CRN roundtable discussion: SMBs in the cloud

Tony: With the greatest of respect Simeon, that model has been around the Telstra wholesale network, where the service provider has been providing one point of contact all the way through to the last mile for the last 15 years. The Telstra retail model says that, but the Telstra wholesale model allows the rest of the industry to survive and prosper.

Jason: We’re completely independent, we’re agnostic, so we just provide the plumbing to enable guys like the distributors and the resellers to actually deliver those cloud based services, be it data based, or voice based, hosted telephony, or cloud storage. We are big believers in the delineation. We are just the plumbing provider, and you guys are putting the service layer on top. So everyone’s got some money to survive.

CRN: How key do we think the faster network speeds are going to be in terms of driving this market?  I thought it was interesting Jason, you were saying, you’re not seeing a lot of demand for super fast connections.

Jason: We can deliver up to a gigabit a second, but the demand typically at this stage for most offices SMB is still in that sub-10 megabit space. It’s going to change I’m sure. You guys are the experts. What speeds do you need to actually access a cloud based application, what does the end user need? If you’ve got a 50 person office, what speed do you need?

Geoff: If you look at concurrent use, as opposed to maximum and so forth and go down that path, you find out that you don’t actually need a lot. One thing that I’ve been questioning of late, is putting a motor way into peoples’ houses. I’d be interested to see how soon we are going to actual use that capacity, are we talking 2020, 2030, 2040, for some of those things. Then again you can never predict what technology is going to do. What if someone comes up with something whizz bang that needs a gigabit? Until you create the capacity to have it and then the capacity to get used.

CRN: If you are a reasonably large organisation and you are thinking about VoIP in the cloud you are going to need a big pipe right? But it’s not being deployed, because those pipes are not available yet, but there’s not a great deal of awareness of the need for them is there?

Roy: I guess it’s a question of whether they’re not buying big pipes because we’re not used to having these big pipes in Australia and it’s been at a premium, so they generally don’t put their heavy duty applications or their network hungry applications out into the cloud, but I think if cheap bandwidth was available, they would use it.

Jason: When you’ve got more affordable access to cheap bandwidth definitely, there’d be more people putting those heavy lifting apps, I’m sure.

Tony: Some of our partners like Bluefire are using it for hosted apps as well as hosted telephony. But there’s always internet in the background, everyone’s doing internet over their links. One of the great things about putting in a network that supports cloud based apps is that you can drive these other efficiencies like hosted telephony and by beefing up your internet link, by virtue of the fact you are putting in a decent WAN that’s going to support your cloud based apps, it’s going to have to deliver these other apps as well.

They are going to help the IT manager justify the investment, because he’s going to be able to cut his telephony costs, roll out a proper telephony solution, potentially cuts his Telstra bill, and potentially also reduce costs on things like storage, internally, because he can put that in the cloud as well, but it is an iterative process, because the bandwidth is not there today everywhere.

Simeon: Cloud doesn’t always mean you need more bandwidth, but it can change the way that you use bandwidth. It might mean that instead of traffic flowing internally through a network, it’s now flowing through an internet connection or through a private IP network, and I think that’s probably the more important question for businesses to ask.

Geoff: One of the things about cloud SaaS providers is that they are looking to provide the service over 3G and they’re looking globally, so they’re looking at big markets expanding into Asia and some of these other places where bandwidth is somewhat limited – so what they’re actually doing, like a mob called Xero, which I’m sure you’ve all heard of, is they’re looking at programming it in an efficient manner in terms of how much bandwidth is being used. I still think we’ve got some of that mentality around efficient coding, to reduce that bandwidth and over time that would be less of an issue, I imagine.

Roy: Another issue we’re seeing is length of contract from the operator from the telco. Suddenly they go ‘I need 10 meg’ are you going to sign up this 10 meg for 36 months for them, and they go ‘wow, I don’t know what’s going to happen in 36 months’ right? We buy from the big providers and then we’re an on seller – and we sell it by the month, literally by the month, 30 days on, and 30 days off.

What we’re finding is that they take up the bandwidth quite easily, because they’re quite happy to say ‘let’s take the 10 meg – because when I don’t need it in months 3, 4, or 5, or there’s a downturn, I can reduce the size of my pipe. It’s that not having the ability to reduce the size contractually that causes people to shudder. The reality is that they don’t reduce, whoever reduces bandwidth? 

Jason: I guess we’re in a lucky position because we’re using microwave and using radio equipment, so we can actually re-deploy the infrastructure, so if your end customer wanted a 10 meg service, and then after six months he said ‘actually we’re moving office, we’re moving from Bankstown to Wetherill Park’ – we can actually go and re-deploy our – whereas if I was a fibre based carrier, I’m stuck, the fibre’s in the ground, it’s into your building and if you decide to move in six months, I’m going to have to tie you to that contract – so unless I can serve you in the new location, they’re going to be paying out the contract – it’s going to be an ugly discussion. That’s the advantage of using wireless.

Roy: Do you know what the reality is? There is somebody else who’s in retail who needs to bump up the bandwidth. We’ve got to get used to in the SMB space, that it’s going to be a consumer play. It’s up and it’s down. Cloud bursting is all about that.

Somebody says ‘I need a lot of bandwidth’ or ‘I need a lot of computer power’, but come December I don’t need that. We’ve been for instance approached by guys in the US who want lots of computer power and lots of bandwidth over December and January and they’ve come to Australia, because they say ‘you guys generally have a sleep during that time, so let’s use that spare capacity’ ---- so we start to work with the global world.

Through consumerism, consumer or consumption based models, you don’t need long-term lock-in contracts. It all shifts and changes.