We cover case studies of three such applications here, with some thoughts from providers on narrower and broader definitions of cloud computing.
The ‘cloud’ is the latest incarnation of a remote computing model that has surfaced from time to time over decades, as the economics of IT and telecommunications make it more or less economical to give over part of the information processing workload to a third party at a remote site.
The distinctive feature of ‘cloud’ processing is that the public internet provides the communication medium, rather than a dedicated communications link.
Perceived advantages include scalability as the workload grows and a reduction in administrative responsibility, (keeping the servers running and keeping software licences up to date). Multiple sites in your organisation can have access to the same data without the need to run your own network. A significant plus in measurement applications such as IAG’s use of Snapshotz, is that the data generated from your own operation can be compared with anonymously collated average figures for the sector.
The downside is a dependence on others with their own roadmaps and their drive to maximise advantage to their overall customer base, which can be disconnected from an individual users’ needs.
Above all it means a dependence on the bandwidth of your internet connection. This, particularly in New Zealand, can be a significant handicap.
Nonetheless we can see the beginnings of a user community with mostly positive feelings about computing in the cloud.
Travel firm gets an upgrade
Stella Travel Services in New Zealand has centralised and virtualised the whole of the IT environment for its corporate travel units over the past 12 to 18 months, says Dhaya Sivakumar, general manager of IT.
Central to this is a move to remote applications provisioned through SAM (Sabre Agency Manager), a division of the former airline-booking system Sabre that is now privately owned with its Australasian head office in Sydney. In addition to linking to the Sabre-selling suite, SAM provides the front-end travel consultants with mid-office travel accounting functionality.
Previously Stella was using Serko, a remote application provider that specialises in the travel industry.
“It’s a move from having some of our core systems externally hosted, to having it all external,” says Sivakumar.
With Serko, Stella had to employ in-house product specialists and data warehousing experts to manage the data and all the appropriate software licences, and to look after all its own upgrades. Even when work was performed by the vendor, time and resources were needed to coordinate upgrade activity.
“We were investing a lot of time and energy into maintaining infrastructure services.
“We wanted to redirect those resources into meeting the needs of our customers and the needs of the business. IT outsourcing allowed us to align our people with those needs, as opposed to looking after the infrastructure,” he says.
In particular, with the move to cloud computing, Stella’s IT staff were able to spend more time on improving applications productivity and usability.
This is now bringing positive, bottom-line results in the form of increased productivity and lower cost of sales, says Sivakumar.
With SAM, upgrades are done by Sabre. This is a mixed blessing, he says. While it means a reduced workload for the New Zealand operation, “We lose some control over the timeliness of enhancements.”
He says it is harder for the company to get new features put in to cater for specific needs, as enhancements are constrained by the Sabre development roadmap.
“The positive side of the change is obviously scale and cost,” says Sivakumar. The company no longer has to keep its own infrastructure working to the consistent availability that the travel industry requires.
A service level contract has been signed with SAM and as long as that is maintained, there is an assurance of constant service that does not require input from Stella’s ICT staff.
In practise, the performance “does go up and down”, he says, “it depends on so many variables”, not least the bandwidth available through the internet virtual private network connection to Sydney. Problems with speed of response in the early days of the new arrangement were difficult to pin down; was it a slow network, insufficient provision for bandwidth or overloading on the Sabre processors?
Most of the issues turned out to be at the Sabre backend. Though initially, Stella hadn’t purchased sufficient bandwidth and underestimated in particular, the cost of its use of international links, Sivakumar says.
“One of the first decisions was whether to go with a dedicated link or the internet,” says Sivakumar. “There are probably some days when we wonder whether we made the right decision.”
Overall, moving into the cloud has been “a bit of a frustrating experience”, he says. Lack of control is a big risk, particularly in getting timely problem resolution.
“If a user is having a performance problem, trying to establish the owner of that problem, contact the right person to resolve it and get action has been hard.”
One overall lesson is that success in cloud computing depends on how good the partnership with the supplier is; this is far more the case than with a conventional software development or purchase, where the project has a clear beginning and end. In the cloud, the relationship is ongoing and has to be a good one. “You and the vendor are joined at the hip,” says Sivakumar.
With SAM, he says, “We started out on a rocky road, I admit, but the relationship is now working a lot better.”
Retail outlets of the Stella operation in New Zealand are still using either Serko or other partial in-house systems, but there are plans to launch new selling tools and the cloud model is being considered.
Insurer measures customer service for improvement
Insurance company IAG was looking for a way to audit the performance of its contact centre. This would help it put the right conditions and incentives in place to improve the performance of staff and to improve the interworking of business processes involved in the centre.
The reason for going into the cloud for its audit “was quite simply that we don’t have an in-house tool,” says Bart Taylor, operations manager in the corporate partners division of IAG.
