,its [Telstra's] core capability.They can do that - we don'tneed to be doing it."

The first phase hasbeen to port Komatsu'sSAP environment to thecloud, followed by ancillaryapplications includingMicrosoft Exchange and fileand print servers. Komatsu willalso co-locate its mainframeand remaining servers in theTelstra facility. Its data centre will be shut down, but all datawill remain in Australia.

Harvison says the decision enables Komatsu to takeadvantage of new technologies such as Microsoft's managedenterprise services for the smartphones.

"It was something we'd wanted to do but the problem inthe traditional model is you have to go and buy a server, put itin, and put the whole disaster recovery environment in place,"Harvison says. "This model means we don't have to worry somuch about having to procure the servers ourselves and getthem up and running."

Do it yourself cloudKomatsu turned to an external provider, but otherorganisations are choosing to create their own clouds as amore effective way of servicing clients.

The Australian Bureau of Statistics (ABS) is one example.The constrained resources available to the ABS have meant thatit has long operated a chargeback model for its 3200 staff and1000 field researchers.

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

"It is a variable charge, but it allows areas that want to doa lot of research and run really long jobs that don't necessarilyneed a lot of capability [to not be] charged horrendously perCPU 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 anddisk. Marion says the ABS is now able to provision a test anddevelopment environment for its offices almost instantaneously,whereas previously it might have taken two or three months.

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

"Everybody has a virtual machine, so that your data neverleaves the bounds of ABS," Marion says. "And if we want toallow people to connect with us from outside, maybe we can setthem up with a virtual machine. "These are the sort of things

This is not aboutsaving monn ; itis about reducing

risk and improvingbusiness ContifLuit

that we are thinking about- giving people more andmore capability - becausewhat we want to do is get thestatistics out there as easily aspossible."

Similarly, the CatholicEducation Network hascreated its own internalprivate cloud.

CENet services the ITneeds of 15 Catholic diocesesencompassing 705 schools

across NSW, Queensland and the ACT and Darwin, with astudent population of 250,000 and 20,000 teachers.

CENet chief executive officer, Bede Ritchie, explains thatwhen faced with the need to refresh its server environment, thenetwork opted in January 2010 to virtualise using technologyfrom NetApp and VMware, giving it the basis of a privatecloud. The initiative has also taken advantage of the CatholicNetwork Australia program that has improved the bandwidthto 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 theresponsibility for them to have to worry about hardware,"Ritchie says. "A diocese can request a VM, request somestorage, run it up, and three months later just make it disappearand go back in the pool again.

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

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

Infrastructure manager, Justin Gillfeather, says Savills istrialling Optus' cloud service. By connecting across the Optusnetwork he does not have to risk reaching out to public services.

"We expect it will take some load off our internal ITdepartment," Gillfeather says. "Especially things like disasterrecovery - that all becomes somebody else's problem.

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

Gillfeather says Savills is currently geared towards acquiringother businesses, which means potentially needing resources atshort notice.

"If we had cloud running we might be able to do that farmore easily than we are currently able to," Gillfeather says."If we can buy those resources from somebody else and knowupfront how much it is going to cost, that allows us to dolonger-term planning than we are otherwise able to.



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

Australian surfwear retailer City Beach certainly isn't keento spend the money to find out. When it came to upgradingfrom a static Web page to a full e-commerce service based onWebSphere Commerce, it opted to host it on Brennan IT'sinfrastructure-as-a-service platform. City Beach is Australia'slargest independent retailer of surf, skate and urban wear, with60 stores nationwide and a turnover of about $300 million.

CIO, Paul Downs, says that hosting with Brennan wasmore cost effective than what he could achieve himself, and itenabled the company to deploy its site in less than 100 days inthe lead-up to a Christmas deadline.

"I have quite a lean-team here, so my strategy is to outsourceas much as possible, because we just don't have the resourcesto provide 24 by 7 monitoring and break-fix," Downs says."When you stack up the cost of the wrap-around servicesversus the cost if I had to employ two or three people to providethe coverage over a year, it's significantly cheaper, and Brennanplaces an SLA around it."

Reality checkThe enthusiasm with which many CIOs are embracing cloudcomputing in no way detracts from satisfying their concernsaround data security, accessibility and governance.

According to CBA's Harte, these issues are not all settled allat once, but they are not all necessarily new, either. Security, forexample, 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 largearbitrage to be had people will decide whether or not they aregoing to have it," Harte says. "If they need further compliance,you can work with regulators and the risk community to figureout what to build back to ensure that robust security."

Komatsu's Harvison says it is important that CIOsinvestigate these models now to meet the agenda being placedupon them to do more with less, because hands-on experienceis the only way to answer these concerns.

"The technology now is there, its proven," Harvison says."And as long as you have some comfort around the securityaspects and the partner you've chosen, then I don't think there'sreasons to put it up as a barrier anymore."

Service through the cloudMarketing departments are often the first group within largeorganisations to experience cloud computing through theirclose links with digital marketing agencies. The Melbourne-based digital marketing agency Citrus, for example, workswith brands including Sportsgirl, Adidas, Ford, Borders andthe Melbourne Cup, providing Web, e-mail and mobilemarketing and advertising services.

Citrus's head of operations, Andrew Fisher, says thatmarketing services is often the first area where businesses will

experiment with cloud services. Citrus works with MelbourneIT and Amazon Webs Services to deliver cloud services.

"The concerns that ClOs have for infrastructure andenterprise IT stuff aren't necessarily the same at the marketing

end of things," Fisher says. "In marketing we are doing things

that are campaign-driven, so you can experiment quiteheavily across a campaign by throwing in different types ofservers and storage systems, or network provisioning."

Before the cloud, Fisher says Citrus would developcampaigns to fit within the infrastructure that was available.While hosting on US services can cause some issuesregarding latency, he says they are much less than wouldoccur should the company not be able to increase itsinfrastructure to meet demand.

The company uses Amazon's S3 storage services,particularly in support of e-mail-driven campaigns that lastshort periods but drive large volumes of traffic to the website.

"Using the Amazon service allows us to scale out reallyquickly, and absorb all of that traffic, and then downscaleit again on the other side," Fisher says. "So it is verycost-efficient, and the end-user customers don't even knowwhat is going on behind the scenes. They don't see anyslow-down."

In the case of the Melbourne Cup, Fisher says a websitethat normally receives a few thousand visitors a day to onethat ramps up into a million over the four days of the carnival,requiring it to grow from one server to 20.

"If you had those 19 extra servers sitting there all yearround doing nothing, it's massively redundant," he says.

One of those lessons has been with regard to e-commerce

systems and the structure of how data is going to flow. Citruswon't run e-commerce sites or anything that holds sensitivepersonal information in the public cloud.

"We might set that up so that the scalability comesfrom a bunch of servers running out of Amazon, but all thedata is stored out of a data service in Melbourne IT, and theconnection between the two is secured," Fisher says. "Youneed to start rethinking the way that you build applications,and you've got to break it down into components andsubcomponents and think of the implications.

"When I'm talking with all of these different businessesthey are all interested in it, and they are all exploring it, butthe nice thing for us is we get to play with it," Fisher says.



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