Can cloud computing put NZ on world stage?

BY MARK REVINGTON

Want to go offshore and reach a large online market in a hurry but don’t have capital to buy the necessary IT hardware? The cloud is your answer.

There’s one obvious drawback: you may never know at any given minute where in the world your data is. And cloud computing is both deceptively simple and terribly complex.

It was hard to miss the hype towards the end of last year. According to the Economist, there’s nothing the computer industry likes better than a big new idea — followed by a big fight, as different companies compete to exploit it.

Every man and his dog know this is a big play and they’re all fighting to get aboard.

The usual suspects are there — Microsoft, Google and a bunch of players who want to provide storage or cloud services.

And that well-known IT company, Amazon. Yes, the online retailer has become a major player in the cloud.

When Dunedin-based TicketDirect said it planned to take on the global giants of the ticketing world using Microsoft’s new Azure cloud computing platform late last year, it seemed like the perfect Kiwi confluence between startups or fast growth companies and the cloud.

What is the cloud? Basically the cloud is the internet and cloud computing is a model of computing where services and applications are hosted on and accessed through the internet.

“We give one label — the cloud — to a huge variety of different services meaning everything from an outsourced platform at the lower end of the scale through to completely outsourced software as a service,” says Cisco country manager Geoff Lawrie.

What it does for TicketDirect is give the company the ability to scale operations at an incredible rate.

It’s the scale fast or fail fast scenario, says Chris Auld, director of strategy at Intergen, which has helped TicketDirect with its Azure deployment.

“Take a startup business with a brilliant idea and venture capital funding. The time comes to deploy and you have two options.

"You either go back to the venture capitalist and say ‘we need $100k to put in some servers’, and they say ‘that’s great but we’ll take another 30 per cent of your company’, or you go to the cloud and it costs you $100 a month and if you do really, really well then two months down the track it may cost you $1000 a month to use those servers.

"But that’s okay because you’re making $20,000 a month and if you do really badly then you turn it off and take some other option and you’re not left with a grumpy venture capitalist with $100,000 worth of server hardware sitting around to dispose of.”

That elasticity and ability to scale, which appeals to TicketDirect, is the beauty of the cloud, says Auld. But as yet he thinks New Zealand companies haven’t quite grasped what is available and its potential.

“They don’t quite understand the elasticity story.”

If you want to pick a fight in business, try taking on Ticketmaster, the US giant that squashed alt rock band Pearl Jam like a fly when it tried to boycott the ticketing company.

TicketDirect founder Matthew Davey is unfazed.

“It’s really the Holy Grail of the ticketing industry and for us as a New Zealand ticketing company fighting the big guys, our multibillion-dollar competitors, it gives us that first-mover advantage. And from that standpoint moving into the cloud overnight gives us more capacity than Ticketek in Australia or Ticketmaster in America. It’s pretty amazing stuff.”

By renting servers from Microsoft’s huge server farms, TicketDirect can coast along, selling around 6000 tickets a day, then crank up to sell 100,000 tickets in 90 minutes.

It opens up a whole new world of possibilities. Say TicketDirect needs or wants to sell half a million tickets around the world to an Olympic Games.

The company knows when the selling period of heavy demand will be, which is an advantage, says Davey.

“Then we can spark up as we need and partition our data on as many Azure SQL servers as we need and we are rockin’ and rollin’ from there.”

TicketDirect has grabbed 45 per cent of all professional ticketed events in New Zealand and a substantial foothold in Australia through turning the ticketing model on its head.

The company’s business model is to provide software directly to venues who provide their own ticketing services and choose their own prices while using TicketDirect’s centralised ticketing website and common marketing brand. Davey reckons it is commonsense.

“We’ve given them a huge element of control and the ability to set their own prices, keep more money in their back pockets and more jobs in their local communities. We’ve proved how strong the model is and how well it works. What we’re going to do with the whole cloud side of things is take the business model global.”

It is a punt, says Davey. Taking the risk as an early adopter is always perilous, but the potential reward by gaining first-mover advantage is massive.

In a sense, none of this is new.

“What all the cloud platforms are about is taking many of the application architectures developed over the past 10 to 15 years, building high-scale internet applications and putting those into a form that can be bottled and sold by the hour,” says Auld.

“How else would we end up with Amazon being the emergent leader in cloud computing? Someone from Amazon woke up one morning and said, ‘we are a really big book store and we do a good job of running high-scale data centres so why don’t we put it in a bottle and sell it?”

“We’ve come a long way but the basic notion that there could be a specialist provider with the expertise and scale and capability to do it at lower cost than you could do it yourself and make reasonably sophisticated capabilities available to quite small companies is exactly the same,” says Lawrie.

“The interesting thing is the way in which we execute around this, and the internet and virtualisation capabilities and the scalability we can get out of today’s platform technology have really changed the dynamics about how you deliver that.”

Cisco, which last year announced a joint cloud venture with VMware and EMC, has been targeting larger companies and cloud providers, says Lawrie, who thinks there is a high level of interest but also a degree of caution.

“The industry does an unfortunate thing to itself in creating huge amounts of hype and expectation around a capability and then, more often than not, underdelivering. It’s unfortunate that the cloud has risen so dramatically because fundamentally it is actually a very viable notion.”

Remove location from the business discussion and it opens up pretty interesting possibilities for New Zealand companies, he says.

“One of the implications of the cloud is that it can catapult New Zealand on to a global stage. The fundamental principle of the cloud is that it is completely independent of location. It doesn’t matter whether you are delivering or accessing the service.”

For TicketDirect, the cloud raises the bar dramatically, says Davey.

“And there is no way we could afford the resources to do it in a conventional manner. We are able to go from the 10 servers we’ve got to 10,000 servers. You can specify that many. A small company like us can’t afford that kind of infrastructure to have it sitting around idle 99 per cent of the time.”

- Unlimited