cloud | Paul Wallbank - Communications Professional

Small business and cloud computing

The story of one Melbourne clothing supplier reminds us just how basic most small businesses’ IT systems are.

This blog, and its predecessor, have long maintained that computers and the internet have levelled the playing field between large corporations and small business so it was interesting Telstra’s managers say that over lunch today.

Australia’s biggest telco was showing off their cloud services for small to medium businesses with a presentation from futurist Ross Dawson on the changing technology world then real world case studies from Darwin’s Abode New Homes, Canberra’s Red Robot and Melbourne’s Cargo Crew.

Narelle Craig of Cargo Crew led with one very good reason for adopting cloud services – Cryptolocker ransomware.

After an infection that locked them out of their systems and cost the business a hundred thousand dollars, they shifted their on premise software to the cloud.

It’s easy to imagine how Cargo Crew came unstuck, a basic system that met the needs of a four person company five years ago grew into an unwieldy beast servicing 25 staff today. As the business grew, the disruption of upgrading IT systems was seen as too time consuming and costly.

Until of course something happened. A ransomware infection for Cargo Crew and for Abode a fire in a neighbouring office the evening after they’d installed a new 20,000 dollar server, where thankfully they didn’t lose anything but the scare was enough for them to start looking at alternatives.

Cargo Crew’s tale is a reminder of how basic most small to medium businesses’ IT systems are and how rudimentary their IT security is. While technology does level the playing field, there are still some things smaller businesses struggle with.

Beating the shock clock

Dell Boomi’s CEO, Chris McNabb sees being part of an empowered Dell as his company’s advantage against the newly listed Mulesoft.

With a range of tech companies floating as corporations lose their appetite for acquisitions, companies like Boomi which was bought by Dell in 2010 believe they have an advantage over competitors like Mulesoft which have to answer to the public markets at sky high valuations following their recent stock market listing.

If Chris McNabb, CEO of Dell Boomi, is concerned about his competitor’s successful IPO, he wasn’t showing it when he spoke with Decoding the New Economy at a restaurant in a Sydney office park last week. With Mulesoft’s stock popping 45% on the first day of trade, attention was on how his company would react to such a vote of confidence in his market rival.

“We continue to grow very rapidly, well north of market growth rates. I think you’ll see us consolidate our position at the top of most boards in terms of the number of customers. If you look at Mulesoft’s S1 (the company’s official stock offering document) it shows them with around 1,078 customers while we have 5,300 customers. We almost have an unfair competitive advantage.”

Part of that unfair advantage McNabb cites is the breadth of services now offered by Dell’s merger with EMC where he flagged an increased push across the organisation’s sales team starting in the second half of this year.

“For us to say six months ago that we’d sit here and say that the merger of two 25 billion dollar plus businesses could be bedded down is really saying something. I think it’s one of the best integrations that I’ve ever seen.”

“For Boomi it’s been terrific and continues to be terrific. We get unequivocal support from executives, Michael Dell and the ELT – Executive Leadership Team – has been nothing but a hundred percent supportive.”

“Now we’re looking at what we can do with the EMC Solutions sales team, what we can do with our brothers in the strategically aligned businesses, specifically Pivotal, Virtustream and VMWare. What are the opportunities to go to market more collaboratively with them?”

Boomi’s recent ManyWho acquisition fits into that range of offerings and McNabb believes the workflow platform’s role as a tool helping CIOs manage their organisations’ transitions to cloud services will be a compelling offering.

“Workflow automation – redoing business processes in a structured and an unstructured way – was always a key strategy of ours.”

“Hybrid IT is here for the next ten years, so how do we enable it so customers can buy all the best of breed software they want yet still have a suite like experience?”

“We believe hybrid IT is creating challenges for CIOs and as you get all these different cloud applications from vendors you’re breaking apart your ERP and creating an integration problem and you’re creating a data management problem along with governance, API management and orchestration.”

“It’s our vision to give CIOs the unified platform the necessary fundamentals in cloud services to address these issues.”

With a solid market position in North America, McNabb sees the Asia-Pacific as the big growth driver for Boomi with channel partners leading the company’s expansion across the region.

“Worldwide EMEA is going through a ton of growth and this region (APAC) is going through a ton of growth. Our expectation is this region will have the highest growth rates – Australia, New Zealand, South East Asia, these are key target areas.”

