It would seem at first blush that the nature of online services makes the location irrelevant to most customers. A recent survey by IT industry analyst Telsyte revealed that two-thirds of Australian enterprise cloud customers use offshore providers.
But there’s a deeper story about where data is stored and whether you use an Australian provider. 82 percent of companies that responded to a contrasting survey from Microsoft said it was ‘critical or important to source cloud services from a provider with a local presence’.
Obviously selecting local versus overseas cloud providers is a movable feast, with certain industries and organisations working to strict cloud location policies and data sovereignty and others merely selecting the best deal regardless of location.
Determining whether local vs overseas cloud services is complicated. On one hand, the whole idea of the internet would seem that it doesn’t matter where data is stored, provided the facility meets your performance and security needs? As Samuel Yeats, CEO of local provider Ultraserve, reports; “Three or four years ago when the cloud movement started we’d have to show most customers through the data facility and give them that comfort,” he says. “Today everyone’s using LinkedIn and Facebook and all this cloud marketing has made people more comfortable with putting their data outside their offices.”
But to other businesses it can matter quite a lot because of regulatory and compliance issues, particularly with government departments.
Yeats adds that bandwidth and storage pricing has changed in the last 12-18 months to the point where it’s getting close to parity with bigger markets, so bigger overseas providers can’t necessarily do a better deal because they have more servers. And with Ultraserve’s customer’s less concerned about data location, it puts Yeats and his company on what he calls a more level playing field.
So all that remains when choosing a local versus overseas provider is which will give you the best performance. For the cases when cloud customers are ‘location agnostic’, as Alan Perkins, CIO of electronics design tools vendor Altium puts it, there are several things to weigh up when deciding on offshore versus local cloud providers.
“Price is just about the last factor,” Perkins says about what Altium looks for. “The most important is what can we achieve with the technology. It’s whether we can stay online, whether we can scale. We’ve focused on the business imperatives, not the how and where of IT technology.”
While he admits there are issues around data sovereignty and different legal frameworks (such as the US PATRIOT Act, which could expose your data to the US Government’s scrutiny without your knowledge), Perkins is more interested in latency – the speed with which queries and responses travel between applications. “You want the latency of the two systems to be as close to each other as possible because it reduces the speed of the application.”
The only other reason Altium might need a local provider is because of specialist hardware it needs to oversee onsite at the server’s location, but apart from that Perkins is happy for Altium’s cloud to be anywhere. “The benefits of placing your data globally and strategically independent of the location will be stronger than complying with any ‘keep your data at home’ policy,” he says.
But with Amazon, Salesforce and Google encroaching on the local market, is there any space left for Australian cloud providers? They might have an edge simply because location will be less important, and with high quality local expertise and technology and pricing levelling out, there’s only one more thing to compete on. As Altium’s Alan Perkins puts it; “It comes down to how good a product they can put on the table, not where their product is located.”