NZ Business: Heads in the cloud
Want to get your head around New Zealand’s cloud services marketplace for businesses? Our 2016 NZBusiness Cloud Services Guide can help by introducing you to some of the industry’s leading experts.
When it comes to cost-effectiveness, ‘the Cloud’ clearly rocks. The evidence is everywhere. You may remember a time when the word ‘cloud’ was only associated with the weather – those fluffy white, sometimes angry grey, things floating in the sky. But in 2016, thanks to a legacy started by a group of tech execs at Compaq Computer in Houston, Texas, 20 years ago, ‘cloud’ is a popular cliché that stands for the ‘online hosted’ model of delivering software services to businesses. Software-as-a-Service (SaaS) is another name preferred by techies.
NZBusiness lined up a whole team of cloud services experts to contribute to this Guide.
A logical person to start with was LayerX Group CEO Bruce Trevarthen, because he has operated in this space since the very early days. His company registered the domain name ‘theCloud’ in 2008 and created a purpose-built cloud platform for delivering services to the SME market – “as a commodity and with zero-touch”.
Trevarthen’s ethos has long been about delivering enterprise IT capabilities on demand to small businesses without the premium price-tag. He’s had good success both in New Zealand and Canada. His vGRID cloud platform delivers Internet connectivity, Exchange email, data backup, business and voice services.
“Pretty much anything a business would want to outsource from an IT perspective,” he explains.
A simple user interface, or ‘control panel’ lets business users set up the services themselves.
“New Zealand, with SMEs making up 96 percent of the business community, is absolutely the perfect market for cloud and what cloud means,” he says, “which is truly ‘elastic’, truly on-demand enterprise IT.
“Business and IT are no longer two separate things; they’ve merged for good. Even a plumber needs an email address, job management and accounting software,
and integrating everything together makes it all so much easier.”
The key with cloud platforms is that you can pretty much automate most of your business processes, he says. “The cloud allows you to get on with running your business, and encourages innovation.”
So just to make it clear – the cloud provides a virtual desktop anywhere in the world; as well as server-driven applications (yes, many businesses can now do without a server); email, storage (think Dropbox) and backup, and voice services (such as hosted PBX systems).
The key, of course, is to have a large Internet pipe into your business, and Trevarthen says this is where UFB (ultra-fast broadband) gives New Zealand the edge over countries like Canada. UFB is a game-changer for Kiwi businesses, he believes. “The concept of getting a 200Mbit connection to your now virtual servers for just $100 per month is mind-blowing.
“UFB is the catalyst for consuming cloud.”
Trevarthen says ‘elasticity’ is the key benefit cloud service delivery provides for businesses.
It means server capacity, for example, can be upgraded on the fly to allow for growing needs; it’s possible to ‘turn on or turn off’ additional memory to improve performance, and to even automate that process. Business efficiency, and staff morale, is no longer affected by IT effectiveness, he says.
With cloud service providers achieving scale, and offering an automated environment, SMBs can now enjoy much improved price-points compared with previous years, Trevarthen adds.
He has no issues around sharing his predictions of where the cloud is going either.
“Today’s trade secrets are just tomorrow’s history anyway, considering the pace of change in technology.”
He predicts that organisations will increasingly approach things from a ‘workload’ perspective, requiring various outsourced applications. “You’ll simply put your workload with a [cloud] provider and have their smart system work out what it needs. A case of ‘here’s my workload and my budget is $100 a month, make it go’. Or, ‘here’s my workload, it’s mission-critical, keep it that way’. We need to move away from the ‘nuts and bolts’ and think more about consumption.
“I call it ‘moving up the stack’ to pure software delivery.”
Trevarthen says the big benefit of partnering with a cloud provider is having the security of a properly backed up server system, with multiple networks, firewalls, everything.
Should a server fail, another virtual server will reboot within a matter of minutes – that’s not possible when all your hardware’s in-house and there’s only one of everything.
There’s further peace of mind for business owners, who never have to worry about upgrading hardware. That responsibility now lies with cloud services providers.