“If I look at things strategically and how important the channel is to us, is it’s a force multiplier as it allows you to get entire teams being certified and ready to go across regions. It also helps execute in a better way in local markets, you have to be in a region in a big way and if you can get really good certified partners you can do that much better and faster than if you’re hiring and building it yourself.”

Returning to the topic of Mulesoft, McNabb sees not being part of a publicly listed company as one of Boomi’s big advantages.

“We don’t operate on a ninety day ‘shock clock’, we know what the market’s growing at, we know what our platform is capable of, we know we’re going to raise our targets. There isn’t increased pressure to perform.”

“As it turns out, those in the public eye do have the ninety day shock clock to attend to and it will be interesting to see how those first, two, three or four quarterly reviews go. I’ll certainly be an eager listener to their investor calls.”

Ultimately though, McNabb thinks Mulesoft’s IPO and it’s 45% pop on listing vindicates Dell’s ongoing investment in Boomi and the potential of the cloud integration marketplace.

“I look at it as a terrific validation of the marketplace…. It’s good for everybody.”

Microsoft sees off the Google threat

With their Office365 success, Microsoft have shown they are far from a spent force in the software industry.

Earlier this decade it looked like Microsoft’s most profitable business line was doomed as Google Docs threatened to disrupt the Office franchise.

Yesterday Microsoft showed how they had seen off that threat when reporting their second-quarter results that beat Wall Street analysts’ estimates and saw the company’s stock market capitalisation topped $500bn, the first time since the year 2000.

Microsoft’s results were mainly due to its cloud computing products with Azure growing at 93% year on year, Office 365 commercial at 47% and Office Consumer Products and Cloud Services at 22%.

Earlier in the week, cloud security company Okta released its Business at Work study that looked at trends in the commercial use of online services which showed how Microsoft’s products are dominating the market.

Microsoft’s advantage was underscored in a Gartner paper late last year. The Current State of Cloud Office and What to Do About It report found 10.7 percent of public listed companies surveyed were using Office 365 as opposed to 5.2% using Google. The rest had deployed hybrid or on-premise productivity suites.

So Microsoft seemed to have seen off the biggest threat to one of their most important products which for Alphabet/Google should be a worrying development as G-Suite (as it’s now called) has failed to become a meaningful revenue centre – advertising profits still made up 22 billion of the company’s $25 billion revenues in their last results.

Google’s failure to diversify should worry Alphabet investors, particularly given the headstart the company had over Microsoft Office in the early days of G-suite as then Microsoft CEO Steve Ballmer struggled to shift the company’s key product lines onto the cloud.

How much the initiatives of G-Suite’s new leader Diane Green can go in making Google’s product more attractive is a big question as Microsoft have shown they can match or beat their competitors’ offerings in areas like collaboration and artificial intelligence.

Despite Microsoft’s success in seeing off Google in the office productivity market the company still lags Alphabet market capitalisation of $570 billion but Microsoft have show they are far from a spent force in the software industry.

GorillaStack – the weekend hacking exercise that grew into a business

As a business born out of a weekend hack Sydney based GorillaStack is almost a classic tech tale.

“I was involved in a startup previously,” says GorillaStack’s CTO, Elliott Spira, recalling how the company was his co-founder Oliver Berger at the AWS Re:Invent conference in Las Vegas last week.

“We noticed we had spikes in our AWS spend, there was a big attribution issue and one day we said ‘how about we do a weekend project and try to spin something up that listens to our Cloudwatch metrics and tells us how much we’re spending at any time of the month.”

As the challenge was accepted, the team went to work. “We hacked away all weekend as we like to do, being nerds, and by the time the weekend was over we had the basic cost dashboard that told us how much we were spending each month.”

Adding more features

“The next weekend we decided to add another feature and we decided to add cost alerting where we’d get an email when we passed a certain threshold. That was really cool as we could budget and know when we were spending too much.”

“On the following weekend we started working on periodic alerts on how much we were spending over a set set time and from there the idea started to prosper, we thought ‘oh wow, we have a bit of a product going here. Let’s show some friends who also use AWS.’ From that feedback we found people wanted to keep the dashboards up and keep track of what was being spent.”

Today GorillaStack offers a service that allows companies to manage their AWS usage, something that can easily get expensive for organisations not closely watching what they are using. “What we try to do is make a cultural change where people become conscious of what is actually theirs in the cloud.” Elliott says. “We’re actually seeing that change.”

