Applause for the cloud

Cloud-hosted software services have become the new normal in business, opening up opportunities and efficiencies for both providers and their clients. NZBusiness looks at the benefits, potential downsides, and the reasons why everybody has their head in the cloud.

You don’t have to look very far to find evidence of the increasing popularity of cloud delivered business services. And it’s happening right across the business spectrum – more so with smaller businesses – but increasingly with larger businesses.

First there was the study conducted late last year by online accounting software provider Xero, which included Australia, the UK and the US, and found that 18 percent of New Zealand small businesses were already managing their accounts using cloud software, compared with 11 percent globally.

More significantly, of the Kiwi small businesses not using the cloud for their accounting currently, 42 percent stated that they were either in the process of moving or looking to convert to cloud within the next 12 months, compared to 39 percent globally. Here we are almost half way through 2015, and we can assume a lot of those businesses have made the jump.

As Xero NZ managing director Victoria Crone said when the study came out – the results highlighted “the increasing importance that small businesses worldwide are placing on mobility, ease of use and scalability of their business management software”.

Further proof that the cloud phenomenon extends to big business came with the ANZ Cloud Adoption Index released by open source software solutions provide Red Hat in late February. That survey revealed New Zealand has a higher percentage of organisations with a cloud infrastructure in place – 92 percent, well above the Aussies. However, planning for cloud adoption is not very advanced at that level of business. In New Zealand, 27 percent of organisations state they are in advanced planning stages but 33 percent said they are still in the beginning stages of their cloud strategy.

So it’s at the SME level where cloud acceptance has been strongest, and the longest – which is hardly surprising considering the efficiencies and cost reductions delivered.
The evolution of cloud delivery has been interesting to watch and enthusiasm runs just as hot on the supplier side, as it does for clients.

Brad McEvoy, who runs Kademi, a cloud-based digital marketing software services developer, loves the fact that software vendors can actively participate in their client’s activities, and pro-actively use their expertise to help clients succeed.

“That’s especially valuable with more complex services,” he says. “For example, we use a server monitoring service (Newrelic) and they’ve been great in working with us to make sure we’re monitoring to the most critical parameters.

“We do the same; we can keep an eye on how our clients are progressing and jump in and chat with them in real time. We’re working with an agency in Michigan doing a US-wide for an automotive manufacturer to train up retail staff about their products. Every now and then they fire us a question through the instant chat built into our website, like how best to run incentives linked to e-learning, or how to automate tasks. We give them what they need to know when they need it. It saves a lot of time and pretty much guarantees a good result.”

Kademi’s clients need to run large integrated online campaigns and create online business tools, meaning they need websites, emails, SMS, forms, and all automated. The Whangaparaoa developer gives them everything they need in one box, all fully integrated and easy to automate.

Ross Hawkins, CEO and senior developer at Ignition Development, believes that one of the most exciting aspects of cloud technology is that it allows companies and people to focus on core competencies. “Rather than worrying about servers and data centres, developers can focus on writing code, widget companies can focus on selling widgets and so on.

“Anything that allows people to focus on what they’re good at has to be a win for everyone.”
One of the key things Ignition offers is experience with a number of different cloud technologies and providers, says Hawkins, whose firm specialises in websites and custom web applications.

“That enables us to look at each project, to consider a number of factors, such as SLAs (Service Level Agreements), need for scale and, of course, cost and use our experience to best identify whether benefits can be leveraged through usage of specific cloud technologies.

“We think it’s really important to be aware of the options that cloud services bring to the table, but still keep a strong focus on choosing the right solution for each customer and project. Our knowledge and experience of multiple service offerings and being as agnostic as possible helps us deliver the best solution for the customer’s actual requirements.”

More to like
It seems everybody has a favourite story behind why they prefer cloud delivery. Kelvin Chen, MD of cloud payroll provider Crystal Payroll, particularly likes not having to back things up and store copies on discs or drives. “Keeping my data safe has never been easier when it happens automatically and immediately,” he says. “I’ve lost data before once when an old PC died and I’d forgotten to back up for a few weeks. My language then was unprintable and, thankfully, will never be repeated.”

Chen says customer feedback usually indicates a ‘peace-of-mind’ feeling. Clients like having “no errors, no headaches”, he says.
“Being online means we can look at what they’re trying to do, as they’re doing it, while we chat on the phone. So if they’re struggling with something legislatively complex we can make sure they input their payroll correctly and then everyone’s happy straight away.”

Another stand-out development associated with cloud delivery is in the mobile sphere. As Andrew Hannan, business manager DataPay for Datacom points out, being mobile is the name of the game now. While mobile phone screen sizes don’t really lend themselves to displaying lots of data very well, they’re a great compromise as a device that is still portable but easy to use.

“More and more of us are addicted to our phones; our payroll mobile app allows employees to use their smartphone to apply for leave, check for leave balances and view payslips.

“For business owners there are real advantages for going mobile with payroll. Having the ability to authorise payments or having a quick and easy way to enter in hours for your staff when you’re on the run is something that is important and we’re working towards that.”

Hannan also emphasises that payroll calculations are changeable as a result of changing legislation; keeping up-to-date with the tax and legislation landscape will prove to be a daunting task. “A true cloud application will facilitate compliance with minimal effort, saving businesses a lot of time and frustration whilst allowing the organisation to focus on growth. It will also ensure that an organisation is free from consequent upgrade costs of their payroll application.”

Hannan says few organisations have an effective disaster recovery plan in place for their payroll systems either. “From a cost perspective it’s expensive to build a new data centre; so choosing a provider who offers a multi-tenanted or tiered approach to cloud application and disaster recovery processes as part of the service should be critical,” he says.