“You can now literally run your applications untouched for decades and never have any transition headaches.”
It doesn’t matter what line of business you’re in – cloud computing is for you. Trevarthen’s clients range from an animation design studio, to a GIS mapping company and a university.
Hamilton’s Wintec outsourced its entire production environment to LayerX five years ago.
With the transition to the cloud, any hardware issues vanished overnight, reports Trevarthen.
“The university’s 30-plus IT team has since been able to focus on all the projects that had been put on the back-burner, because the ‘feeding and watering’ of the infrastructure was taking up all their time.”
He says LayerX is even offering its vGRID software as a turnkey solution to any organisation worldwide who wants to run their own cloud services environment, and they’re already in discussions with various telcos.
Cloud’s clever capability
Delia Gill, MD of Wellington-based IT consultancy and cloud services provider IT Engine, lists cost savings, security and disaster recovery and business continuity as the standout benefits of cloud. However, she says business owners must do their research. “Clearly understand what cloud storage you’re using – its location and set-up – to ensure you’re not using someone’s amateur cloud set-up in a garage.”
She says most cloud storage companies won’t tell you the exact location of their servers but it’s crucial to know if it’s a large overseas set-up or somewhere local. “And
in both cases confirming they have a solid disaster recovery plan.”
Eliminating on-site servers allows IT Engine to deliver a higher level of service, and one that’s more personal, adds Gill – rather than focusing on the ‘nuts and bolts’.
Email server and email failure issues are now largely a thing of the past too, thanks to Microsoft’s cloud-based Office 365, she says. “This alone promotes productivity, as do all those SaaS products designed to cut time and integrate with other products, which further encourages efficiency gains on all levels of a business.”
Cloud enablement is encouraging a host of new technologies and applications. Gill is particularly excited about beacons – small devices that deliver low-cost micro-location based Bluetooth technology to connect smartphones to deliver context-relevant content. “In a café it might be a menu in the language of the phone; in retail it might be to an online store or catalogue with more colours or options for whatever widget you want to buy. Or it could be asset tracking of machinery that needs maintenance,” explains Gill. “The list is near endless.”
Related to beacon technology, another cloud enabled game changer is business intelligence (BI). BI tools were previously considered too expensive for smaller businesses, or not necessary because there wasn’t enough data being generated. Then along came the cloud. Suddenly a lot of data is being accumulated.
“Cloud-based BI tools can pull it all to a single point, build relationships between that data, and then output in meaningful ways that enable better and more powerful decision-making.”
Other cloud-based apps Gill is in love with include One Note (offers note taking on almost any device that’s automatically saved to the cloud); Trello (a free tool for internal project management); and Canva (a drop and drag graphic design tool).
Looking ahead, Gill believes cloud services will only get bigger and better. It helps that cloud providers are focusing on integration as a key design feature of their products, she says. “The popularity of a [cloud] product increases ten-fold if it slots nicely with several others. A good example is the Xero marketplace.”
The cloud enablement process
Another Wellington-based expert on cloud enablement is Techtonics. Its expertise lies in information management, infrastructure services and enterprise content management, and it is an experienced OpenText business partner and a specialist in Office 365 and SharePoint Online.
Professional services manager Graham Wilson loves the fact that moving to the cloud allows businesses to access an enterprise-level capability that is “scalable, flexible and at a cost proportionate to the size of your organisation”.
“Additionally, you get the benefit of improved risk management and integral disaster recovery practices as you move dependency away from your physical hardware.”
You gain a great deal of value, he reminds us, but think about what you may not have and what you will need. “Server free means no Local Domain Active Directory* for example, and, of course, you’ll also need to have reliable access to the Internet.
“It can be tempting with the ease of access to cloud solutions to jump in and turn everything on. You need a solution that seamlessly fits your people, processes and technology. It’s not uncommon to see projects in the industry blow out because the business didn’t take the time to cover the fundamentals. This is something that a good partner will provide leadership on.”