Living the culture

“In terms of that culture, we try to live that culture as well. We have private Slack channels with each of our customers so there’s a constant line of communication,” says Oliver. “Those Slack channels have proved to be an effective customer support and product development tool. “we’ve fostered quite a good community.”

With the initial hack being successful the company was formally founded in June 2015 and to date is bootstrapped, having not taken any investor’s money. “We want to get to a stage where we’re comfortable with the product,”says Oliver.

Currently the user base includes paid customers like Citrix, Bauer Media, Health Direct and the Australian Football League. “We have quite a good spread in terms of geography and mix of customers,” observer Oliver. “Right now the breadth suits us.”

Applying the freemium business model

Following the freemium model, the company also offers a free tier offering a single switch. “If you want anything more you move onto our paid tiers,” says Elliott.

To the question whether the company is looking at catering to other services such as Microsoft Azure or the Google Cloud, the dominance of AWS comes into play. “Right now we’re definitely sticking with the giant, we’re really looking at growing our capability so we do more and offer more to our existing customers,” says Elliott. “I think it’s really important to focus on delivering value to them and our business’ future,” Elliot says.

Looking to the immediate future, their focus is on extending their current customer offering. “We’ve a fair bit on our roadmap, we have a bit focus on chatops with a more in depth integration with Slack and Hipchat integration with our existing product,” says Elliott.

In talking to the Gorilla Stack founders, it’s striking just how the startup follows the classic tech model of a bootstrapped company that started by a bunch of hackers solving their own problem. How the business evolves will be fascinating to watch.

Paul travelled to AWS Re:Invent in Las Vegas as a guest of Amazon Web Services

Saving pets with tech

Pet Rescue has a mission to make sure every rescued pet finds a home. By using the web they hope to save thousands of animals each year.

“Like all great ideas it was conceived over a beer and executed over coffee,” says John Bishop, the joint founder and co-CEO of Pet Rescue. “A couple of friends and I were sitting in a bar back in 2003 and we came up with the idea, had a look around and there was no-one doing it in Australia at the time.”

John was talking to Decoding the New Economy at last week’s AWS Re:Invent conference in Las Vegas where he some time to explain how Pet Rescue uses the web to connect prospective pet owners with rescue shelters.

“Basically we help people find rescue pets in need of adoption,” John explains. “We work with the vast number of rescue groups in Australia. By rescue groups I mean pounds, shelters, vet clinics and foster care networks. There’s about 950 of those in Pet Rescue at the moment.”

Rabbits, guinea pigs and rats

The system allows accredited animal rescue services to list the pets they have available for adoption, “primarily cats and dogs but also rabbits, guinea pigs, pigs, chickens, there’s even one rat we’ve rehomed,” John laughs.

John was working as an IT manager with a consulting business on the side in 2004 when the site launched. “We didn’t know if it would work but I had the idea in my head the whole time I was building it that if one pet found a home rather than being killed then it would be worthwhile.”

“From day one I designed Pet Rescue to be as hands off as possible, once the members had access to it they could upload their own photos and things like that. It wasn’t groundbreaking in 2003 but it wasn’t that common”

“One of the biggest problems we faced in those early days was many of the rescue groups didn’t have digital cameras. So we did a promotion with a bunch of Kodak digital cameras that had been donated to us and gave them to the groups.”

A problem of scale

The site was quickly a success but that came with issues, particularly when the site was mentioned in the press or had a lot of social media attention. “Eventually we hit problems as I had gave no thought of architecting a site that would scale.”

While that scaling process didn’t go without problems, the service now sits in the public cloud with AWS so the Pet Rescue team can get on with connecting pets with owners, and John expects to help rehouse four thousand pets by the end of the year.

“Our challenge at the moment is we have a weird supply and demand problem happening, we have half a million unique visitors a month and helping rehome about five to six thousand. Another challenge is we’re still working on an old model of handling enquiries about the pets.”

“Our goal is to get to the point where we rehome 200,000 pets a year. Right now we’re looking at 90,000. It’s a bit of a magic number because that’s the number of pets that are unnecessirly killed each year so if we can get to that two hundred thousand we can zero that out.”

Finding funding

The bigger task for Pet Rescue is to find funding with the organisation as John doesn’t believe paid registration for the rescue groups or users is the best thing for the site, “we want to have as few barriers as possible,” he says.

Currently the service earns some money from advertising with some corporate partnerships in the pipeline. “We need money, it costs a lot to keep the site up and costs a lot for development.”

