7 mins to read

The year that was: cloud, spies and all-of-government

Ian Apperley
Sat, 21 Dec 2013

2013 has been a year of increasing Cloud, murky international politics, and the first time where government got its grind on and started to push All of Government services, hard.

Cloud started the year brightly, the Amazon War Machine continued to dominate the market and lock out all newcomers while giving IBM a massive broadside with it’s multi-hundred million dollar win with the CIA. IBM fought back, and lost. Gartner harpooned IBM a couple of months back ranking them well down the magic quadrant. IBM in one corner, Amazon War Machine in the other. The old and the new.

Desperate to take some of the share and attempt to stop a sinking ship, HP came late to the Cloud party and has been relegate to a position not much better than IBM. IBM, Oracle, and HP should be starting to think about going back to selling printers. The Amazon War Machine is now five times larger than the entire market combined and shows no signs of stopping.

Watch the old hardware sellers decline further next year, servers sales are well done as are desktop machines. That trend is just going to keep going.

Meanwhile, Microsoft is keeping in the running with various Cloud services released this year and a huge captive market with the corporate and home users powering their revenues. Watch them next year as the release desktop in the Cloud. Given it is their software they should be able to undercut every other provider in that niche and re-establish some dominance moving into 2015.

In New Zealand we saw little movement in the market with both Datacom and Revera continuing to suck up mostly government services into their maturing Cloud services. There are long queues at both doors that will continue into this time next year. No one else has really managed to touch these two in New Zealand, the multinationals are shutting up some of their datacentres while local niche players are carving their way into the small to medium business sector and growing rapidly. Brokers and integrators are starting to rise with local leader Fronde leading the charge and other NZ ICT companies following rapidly behind.

Watch Revera next year as rumour is that they and Gen-I are finding it difficult to get along. I was told back near the beginning of the year by reliable sources that a) Revera had free reign to keep doing what they were doing with the choice over Gen-I staff and that b) Gen-I’s “Cloud” service, Ready Cloud, was going to be decommissioned in favour of Revera’s Cloud service. Just this week I heard from a colleague that Gen-I are still pushing Ready Cloud (I wonder if the bosses know that they are funding two Cloud services) and that the relationship between the two parties, is… strained.

Expect someone to sort that out next year given the $95 million investment and the general concern that Gen-I would dominate the service degrading Revera’s quality work.

Spies and spooks dominated the Cloud market with the Snowden revelations that everyone was spying on everyone else and all Cloud services were open to Western intelligence. This saw an immediate jump in customers enforcing data sovereignty and a large migration of customers from the continental U.S. to Europe. Multinational ICT companies, started doing three things. Looking at how they can encrypt everything, looking at moving their operations into other countries or outside of national borders, and lobbying the U.S. government to get the NSA under control. The move to Balkanization of the Internet progressed significantly with multiple nations setting off down that particular path.

Back home New Zealand passed two sets of dumb laws in relation to spying. One that allowed the GCSB, and so the Five Eyes, the ability to spy on New Zealand citizens legally and the other to interfere in ICT companies business where it related to telecommunications. Both will end in tears with the second likely to slow down the telecommunications industry at a time when we need it to be moving a lot faster and the first damaging trust in our Cloud services that we should be exporting.

Chorus has been a mess for the government and a great example of why we shouldn’t let politicians interfere in market forces. Uptake is dreadfully slow, the contract is a mess, the Commerce Commission ruling has caused further problems, other technologies are leap frogging UFB already, and the board response to this has been to mill around like a bunch of panicked schoolboys moaning and complaining rather than displaying the type of leadership you’d expect from a multi-billion dollar exchange listed company. All of this is extremely problematic given we need high speed connections yesterday and any delay will result in us simply having online traffic jams.

Feeling battered and bruised is the local ICT Industry who believe that they are still being locked out of lucrative government contracts. IRD has taken a large amount of negative publicity for a) the total cost of the work proposed to modernise their systems and b) the requirements that appear to rule out local NZ ICT companies from responding. So much for the government investment in New Zealand Incorporated.