Transitioning to the cloud is not just about moving to the latest and greatest trend in the industry, says Wilson. The business must move through the cloud enablement process in a way that is right for the rate of change [the business] can handle and turn on the right things at the right time.
“It’s not just about making a technical upgrade, you need to be able to connect your business needs to the solution. We design our services around long term partnerships with our clients. We want continue to work with our clients long after implementation to ensure enduring value for the business is delivered from the cloud platform.”
Wilson’s cloud favourites include Suite Files (tools designed to gain business efficiencies in productivity, operating costs and risk management) and Office 365 (“there’s so much capability delivered at a great price”).
His advice for business owners is to work with a partner who understands your business and your strategy.
“Don’t be sold into solutions that are bright and flashy but aren’t going to work for your business or your people. Take it one step at a time and don’t take on everything at once. Above all, lead the change. Getting the user base on board and excited about the change to a new way of working is vital not only for initial adoption but ensures you continue to see the full value and benefit from the use of cloud services.”
More pluses than minuses
For Jek Tan, CEO of Integricity Technology, the benefits of cloud delivery far outnumber potential downsides.
First there’s access to best-of-class solutions. New Zealand is a tiny market, so SME owners find it difficult to invest in R&D and improvements as the return on investment is poor, he says.
“Accessing cloud services means they enjoy proven world-class solutions without having to wear the costs of innovation.”
Disaster recovery provides Tan’s second plus, because New Zealand’s not exactly immune to natural disasters. Affected businesses only need worry about re-establishing their brick and mortar presence. “The data, applications, software and solutions will be there and waiting for them.”
Business agility and mobility are the the next cloud positive. “With cloud services, businesses are no longer restricted to the confines of their office environment,” says Tan. “Employees are empowered with true mobility; businesses can right size their IT investments to match their size, growth and scale; and spawning new offices can be done with ease, without having to worry about tech infrastructure.”
Cloud services also allow SMEs to switch from a capital expense (CapEx) cost model to an operational expense (OpEx) cost model. “They can run their projects without incurring large CapEx and end them without a massive burden of redundant technology assets.”
Improved data and systems security is another plus that has already been covered in this article.
The downsides of cloud, identified by Tan, hold no surprises. Of course, you must be online.
Some hybrid solutions do exist but to harness the true power of cloud, you need a fast and robust Internet connection.
Agreements are generally non-negotiable. “Cloud vendors service businesses around the world, so are unlikely to customise their service agreements,” explains Tan. “SMEs have no size and clout, therefore have no shot at making agreements work to their advantage.”
While unlikely, there is still no control over downtime.
If services go offline, there’s little a business can do about it, except sit tight until services resume.
Tan also warns that if there’s no dedicated in-house resource to look after a business’s technology strategy, investments in the cloud could potentially not be
In terms of IT support, Tan cites faster issue resolution, 24/7 service support, and constant patching and upgrading of platforms and services as the key dealmakers for cloud.
In his crystal ball he can see a continued reduction of physical servers on-site; an urgency in converting customers to the cloud (particularly by accounting software providers), so businesses do not have to support two versions of their solutions; more providers opening up their cloud platforms to connect with other software and platforms through APIs (application-programming interface); and a shift in power within certain organisations. “CTOs and CIOs will control all critical customer data instead of the marketing department. Because of this, they’ll have a significant contribution towards marketing and innovation,” says Tan.
When it comes to stand-out cloud services for small businesses – his pick is Amazon Web Services (to replace servers), Office 365, Google Drive and Dropbox.
A payroll perspective
Chris Mar, manager strategy and compliance for cloud payroll provider Datacom Payroll, sees the cloud delivery of business services providing many advantages over traditional ‘packaged’ software. Benefits such as monthly subscriptions compared to yearly license fees, easy scaling, constant access to the latest versions, and anywhere/anytime availability, all ensure that cloud services will continue to be adopted.
