What is cloud computing?

MAY 2010

While efficiency is deeply encoded in the business mindset, IT can be an Achilles’ heel for managers as trends change at a rapid pace. Outsourcing is fast becoming the norm to deal with the issue, with several options for businesses to meet the challenge such as cloud computing and disaster recovery strategies. As a result very few companies will buy their own servers in years to come.

IN 2002 Bank of Queensland Limited (BOQ) outsourced its technology to Electronic Data Systems (EDS).

BOQ group head of technology Jim Stabback says the move tapped into leading industry capability in systems management and application development.

“The arrangement also allowed us to deliver rapid transformational change to the then constrained IT environment through the delivery of a new core banking platform,” he says.

The relationship with EDS, now known as HP Enterprise Services, gave the necessary support to assist growth from just 100 BOQ branches in Queensland to a 270-strong national network.

Cloud computing

To support this growth, the IT outsourcing companies are expanding too.

IT Leaders founder Scott Jones says the demand for cloud computing has taken up quickly over the past year, estimating that 60 per cent of businesses nationwide are now using it.

But what is cloud computing?

“What it means is computer services delivered remotely, so there’s different hardware and software associated with that – the likes of Amazon and Google use it as a means of storage or applications,” explains Jones.

“The traditionally-minded approach would be for a company to buy its own hardware, software and buy a perpetual software licence, have its own servers, PCs and be operating applications, but then they are typically tied into an upgrade cycle.

“With the new model, rather than buying everything companies are effectively renting, so I think in three to five years the vast majority of SMEs won’t be using their own servers any more, as it just isn’t cost-effective.”

Jones says there could be data security risks for companies who engage in cloud computing internationally, but many businesses don’t pay enough attention to the issue at home.

“You could say there is (risk), particularly with different jurisdictional borders, for example if Amazon hosted six data centres around the world, if they enter a legal dispute, where are they going to start?

“But what you see is that businesses don’t pay that much attention to file security anyway and back-up systems tend to be far less sophisticated than what they would be if they were controlled by a larger IT centre.

“It’s (cloud computing) happening more and more – we got involved about a year ago thinking we’d be well ahead of the curve and ready for it, but we’ve had two upgrades since then because there’s been so much take up.”

Jones says the fact that 40 per cent of businesses aren’t using cloud computing can be attributed to companies who have already bought servers, typically with a three to five year shelf life, as well as lagging internet speeds.

“The other issue is the national broadband rollout – Australia needs faster broadband, it’s too slow and that’s holding us back.

“Businesses are already achieving those economic efficiencies in other parts of the world, so do we want that or do we want to go the slow and expensive way?”


Sanity Technology director Andrew McLeod says people opt to use data centres for the added security and environmental controls they don’t have in the office, but for complete security a disaster recovery strategy is needed.

“Examples of environmental controls are electricity stability in case of a power failure, or security like CCTV cameras and swipe cards to protect the data, and fire suppression as well,” he says.

“Let’s say a client wants us to host a website and they need it to be up no matter what, so we would implement a disaster recovery strategy that would involve more than one data facility.

“Usually disaster recovery is an expensive service that’s difficult for smaller companies to justify - it’s for people who need their sites to be up in a critical environment, like an e-commerce website whereby if they go down for an hour it means they could lose millions in sales.”

He says the policy is more or less a form of insurance for a worst-case scenario, but a lot of companies don’t have disaster recovery strategies in place.

“I’m quite sure there’s plenty (of companies). If there happened to be a major natural disaster in Brisbane and say, PIPE Networks went offline, then there’d be a lot of clients up a creek without a paddle,” he said.

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