While many startups and corporations talk about using tech for good, Pet Rescue’s and John Bishop’s mission of ending unnecessary deaths of unplaced pets is a genuine worthy cause. By making it easier for companion animals to be adopted by the right households shows what technology can do.

Paul travelled to Las Vegas and the Re:Invent conference as a guest of Amazon Web Services.

Having a culture of yes

Key to fostering a company wide culture of innovation is management’s willingness to say ‘yes’ says AWS CEO Andy Jassy

One of the biggest impressions from the AWS Re:Invent conference is the company’s rapid innovation with the firm’s executives boasting how they have offered over a thousand features on their services this year.

That sort of rapid change requires a fairly tolerant attitude towards new ideas and risk, which was something AWS CEO Andy Jassy explained at the media briefing.

“In a lot of companies as they get bigger, the senior people walk into a room looking for ways to say ‘no’. Most large organisations are centrally organised as opposed to decentralised so it’s harder to do many things at once,” he observed.

“The senior people at Amazon are looking at ways to say ‘yes’. We don’t say ‘yes’ to every idea, we rigorously assess each on its merits, but we are problem solving and collaborating with the people proposing the idea so we say ‘yes’ a lot more often than others.”

“If you want to invent at a rapid rate and you want to push the envelope of innovation, you have to be unafraid to fail,” he continued. “We talk a lot inside the company that we’re working on several of our next big failures. Most of the things we do aren’t going to be failures but if you’re innovating enough there will be things that don’t work but that’s okay.”

While Amazon’s management should be lauded for that attitude, they are in a position of having tolerant investors who for the last twenty years haven’t been too fussed about the company’s profits. Leaders of companies with less indulgent shareholders probably can’t afford the same attitude towards risk.

There’s also the nature of the industry that AWS operates which is still in its early days, sectors that are far more mature or in declines – such as banking or media respectively – don’t have the luxury of saying ‘yes’ to as many ideas as possible.

Jassy’s view about encouraging ideas in the business is worth considering for all organisations though. With the world changing rapidly, having a workforce empowered to think about new ideas is critical for a business’ survival.

Computing on the edge

Amazon announced another range of services and products at their annual Las Vegas conference, but are they becoming too powerful?

As with every vendor conference, this year’s AWS Re:Invent convention in Las Vegas bombarded the audience with new product announcements and releases.

One of the interesting aspects for the Internet of Things was the announcement of Amazon Greengrass, a service that stores machine data on remote equipment which combines the company’s Lambda serverless computing and IoT services.

Further pushing Amazon’s move into the IoT space was CEO Andy Jassy’s announcement that chip makers such as Qualcomm and Intel will be building Lambda functions into their chipsets, further embedding AWS into the ecosystem.

Jassy also touted the company’s new Snowball Edge, a slimmed down version of their Snowball data transfer unit that also include some processing features, that is aimed at storing machine data at remote or moving locations such as ships, aircraft, farms or oil rigs.

That latter function ties into one of the key aspects about the Internet of Things – that most data doesn’t have to, or can’t, be transmitted over the internet. This is something companies like Cisco have focused on in their edge computing strategies.

With AWS dominating the cloud computing industry – Gartner estimates the company is ten times bigger than the next 14 companies combined – the worry for customers and regulators will be how much control the organisation has of the world’s data.

It’s hard though not to be impressed at the range of products the company has, and the speed they get them to market, the onus is on companies like Microsoft, Google and Facebook to allocate the resources and talent to match AWS in the marketplace.

The smell of social media defeat

While Microsoft’s acquisition of LinkedIn is a triumph for the Silicon Valley greater fool model, it shows social media is largely an investor’s graveyard.

“There’s a shared sense of alignment,” says LinkedIn CEO Jeff Weiner during his video with Microsoft’s Satya Nadella to announce Microsoft’s $26 billion dollar acquisition of LinkedIn.

Weiner has been trying to reinvent LinkedIn’s business model for three years and Microsoft’s acquisition is an admission of defeat with the company’s market capitalisation half of what it was a year ago and profits proving hard to find.

The fact revenues were slowing in the face of anemic returns is probably the reason why LinkedIn’s board was happy to accept Microsoft’s deal that’s 46% more than the social media site’s $17.5bn market capitalisation on Friday.

LinkedIn’s capitulation shows what a graveyard social media sites have been for investors. With the exception of Facebook, almost all have failed to deliver the profits or promise hoped for by those making big bets on the platforms.