However, there’re points to consider to ensure you choose the right cloud provider, he says. “Knowing where your data is held and who can therefore get access to this data should they require to do so is important. For example, the Tax Administration Act requires that all tax records be held in New Zealand and in the English language, unless approval is given by the Crown. Recent changes have allowed cloud service providers holding records in overseas hosted locations to apply to Inland Revenue for approval to do so on behalf of their clients. If this is not the case, then the individual company must make a request to Inland Revenue for this exemption.
“Not many people are aware of this requirement and they should check when using or purchasing financial services software from the cloud, where their data is being hosted,” says Mar.
With the increase in popularity of cloud services, Mar has noticed some providers trying to cash in on the trend by using the right buzzwords and flashy marketing material – “but, in fact, they aren’t really true cloud providers.
“In some cases, software might be accessed over the Internet and hosted remotely but are actually just separate instances of the software running for each customer – meaning that upgrades must still be done customer-by-customer and scalability is not as easily achieved.
“Others simply backup data into the cloud but the actual application is still hosted on the customer’s premises – meaning you’re still tied to specific machines.”
Considering that you’ve entrusted important information to your cloud provider, ensure they can “walk the walk” when they talk about resilience, backup and disaster recovery and internal processes, says Mar.
“How often and what proof does your cloud provider have for testing their disaster recovery processes? Do they actually have one? Do they have any proof that their internal controls are robust and well maintained?
“Some cloud providers can provide assurance that they’ve been successfully audited against international standards such as the International Standards on Assurance Engagements (ISAE) No. 3402 Assurance Reports on Controls at Service Organisations.
“The independence of these audits can give customers more confidence that their cloud provider has the internal controls sufficient to manage their important business functions.”
An accountant’s view
There’s no doubting the fact that the accounting industry and business owners have wholeheartedly embraced cloud software. Mark Kingsford, business advice director at Staples Rodway, has seen a massive uptake of cloud-accounting tools amongst their clients in recent years. From minimal cloud clients just five years ago, Staples Rodway now has more than 1600 clients using a cloud-accounting system, he reports – many with cloud add-ons such as Payroll, Inventory and Point-of-Sale.
“New businesses are driving the trend, with most setting up in the cloud. It’s the more established businesses that tend to be slow adopters,” he says.
Staples Rodway has embraced the changing accounting landscape by launching a cloud-based service offering called RealTime.
“RealTime blends the latest cloud technology with Staples Rodway’s tried-and-true service to provide unique solutions for progressive clients,” explains Kingsford. “We also contribute to the development of many cloud solutions – rural accounting platform Figured, for example.”
Cloud-accounting solutions deliver a big efficiency booster for accountants by providing ready access to online data. “Traditional means of gathering information seem antiquated and just plain slow,” says Kingsford. “Benefits for clients include access anywhere, anytime, and the automation of many tasks.”
However, he says the accuracy and integrity of data must continue to be managed. “A cloud-based system doesn’t overrule the ‘rubbish in, rubbish out’ rule. We work regularly with clients to make their process fit for purpose and to ensure that the monthly financials are accurate, reliable and allow business owners to make good decisions.”
Cloud accounting also means reporting is becoming more powerful. Cloud tools enable automatic feeds of data up into graphical dashboards, assessing business performance against KPIs. “Big data, benchmarking and other analysis are going to be big in the next few years as businesses make more use of, and commercialise, the aggregated data now residing in the cloud,” explains Kingsford.
When clients switch to the cloud, the biggest advantage to accountants arises from the ability to work directly with the financial data, adds Kingsford. “It means we can give proactive, real-time advice at a fraction of the traditional cost.”
Another advantage is utilising the ‘single ledger’ concept, he says, whereby client data is used directly to generate the statutory financial statements, instead of having to use accountant proprietary systems.
Then there’s the ability to integrate or ‘bolt’ other systems or apps onto a core cloud-accounting platform to deliver operational objectives. “It gives small and medium companies the same functional efficiencies that have traditionally been the domain of the larger corporates,” says Kingsford.
“This technology competitiveness, combined with conventional agility, results in small businesses starting to disrupt business dynamics.”