“I was actually looking for full audit service through Teleconsultants.” As a preliminary step Taylor looked at SaaS tool Snapshotz, from Auckland firm Customerservicesaudit. “I thought they might be able to help me with a brief snapshot before we got into a full audit,” he says.Snapshotz was developed over five years by New Zealanders, Deepak Selvaratnam, Vernon Lu and Feng Wu. The Snapshotz process includes consultancy and measuring technology delivered in a software-as-a-service mode and is based on real-world experience in customer services across many industries and countries.
It is applied not only in contact centres but in a broad range of customer-service environments, including face-to-face retail, says Selvaratnam.
Snapshotz uses a checklist of more than 550 variables covering eight main functional areas. Processes can be hooked together in a workflow scheme and a cost assigned to each “as you would with a manufacturing process,” says Selvaratnam. Then efficiency, productivity and cost savings overall can be calculated.
By measuring these parameters against industry averages, the tool gives an organisation a quick focus on the areas where it could obtain the biggest payback most immediately.
This is assisted by a range of visual charts, quickly appreciable by the manager of customer services or even the CEO. They include histograms, radar charts (polygonal plots of several variables with all axes radiating from the centre) and red-yellow-green indicators of significant and not-so-significant deviances.
“SaaS gives you flexibility,” says Selvaratnam, “you don’t have to worry about storing your own data and you can access it from anywhere.”
Benchmarking against moving industry averages is easier if all the data is together. “You could do it with in-house software, but it would be hard to organise the data in one place.”
Increasingly, all channels of the customer relationship are being brought together through “unified communications”, he says, so it makes sense to have a “holistic” view of the data pertaining to all channels.
“I think the snapshot has given me a great idea of where we need to focus on, like around business process improvement,” says Taylor. “Do we have the right remuneration policies in place; do we need to think about health and safety?
“There were some key aspects that came out for me and what we’re doing now is building strategy plans off that to look at what areas we want to attack first. We’ll make a decision [when we get] into the new financial year, around July — do we actually want to do a full audit through Teleconsultants? We may just want to plough ahead with the information we’ve got through Snapshotz.”
Bunning opts for managed mail
For hardware store Bunnings, a need to upgrade its Exchange server and provide redundancy for it that sparked the move to a remote service to ensure the safety and security of the company’s email and internet access.
The change became necessary three or four years ago, says ITS manager David Hollies. The company had more than 200 users and the load was becoming difficult to manage. However, before upgrading in-house, Bunnings decided to explore managed email.
“We were using Telecom’s OneOffice and Telecom was providing our fixed and mobile phone service,” so it made sense to explore the Telecom Gen-i Safecom managed mail solution.
“When we calculated the cost of a new server, managed mail looked a better proposition,” says Hollies. Rather than going for the immediately apparent solution, Bunnings put up a competitive tender; but the Telecom-Gen-i solution showed up the best anyway.
Bunnings has now been running Safecom for almost three years and it has performed exceptionally, Hollies says. It serves 270 users, in head office and on the two or three PCs at each branch, managing both their email and their internet access. Blacklists and white-lists are maintained at the server to restrict the websites that employees are allowed to access. This is taken care of by Safecom; Bunnings staff are not burdened with the task of keeping the lists up to date.
Telecom and Gen-i also take care of the main user helpdesk, diagnosing and remedying more major problems, though Bunnings takes care of front-line minutiae such as forgotten passwords.
There have been no drawbacks to the remote arrangement “as far as I can see”, says Hollies.
More complex than SaaS
Storage specialist EMC has a rather different definition of cloud computing from the SaaS users interviewed. If the processing is being done in one identifiable place, then it’s not “in the cloud”, says marketing chief technical officer for EMC Australia Clive Gold.
With its market focus, EMC naturally sees data backup as a prime application for the cloud environment. Data backed up in several geographically diverse places is better protected against loss, says Gold, and more secure against failure of a single site or single technology when it comes to restoring backed-up data.
EMC made its first move into the cloud with the acquisition of consumer cloud backup company Berkeley Data Systems and its product Mozy in late 2007. This has been upgraded to Mozy Enterprise for commercial users. Acquisition of personal information management company Pi followed last year. EMC is now merging the two into an entity unprepossessingly known as Decho (Digital Echo). “We’re playing to our strengths in managing information, not applications,” Gold says.
However, the EMC cloud operation also takes SaaS applications from “tenants” and bills centrally for their use.
“We see cloud technologies driving the way people use IT in the future,” says Gold. With the aid of virtualisation, the environment permits even greater flexibility and efficiency in computing platforms.
All this reorganisation will not be easy, says Gold and a lot of customers are “stalled” working out the complexities of visualisation structures, and other aspects of exploiting the cloud’s full potential.
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