All of Government initiatives under the Government Chief Information Officer (GCIO) have been a mixed bag. Common operating environments, web services, and desktop as a service have been success stories while Government Cloud initiatives have not. Now several months late and different from the original business case that originated in Department of Conservation, it may be too late for some of the services that are planned.

The GCIO, in my opinion, needs to be separated out of the Department of Internal Affairs and put into a standalone ICT Ministry. When your ICT exports are showing potential to outgrow your agriculture in future years, are low impact on the environment, and produce high returns, getting serious about it is the right thing to do.

Too many of the All of Government ICT services have been written by lawyers and commercial people before being filtered through a thick layer of policy analysts. Here’s a tip fellas, true Cloud services have no contract. The end result is a product that is inferior to the market. Further, government should not be in the business of creating and selling products in any market, least of all Cloud, which is so rapidly evolving that it is near impossible to remain current.

The IaaS construct is in some trouble. It is starting to be battered by the larger Cloud providers and niche Software as a Service market. More than three quarters of government agencies are using Cloud, with a strong movement to Salesforce as an example, while only a quarter of agencies have wholesale taken up IaaS.

The GCIO office has some exceptional minds in the area of ICT that are, in my opinion, largely being constrained by a reactive organisation that is bound in red tape, scared to make a misstep in front of Ministers, and trying to legally and commercially manage ICT products that they have created in a volatile market.

Better the GCIO function is pulled out, put into its own Ministry, and balanced up with the other issues that the country faces. Lack of good ICT infrastructure, poor support of homegrown ICT companies, issues of privacy and security, support of the export potential of a zero touch industry, the provision of guidance to agencies on Clouda centre of ICT excellence, and amalgamation of lobby groups into a single, cohesive, force.

The AoG approach is to tell agencies that they must consume IaaS and PaaS despite this not being true. There is no mandate. While we are at it, there are no rules on data sovereignty either. There is only a “Cloud First” policy that agencies are adhering too. This push to bully agencies into adopting IaaS and PaaS is dangerous. These are not true Cloud services, yet, and they are also not capable of managing all workloads. Having a strategy where all work loads are homes on AoG IaaS and PaaS is a recipe for failure. Well, it can’t actually be achieved.

AoG IaaS is starting to look creaky. Up against niche and global players, the cost and complexity of transition are becoming problematic. Rumour has it that if IBM don’t win that next big RFP they’ll be dropping out of the conglomerate. Rumour has it that at least once agency has pulled out of the offering. Persistent rumour also has it that the conglomerate might be anti-competitive.

As I have banged on about before, Amazon is not far off landing in the country. We now have a national manager and staff recruited. My sources tell me that Amazon is putting some make up on in order to start courting large enterprise and central government agencies. This could spell the end of AoG IaaS and PaaS. Like I have commented before, government should not be in the business of building and selling products, they should do as the U.K. and U.S. have done and provide guidance and support.

Some of this focus on infrastructure is likely to become irrelevant next year as multiple agencies gear up to replace core software. Successive governments have had a sinking lid on ICT costs and the Treasury have got their claws on buckets of money for approval. Agencies haven’t updated core software for over a decade in a lot of cases. All the Cloud in the world won’t help you when you have ancient computer systems that simply can’t utilise it. Next year will see the rise of the redevelopment cycle and we can expect it to be a) very very expensive and b) not going anywhere in a hurry. That’s because commercial, legal, and accountants are in charge of ICT so the dollar becomes the single focus so justifying replacement of that legacy applications is going to be tough.

Changing tack, Wellington City has badly dropped the ball with both Smart City and ICT, dropping the ICT portfolio from their overall programme in a thumb nose to the local industry. Meanwhile, Auckland continues to invest heavily and Christchurch’s Sensing City is an outstanding example of how it should work. The Wellington Council needs a swift kick in the pants and the realisation that ICT and Smart City are not only the future, but a necessity.

Its been an interesting year. From spies and spooks to government tantrums and reactions and market conniptions its been a wild ride. One thing is for certain, next year will be bigger, faster, meaner and more changeable than the last.

Ian Apperley is an independent cloud computing consultant. He posts at

Ian Apperley
Sat, 21 Dec 2013
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
The year that was: cloud, spies and all-of-government