It was a novel start to a presentation about cloud strategy, but Wasley’s remarks reflect Trade Me’s cautious and pragmatic approach to an innovation that can inspire over-enthusiasm and exaggeration.
His response when asked to present on the subject at the CIO event was: “We don’t use the cloud and it is a term we don’t think much of.”
But a bit of reflection brought some cloud applications to light: “I did a mind-map and thought, oh there’s that app; that’s in the cloud and we pushed that one out… oh and now we’ve got into using Salesforce. The more I thought about it, the more cloud applications I realised we had.”
He then addresses the reasons why some Trade Me applications are externally hosted and many others are not.
He was relieved, he says, to hear a similarly pragmatic approach from Unisys CEO Brett Hodgson who gave a preliminary address before his presentation.
“It is a matter of horses for courses; a question of picking what works best for you,” says Wasley. “A lot of Trade Me’s infrastructure we would never outsource; it is just not in our nature.”
Because of the nature of Trade Me’s business — high-volume, highly responsive and in touch with a local customer population — the company prefers to keep its mainstream systems local.
Constant availability of service and trust in support staff are important factors in the decision, he says. “If [our main applications are] not available, we are not making money and we are annoying our customers. We have implicit trust in the people we employ” to keep the systems ticking over.
When considering an international provider, he says a key lesson is working out the service level agreements. While Trade Me is a “big fish in a small pond”, it is an entity of far less consequence to an international outsourcer. ”You must really trust the [providers] you want to deal with and fully appreciate where you fit into the big scheme of things,” he says.
“We’re 180 staff, looking to be well into the 200s in the next 12 months. We recruited an HR [human resources] manager last year and we have got processes and policies and stuff like that, because we’ve got a lot of people now. We’ve got people in Auckland and two [Wellington] offices. It is just the nature of a growing business that has changed us.”
The total load over all the types of transactions is quite predictable, says Wasley, and Trade Me is confident that it can handle this with staff from a New Zealand base. Outsourcing would require a provider with a usage-based charging scheme and there were no suitable providers “at least not when we last looked”.
One of the guests at the luncheon suggested that for the amount of business involved, a US-based cloud provider would probably be willing to charge for service in that way — but Wasley still demurs.
“The biggest issue for us is local traffic,” he says. “All of our users bar a couple of Aussies are in New Zealand and the guys that might have usage models [that suit us], are all in the States. It just comes down to latency and performance.”
The company is also wary of too many layers of virtualisation impacting efficiency.
“We like to run things close to the tin [hardware],” Wasley says. “We are all about performance. The fewer layers the better. The slower our site goes the less money we make and the more annoyed our customers get.”
Local availability, control and quick response of support staff are also important. “We’ve got quite a big stick sitting in the office,” he jokes. “If something goes wrong we grab that stick and stand over the tech guy that can fix it, until it’s fixed. And we kind of like the ability to do that.”
With Salesforce use “we’re in an interesting situation,” Wasley says. “We started with two licences three or four years ago. We’re probably out to 25 to 30 licences now, which is probably not big in comparison with [companies represented at the lunch].”
However, “we now want to drag our Salesforce data and marry it up with our TradeMe data — with all the bidding and buying people are doing — and one set of data is up there [in the cloud] and one is in the office across the road.
“So now we have to get an enterprise licence for Salesforce so we can tap into their API [to bring the two sets of data together]. Those are the sort of things you have to think about,” when going into the cloud.
Unisys kindly sponsored the CIO Insights Luncheon on ‘Driving a successful cloud strategy’ in Auckland and Wellington. Check out the pictures of the event on CIO Facebook.
Sidebar: Heading for the cloudsIn the several years since cloud computing was first recognised as a productive ICT strategy, enterprises have significantly changed and refined their view of the cloud, says Unisys CEO Brett Hodgson.
“In the early days, everything was going to be given to the cloud,” there would be a major shift of the entire processing workload “out there”. With more careful consideration it has become clear that “that’s not happening and it probably won’t happen,” he says. “All our clients are telling us they’re going to retain infrastructure on site. There will be a certain amount of infrastructure and a certain number of applications that for the foreseeable future they see staying in-house.”
David Wasley of Trade Me gives several reasons why this has been so in his company. A large enterprise might have a combination of conventional in-house infrastructure, use of public-cloud providers such as Amazon and Google and a private cloud using cloud technology entirely devoted to the company’s own applications. The private cloud may be run by the company itself or hosted outside. Increasingly, there are hybrid-cloud setups, where several clouds communicate with one another, using open or proprietary standards.
“The challenge we hear from our customers is, how do you optimise across all those different models that enterprise customers are looking to take advantage of – to use multiple versions of those components,” says Hodgson.
What makes the picture more complicated is the IT team no longer has complete control, says Hodgson. “Business are going round the IT shops, commissioning some work directly with vendors and implementing it,” acknowledging that Unisys had been the beneficiary of such direct deals. “At the end of the day businesses are doing that because they think they’re getting IT faster and sometimes at a lower cost.” But the saving may be undercut by the increased complexity, he suggests.
Customers moving into the cloud tell Unisys they look forward to increasing agility – having an ICT resource that will grow and shrink to meet business needs. With that goes an expectation of reduced cost, particularly reduced capital expenditure. Cloud computing is also expected to offer ready and convenient disaster recovery.
However, Hodgson says, to achieve that cost saving and agility, it is essential to keep tight control of the various environments and their interaction. This means broadening the perspective beyond the hybrid cloud to what Unisys calls the hybrid enterprise.
“A hybrid enterprise is a composition of cloud, non-cloud, internal and external IT service delivery models that remain unique entities, but are bound together by an integrated management environment, and common technology, processes and policies to optimise agility, enable data and application portability, and reduce risk,” says Hodgson.
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