As for making the transition from desktop to cloud, Kingsford says planning is paramount.
“Depending on size and existing infrastructure, businesses may want to stagger their shift to tie into the end-of-life of fixed hardware. Staples Rodway specialises in transitioning accounting systems to the cloud and has learnt the best, most effective way to do this.”
Here is his list of things to consider:
* Do you want to take across balances or transactional data – what use will you have for the data?
* Do you need weekly, monthly or yearly comparatives?
* Open items (debtors, creditors etc) need to be brought across accurately.
* It is an opportune time to clean up the chart of accounts and, for multi-entity groups, put in place aggregation/consolidation tools to make reporting easier.
* Cut over on a good date – ideally, but not necessarily, the end of the financial year. Avoid mid-month cut over.
* Remember that a system doesn’t work in isolation and that focus should be given to the business processes around the system.
Kingsford can see an exciting future ahead for cloud deployment.
“At present, most [cloud] applications are geared towards the client. In time we expect to see more apps that manage the deployment and maintenance of a suite of apps. This will make it easier for accountants to manage large client lists on a universal level.
“Going forward we will be releasing industry-focused solutions that manage all financial aspects for certain industry groups such as RealTime Farms, RealTime Motor Vehicle Dealer and RealTime Architect. These provide the financial tools these groups need to run their business efficiently.
“We will also look at tools that can help clients manage costs and identify possible savings, better handle their debtors and manage FX transactions more effectively.”
Software access made easy
Last but not least, our final contributor is Robert Gosling, MD for Oracle New Zealand, who has witnessed cloud applications for marketing, HR and ERP being embraced by SMEs to accelerate their operations and engage more intimately with customers.
“Cloud technologies bring the capabilities traditionally deployed by larger enterprises within reach of SMEs at a price they can afford – giving them all of the flexibility, added agility and functionality required by a complex business and enabling them to achieve greater efficiencies in their operations,” he says.
“Another thing to consider is that in the past companies would tailor their software to their business requirements and processes. In doing so, they would build more complexity into the software, which then made the software itself harder to use, manage and maintain.
“With cloud, you don’t customise and modify software any more – you personalise it, just like you personalise your mobile phone to meet the needs of your lifestyle with apps and skins.
“The knock on effect is that cloud implementations go as far as impacting the end user directly, helping eliminate complexity for them, as well as for the business as a whole.”
The delivery of business software through the cloud has given a wider audience of customers access to Oracle products, says Gosling, largely due to the cost benefits of the cloud.
“Software through the cloud has also broadened the choices available to organisations. For example, five years ago, people chose applications based tailored to their database. So, if you were an Oracle database user, it was a much more natural decision to use Oracle-certified applications.
“But as the cloud is delivered as a service where you don’t see the supporting infrastructure and taking out the visibility of the database layer, this criterion becomes less relevant. So this is making Oracle software more accessible to the market.”
The cloud has also given Oracle a way to really leverage the strengths inherent in being an organisation that operates across the whole technology stack from top to bottom, says Gosling. “From the applications at the top, right down to the infrastructure the software runs on, and all the systems in between that bring it all together; we pass the benefits of that on to customers of all sizes.”
Gosling expects to see some significant changes in the next five to 10 years as companies make their transition to the cloud. During his keynote speech at Oracle OpenWorld 2015 in San Francisco, Oracle’s CEO Mark Hurd made the following five cloud-related predictions for 2025:
* Eighty percent of all production apps will be in the cloud, up from about 25 percent today.
* Only two major (SaaS suite providers, who will have 80 percent of the cloud enterprise application market, will exist.
* One hundred percent of software development/testing efforts will be conducted in the cloud.
* All enterprise data will be stored in the cloud.
* The enterprise cloud will be the most secure IT environment.
Some of the other developments we expect to see are around usability, says Gosling.
*Active Directory (AD) is a directory service that Microsoft developed for Windows domain networks. It is included in most Windows Server operating systems as a set of processes and services.