Duncan Faulkner, founder of Auditz, a cloud-delivered health and safety management system (see ‘Start-up of the Month’ feature in this issue), loves the benefits of the online platform. From his point of view it makes sales and distribution effortless, including the automatic software updates. And it allows him to run an “incredibly lean” business. With its mobile application it literally puts health and safety management right into people’s hands, he says.

One of Faulkner’s clients is a large lower South Island-based transport company with several hundred employees and eight subsidiaries. “Truck drivers are not all exactly tech-savvy, but by keeping the software simple and easy to use we’re able to engage and direct everybody within the organisation on health and safety management. Essentially if you can use Facebook you can use Auditz.”

Addressing those myths
The basic benefits of cloud delivery no longer need to be explained to business owners – most get it. But are there myths or misconceptions around cloud delivery that still need to be addressed?

Kademi’s Brad McEvoy thinks there are. “There’s a perception that cloud services are cheap or free, when in reality there is usually very little difference in direct prices between packaged software and the equivalent software as a service – for example, Xero vs MYOB – and even between running your own servers vs using cloud services.”
The limitations of cloud services are not well understood either, he says. “There is a perception that if you take any two services you can integrate them.”

Say you wanted to use a cloud-based accounting service and another cloud service for the inventory or payroll – you might assume that would be easy or at least not too hard. But that integration will often be more expensive than the services themselves, suggests McEvoy, and it can often end up being very messy and error prone.

“That’s why a lot of Software-as-a-Service companies are broadening their offerings to minimise the amount of integration their customers need to do. For example, Xero started with a strategy of supporting an ecosystem of separate applications, but now they’re building their own inventory and payroll systems, etcetera, inside of Xero.”

By far the greatest and least recognised benefit of cloud services is the expertise you get access to, explains McEvoy. “In some cases that expertise comes from the software vendor; in other cases it’s from the community of experts which tend to cluster around cloud services, such as the accounting companies who partner with Xero.

“With packaged software you need to drive it yourself or get someone to come and help, and that limits the availability of experts you can call on. But with cloud delivered services you often have a large, global pool to draw on, meaning you can pull people in at short notice,” he says.

“At Kademi we nurture a community of web professionals certified to work on our platform, and we refer them on to our clients when needed. So an agency can assemble a team to put together even very complex campaigns within a matter of hours.”

Getting back to the myths question, Ignition’s Ross Hawkins believes there’re still some believers in the “Stick it in the cloud = job done” myth.
“The cloud is not a fix-all for systemic and organisational issues, or for a lack of a cohesive IT strategy,” he says. While cloud services offer opportunities for reduced infrastructure, there’s still a need to manage and monitor them, and to ensure that they’re identified as a key component of your risk management processes.”

Crystal Payroll’s Kelvin Chen says there’s a lingering myth about data ownership too. “We still get occasional queries about ownership of the data, with people worried that if they stop using us their payroll information will somehow disappear into the cloud when, as legally required, they must be able to access it for the next seven years.
“I can’t speak for other payroll providers but we never delete anything if an account closes. We simply switch the account to ‘read-only’ and leave it available for access anytime.”

Evolving landscape
So how will the cloud delivery landscape evolve over the next five years? Kademi’s McEvoy foresees an accelerating trend of cloud service providers moving from their narrow and specific proposition to a much broader ‘everything you need to do X”’ proposition.

“The pressure will increase on smaller cloud service providers who might see the bigger providers squeezing their niche,” he says.
He believes it will be interesting to see how the local tech industry copes in this new environment. Attracting talent is an acute issue for most tech companies and that looks set to get worse, but New Zealand has a lot of potential to attract the world’s best, he says.

“Current and previous governments have made a lot of noise about supporting the tech industry, but I’m not sure they’re focusing on the things that really matter, which is really just creating a great environment to work and live in.”

Meanwhile cloud usage is fast becoming ubiquitous. There are still providers offering PC-based software but these are slowly vanishing as more and more software solutions migrate or start up online.

Ross Hawkins says nowadays it would be unusual for anything to feel out of place in the cloud; however, he names a couple of slightly less traditional examples of leveraging cloud technologies.

“Microsoft recently used their Azure platform for the multiplayer infrastructure components of their Xbox release ‘Titanfall’. There’s been a number of articles posted with information about that, and they make for interesting reading.

“Taking a slightly different angle, 2014 saw a number of malware and botnet writers using cloud services. Which serves as a good reminder that the power of the cloud can be used for both good and evil means.”

We’ll give the last word on the future of cloud to Tim Dacombe-Bird, regional sales manager, New Zealand, for Amazon Web Services (AWS).
“It’s still early days and it’s amazing how much the cloud has already impacted the world. Today all of the biggest events are run on the cloud, from streaming the Olympic Games, to voting on big reality shows like Dancing with the Stars.

“We’re going through an enormous shift in technology and it’s happening at a startling pace – much faster than anyone anticipated,” says Dacombe-Bird. “Cloud allows organisations to focus on their key differentiators – whether that’s analysing petabytes of data, delivering video content, building great mobile apps or even exploring Mars – leaving the heavy lifting of the underlying technology infrastructure to AWS.

“Ultimately [the cloud] enables every industry to innovate in new ways – from personalised medicine, to better understanding our universe, to accessible university education for hundreds of thousands across the world, to new business models for traditional industries and the advent of the ‘connected world’.
“We are just in the beginning of what is possible.”