Both LinkedIn’s and Twitter’s managements have been distracted by the search for revenue streams to justify their huge stockmarket valuations which in turn has alienated core users. LinkedIn’s surrender means Twitter’s acquisition is only a matter of time.

Microsoft now has to show how it is going to derive twenty-six billion dollars worth of value out of LinkedIn. The company’s track record of acquisitions is execrable as we’ve seen with Nokia, Yammer and Skype and there’s little to indicate this deal will fare any better.

Commentary that LinkedIn as a ‘cloud company’ will help Microsoft Azure against an already rampant AWS is downright silly, Nadella himself in a Bloomberg interview with LinkedIn’s Weiner was at pains to point out the networking service’s fit with the Dynamics product.

Plugging LinkedIn’s ‘social graph’ with Microsoft Dynamics might give the Nadella’s team better tools to compete with Salesforce in the CRM market, it seems a high price to pay and almost justifies Salesforce’s Marc Benioff rejecting Microsoft’s overtures last year.

LinkedIn’s capitulation marks the end of social media’s growth phase. Now, as Facebook becomes the platform that rules all, the others have to find their niches in a market dominated by one services. For Twitter the race is now on to find a buyer.

The benefits of being public

Both the public cloud and a publicly listed company are good things for a business says Netsuite’s Zac Nelson.

“Managing a public company is a great discipline and in some ways gives us an advantage over non-public company who don’t have to have discipline and make good investments,” says Zac Nelson, the CEO of Netsuite.

Nelson was talking to Decoding the New Economy yesterday at the annual Suiteworld conference, Netsuite’s annual gathering in San Jose.

The CEO’s comments are in contrast to a common view that being publicly listed company distracts a company’s management from focusing on long term objectives, a sentiment Nelson rejects.

“In terms of managing a public company I think it’s an important discipline, I think a lot of people are opposed to these SOX (Sarbanes-Oxley) rules but when I look at these rules I think they are just common sense. Are you managing your business right? You want to have control of your business so you aren’t blindsided.”

Probably the biggest advocate of taking companies private is Michael Dell who took his eponymous business off the markets three years ago and is now looking at doing the same thing with EMC in what will be the biggest IT merger in history.

Dell going private

Nelson doesn’t think Dell going private was a mistake though, “I saw Larry Ellison say it was one of the greatest business moves in the history of man, I’ll agree with Larry – he’s usually right on that stuff,” he laughed.

“The thing I see Dell doing that I understand is they are giving their smaller division more autonomy. Dell Boomi is going back to being just Boomi and Secureworks just went public. Certainly from a structural standpoint and business model innovation that makes sense and it’s what I understand.”

As a public company, Netsuite does come under scrutiny and one of the criticisms is that it continues to post losses, something that Nelson puts down to the treatment of stock options. In the last earnings report, the company claimed capitalising stock options added $30 million in costs and not including them would see the company reporting an eight million dollar profit last quarter.

“We’re cash flow positive, we generate over $140 million in cash,” Nelson says. “People are happy with it, we’re still investing. What we’re investing in this year is different to the past, we’re investing in services to enable our customers to invest in product.”

Integrating the stack

One of the advantages Nelson sees that cloud based companies like his have are integrated systems, “the client server world created this perspective that dis-integrated systems actually work – you have Windows, you have third-party apps – but what really works well are integrated systems.” he says. “Look at the most common system you guys use, called Apple, it’s an integrated end-to-end system. Same with Amazon, that’s what we’ve built.”

“The detour we took in the client-server world is still being taken in the software world, a lot of software people believe you can compile this stuff and it will magically work. No, it doesn’t. Integrated systems work better.”

Securing the cloud

One area he specifically sees where cloud services have an advantage in being integrated is with security, “a problem that large enterprises have that we to some degree don’t have is we have one system, we have five data centers. You look at some of these large enterprises and some of them don’t even know where some of their data centres are. How on earth do you secure that environment? It’s not a product problem, it’s a process and IT management problem.”

Nelson’s comments on security are a swipe at competitors like SAP and Oracle who are often criticised for having disparate systems.

With Suiteworld moving to Las Vegas next year, it will be interesting to see who’s taking bets against cloud services like Netsuite. Certainly with salesmen like Zac Nelson, they’re able to tell a good story. The key though is to show some profits in the longer run.

Paul travelled to Suiteworld in San Jose as a guest of Netsuite.