From XU Magazine, 
Issue 21

What’s behind the World Computer? Demystifying cloud computing Add Comment

Cast your mind back to the 1980s. PCs were a luxury. Business computing was basic at best. Today, things couldn’t be more different. Not only is computing ubiquitous, but every company enjoys equal access to top technology. It’s the era of the ‘world computer’, and whether you know it or not, you’re using it daily because that’s how Xero works…
This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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Generally, though, we actually don’t call it the world computer, opting instead for the suitably amorphous title ‘the cloud’. In the simplest of terms, the cloud just means ‘someone else’s computers’ – but understanding the sheer magnitude of it means understanding who that ‘someone else’ is.

A case in point is Microsoft, not only one of the world’s biggest and most successful companies, but also the operator of a major cloud platform.

Microsoft Azure is a globally distributed data centre infrastructure, supporting thousands of online computer services out of more than 100 highly secure facilities worldwide.

The computing (and, crucially security) Microsoft invests in is the very best available anywhere, says Kevin Mann, CEO of New Zealand-based company Tidy International. “With the cloud, you’re always getting the latest technology available. The data centre operator is economically incentivised to invest in the best, because it does more with less – less electricity, less cooling, less space for the same or a better outcome.”

Kevin is well-placed to make those observations; his past role as Chief Technology Officer in the fund management sector involved him selecting and auditing mission critical data centres across Europe. When it came to making the final cloud platform decision for Tidy’s software as a service (SaaS) products in 2009, he met with US data centre experts at both Microsoft and Amazon. “We went with Microsoft Azure as it measured up best overall – and we’ve not been disappointed with that call,” he says.

Tidy has made a point of only connecting to other pure cloud applications like Xero, Office 365 and Capsule CRM, to provide customers with modular and flexible ERP solutions. “Why use old technology?” Kevin states, “The future is cloud. We knew it a decade ago and global cloud momentum has validated the massive investment we made in Tidy.”

Multiple benefits

Explaining the advantages of cloud computing, University of Waikato software engineering lecturer Panos Patros uses an analogy.

“Think of cloud computing in the same way you think of water or electricity. If everyone ran their own pumps and generators, it wouldn’t make sense – complicated and very expensive.” - Panos Patros

It is, therefore, shared infrastructure. Just like settling your power bill, you pay monthly for the technology services required by your business. This has the financial advantage of eliminating capital expenditure, and a technological advantage because updates –inevitable in computing – are provided as part and parcel of the service.

Panos, who also founded and heads the Oceania Researchers in Cloud and Adaptive-systems (ORCA-Lab) at the University, explains further: “It started with basic infrastructure – storage and compute – then moved on to what we call platform as a service (PaaS), where you have the infrastructure along with operating systems and other ‘supporting’ software. PaaS lets you write and run your own applications, or software, on the platform. Then there’s the highest level of cloud computing, SaaS. With this, you get the complete application, running on the cloud platform. All you need to access it is an Internet connection and a device.”

Notably, cloud solutions are brought to market in much the same way that on-premise ones were. This is important because it means end-users receive the support required for the services their businesses depend upon. Known as the ‘channel model’, distributors like rhipe, a cloud service provider (CSP), provide support to resellers; resellers (often a local accounting or IT firm) engage with end-users, delivering the best solutions and services for efficient business operations.

Providers like Tidy and Xero create their software on cloud platforms, on-selling through SaaS to thousands of users around the world.

An end-user perspective

One of those users is Bryan Holyoake, business development manager at Taranaki engineering solutions provider Armatec Environmental. “We’ve got a typical round-out of customer management, budgeting and forecasting, manufacturing and human resources management software.” His company also uses Xero, the popular cloud accounting application, for its financials.

Under his guidance, the three decades-old company has moved ‘just about everything’ into the cloud; with 30 employees across four locations, Brian says the distributed nature of Armatec’s operations means cloud computing makes even more sense. “From any device, and from anywhere there’s an Internet connection, employees can access the information and services they need to get their jobs done.”

As to why he’s gone with Xero and Tidy in the cloud, Brian says the answer is quite simple.

On-premise is obsolete. We could see systems categorically failing while there were far better ones available in the cloud and for which we wouldn’t have to make capital investments. - Bryan Holyoake

Cloud computing takes away the issues, costs and challenges of managing technology. “The uninitiated think network issues aren’t a big deal; trust me, they are. We don’t have the capacity to look after our own servers and other gear, in fact it’s stupid to even think we can. Cloud software as a service like Xero and Tidy is the obvious answer. We’d fail ourselves if we weren’t to use it, because cloud makes technology really easy.”

Why the cloud is expanding rapidly

There are multiple reasons for choosing someone else’s computers, particularly those of Microsoft, Amazon Web Services or Google; among them is quality. Kevin says delivery excellence is obligatory. “When you’re delivering equally to everyone, you just cannot get it wrong or you’ll have thousands of calls and emails complaining. Discipline is enforced and cowboys just don’t last because it’s easy to move from one provider to another.”

Kevin adds that the cloud offers multiple benefits beyond easy access to reliable technology. “You can set up business systems anywhere in the world in as little as a few hours. This is enormously powerful, as it reduces the cost of expansion; previously, you’d have to invest in local expertise for set up and you’d need space to house not only people, but computers. You just don’t have to do that any longer.”

Indeed, it is the way in which the world is moving; market watcher Gartner expects the worldwide public cloud services market to grow 17.5 percent in 2019 to total US$214.3 billion, up from US$182.4 billion in 2018.

What’s more, the cloud delivers far better quality, reliability and availability, adds Panos, with data persistence that cannot be matched by even the best on site systems.

Trusted advice

But there is a caution; not all cloud providers are created equal. Both Kevin and Panos say any business testing the cloud waters should assess the selected provider carefully. “It is a serious discussion. Analyse your requirements with your team. Know what makes sense to outsource, when to outsource it, and crucially, to whom.”

As more businesses rely on cloud technology – and in particular, SaaS applications handling sensitive financial information – absolute assurance of data security is necessary. After all, the paradigm is radically changed from data resident on a local hard drive or server.

“Serious attention should always be paid to the security of any computer network and the cloud is no exception,” says Kevin. “You should seek details from the vendors you work with and check them with a trusted advisor who is technically qualified and experienced. Know the risks, because everything has risk; with the cloud, accountants and other decision-makers need to understand where the data is hosted and the layers that protect your data.

The factors include security, privacy, data integrity, contractual clarity and protections, business continuity, process and system reliability, and even compliance with cross-jurisdictional regulations.”

Kevin adds, it is necessary to know the measures taken by the cloud platform providers, in depth. “For example, Microsoft spends over one billion US dollars a year on detecting cyber fraud, shutting down malicious schemes and educating and assisting authorities in bringing cyber criminals to justice.”

That’s far more than any single private company might allocate. “This doesn’t eliminate risk. But it goes a long way in mitigation.”

Finally, Panos says there is no better way to get going in the cloud than by giving it a try. “As a regular consumer, you’re already using cloud. It might seem different for your business, but it isn’t – there are many services you can try at no cost. You’ll quickly discover how easy, dependable and affordable it is.”

Kevin recommends checking a video overview of Microsoft’s Azure cloud. “Just search ‘Microsoft Global Datacenters and Network Infrastructure’ on YouTube. You’ll be amazed.”

Why leave it there?

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