The launch of Microsoft Azure in Australia, and how cloud computing can save your business money: Control Shift

This week, Microsoft officially launched two Australian datacentres as part of its Azure cloud computing platform during its TechEd event in Sydney. Of course, this raises an obvious question: why does it matter to your business?

As I’ve explained previously, at its simplest, “cloud computing” means your files, data, web apps, website or online service is hosted through someone else’s datacentre, rather than on a server in the back room of your own office.

That cloud computing service you use might come in the form of a low-level “virtual machine” (basically your own server except on a cloud service), a website hosting service, a cloud storage service, or a higher-level web or mobile app.

If you’ve ever had a Hotmail account, used Office 365, watched a YouTube video, shared a photo on a social media site or relied on a hosting company to host your company website you’ve used a “high-level” cloud-based service without even realising it.

The alternative to using the cloud computing is maintaining your own software on your own computers and servers. For a growing business, there are some very real downsides to this model.

Aside from the additional IT staffing costs, the big issue is scalability. How can you make sure your systems and servers will be able to handle your business growing in terms of staff and customers?

For websites and online services, it also means being able to handle peaks in demand without crashing.

Historically, the answer has been to make sure you have computing power and internet bandwidth to handle your peak load. But this has meant a lot of extra unused capacity and costs off-peak.

Cloud computing services mean that you pay for your peak usage when you need it, and off-peak, you pay for what you use. In other words, you don’t need to pay to have that peak level capacity 24/7. Depending on your business, this can lead to huge cost savings.

Some real world examples

Consider the example of event management software developer Centium Software. It’s a Brisbane-based company with about 70 staff that helped to organise the London Olympic Games.

Cloud computing allowed it to scale up and then scale down its computing resources for a once-off major event without buying a lot of excess capacity that would have been as useless as an Olympic handball stadium after the event finished.

Another example is a website such as CarSales. Typically, people looking for new cars do so in the evening or on a weekend. CarSales receives 20 times more traffic during peak times than it does in the mornings. With dozens of photos for each car, that’s a significant amount of data.

In the case of CarSales, maintaining that peak-time capacity during the mornings would increase the cost of maintaining its website by a factor of 10.

A few key things you need to consider

Of course, before jumping in and choosing a cloud provider, there’s a few important issues you need to consider. Choosing a cloud service means you’re entrusting your data to a third party, and the choice of platform is not a decision to be taken lightly.

Running a large datacentre with tens of thousands of servers – enough to allow many businesses to scale up and down on demand – is also a very expensive enterprise. In the case of Microsoft’s Azure platform, each datacentre is the same size as a rugby field and can hold 600,000 servers – or two jumbo jets.

In a previous column, I discussed how competition is intensifying in the cloud. You need to be able to trust your cloud platform provider will be able to maintain that sort of infrastructure over the long term.

Scott Guthrie, the executive vice president of Microsoft’s cloud and services group, has predicted the cloud platform marketplace will soon shrink to three key players in Amazon AWS, Google and Microsoft Azure.

In other words, these three global giants will develop the scale necessary to maintain large datacentres with enough resources to scale on demand in a number of countries. Most other “higher level” cloud service providers will eventually, in turn, offer their services on these platforms. I think it’s an astute prediction.

Meanwhile, it’s important for speed and latency to make sure your cloud provider has their datacentre close to where your staff and customers are. Overseas datacentres also carry additional risks, such as espionage by foreign governments and the local regulations in the country your data is hosted.

For this reason, it is a huge advantage to have the cloud datacentre you use physically located in the same country you do business in.

For small businesses, the big news is that cloud computing can save you real money on computing resources as your needs scale – especially if there’s a gap between your peak and off-peak requirements. And with major platform providers such as Microsoft and Amazon opening datacentres in Australia, it’s an option increasingly worth considering.

Andrew Sadauskas attended TechEd as a guest of Microsoft.

Follow SmartCompany on Facebook, LinkedIn and Twitter.