Cloud demand driving business growth

The cloud is ‘IT’, when it comes to the technology industry. It is the buzz phrase that keeps on growing.

Vendors are pushing it and firms are being drawn in. The big players, such as Google and Samsung, are about to reveal their own public clouds, and Amazon Web Services (AWS) has one trillion objects stored on S3.

Smaller firms, such as UK company Interoute, are flying too as take-up of it’s cloud offerings soar. The high-end hype can be translated into a genuine growth for the cloud as it becomes established within firms’ IT domains.

It appears 2011 was a time of clarity as Interoute saw many of its customers move to the cloud.

“Some 55 per cent of our revenues are now coming from cloud services, with notable customers such as Deutsche Post and UEFA”, said Gareth Williams, chief executive at Interoute.

Williams expects video delivery in the cloud to increase greatly in the coming years - explaining the purchase of Swedish firm VCG. Trailing the technology in house at the moment, the firm sees it on the iPad in the near future.

“Video accounted for some 15 per cent of revenue last year and we expect that to grow in 2012 as firms look to save money on travel costs and increase productivity.”

Alongside the success of the mid-tier firms, the big players are getting bigger; AWS has thousands of customers around the world from the smallest start-up to some industry giants.

As AWS accommodates 650,000 transactions per second on the service, thus adding the same level of capacity everyday, there can be no doubt how big the growth is. But, there are still concerns.

Issues raised are primarily still those of security, specifically data protection. The single pan-European law that is presently being proposed under new legislation could calm many nerves in this area.

Service outages are still an issue but regardless of this the cloud has almost reached a status of ‘the norm’. Those who still harbour doubts need to reassess the disaster of being left behind.

Dollar reduces IT spending

The US dollar, rather than a slowdown in spending, appears to have brought down the estimated growth rates for IT spending worldwide, according to Gartner.

Up by 2.5 per cent on last year and expected to hit £2.3tn ($3.7tn) for 2012, however, spending is down by 0.2 per cent on previous estimates mainly due to the strength of the US dollar against other currencies.

Richard Gordon, research vice president said the, "early signs in 2012 suggest that the global economic outlook has brightened a little".

Good news all round considering the Eurozone debt crisis, China’s real-estate bubble and oil prices being on the up.

All IT sectors are expected to show some growth; IT and comms being the lowest, and comms equipment the highest – the mobile device market is the main driver behind this rise, along with app growth, network security, WLAN gear and Ethernet switching.

The SME market, which represents a quarter of all enterprise IT spending, should reach the trillion-dollar mark by 2016, and determined by the growth in enterprise software, midsized business IT spending looks set to out-perform other sectors up to 2017.

According to Gartner the areas of concern are the public sector and government spending, which, due to the Eurozone austerity drive will decrease slightly around the world over the next year.

Microsoft signs deal with Facebook

"It is funny how these partnerships are coming together, they have made some strange bedfellows become friends."

Analyst, Michael Cherry, spotted the obvious, as Facebook and Microsoft signed their $550m patent deal. Cherry also pointed out how the strangeness obviously had many reasons behind it.

Under the deal, Facebook has rights to buy a portion of the AOL patent portfolio that Microsoft acquired in April – approximately 1,000 patents in total, and under the deal, Facebook takes ownership of a good 650 patents, of which Microsoft can use under licence.

“Today's agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction," said Brad Smith, executive vice president and general counsel at Microsoft.

Microsoft acquired the AOL patents so as to create a durable licence to “the full AOL portfolio,” and to take in those patents that compliment Microsoft’s current portfolio.

Facebook saw the move as one of protection following a recent legal threat from Yahoo. Ted Ullyot, Facebook general counsel, explained that the deal was part of the development of an intellectual property portfolio in order to protect Facebook into the future.

Facebook is certainly making itself heard prior to the company floatation, expected in May – the IPO is expected to value the company at $100bn.

“It may be that Microsoft is buying a friend for the future, if you help out someone today they might come to your aid later," said Cherry.

Time will tell how good the friendship between the two big hitters is - maybe friendship is a move Yahoo should consider too, so like Microsoft it can benefit from Facebook, rather than push it away. 

TIG on look out for managed services providers

There is “definitely a shake-up happening in the managed services industry”, according to Paul Edgley of The Internet Group (TIG).

Edgley, formerly BT Lynx boss, joined TIG’s M&A practice in 2009 to give it an overhaul. He admits that TIG’s acquisition strategy relies quite heavily on the fact that managed service provider owner managers are looking to sell their businesses.

"Providers that rode out the worst of the recession are now seeing opportunities to sell at a suitable profit [and] with advances in networking technology and fledgling delivery models such as cloud, it makes sense to amalgamate expertise and create greater value from managed services," said Edgley.

The MSP apparently, has seen a significant increase in owner-managers wanting to sell, and as such there is a push to acquire more firms through BuymyIT.biz, a subsidiary company.

Edgley is specifically interested in mid-market, London-based MSPs, but essentially TIG wants businesses with a strategy similar to it’s own.

European Commission investigates biggest mobile operators

Project Oscar, a mobile payments joint venture between three of the UK’s largest mobile operators, is to be investigated by the European Commission.

Vodaphone, Telefonica and Everything Everywhere may be too powerful in terms of allowing the competition to flourish, according to the EC’s competition rules.

The Commission is, of course, in favour of the development of the mobile sector in Europe but also has to protect all mobile operators. If Project Oscar has high market shares, other operators may find it hard to enter the mobile payments, advertising and related data analytics market.

“We need to make sure that competing services can keep emerging in this market, so that incentives to innovate remain and customers get the best mobile commerce services at the best cost," said Joaquin Almunia, the EC’s vice president of competition policy.

UK operator Three supports the EC’s decision to investigate Project Oscar and it’s potential impact on consumers, and the development of the mobile market.

Vodaphone, Telefonica and Everything Everywhere are standing firm however, confirming their commitment to the project.

“The EC decision to enter into a second phase of investigation follows constructive discussions with the EC about the purpose and scope of the joint venture. The discussions have been positive and the shareholders in the proposed joint venture remain focused and determined to progress with the project," they said in a joint statement.

The result of the joint venture would be a single point of contact for all those wanting to create m-commerce products and services – advertisers, marketing partners, retailers and banks.

A straightforward system, but the EC is right to look deeper; simply to ensure the market only gets the best.

Insights from Tokyo OpenWorld 2012

"Getting through tons of information to get the right data to the right person at the right time to make the optimal decision is the most important thing you can get from your data," said Mark Hurd at the Oracle OpenWorld Tokyo 2012 show in Japan earlier this month.

The new release, and one of the “next-generation analytic systems,” was the Enterprise Performance Management System software and new business intelligence applications for sales, manufacturing and asset management, which Hurd showcased alongside the company’s ‘engineered systems’, the hopeful force behind the fuelling of Oracle’s growth.

"We didn't have a zettabyte of information on this planet until the middle of the last decade," Hurd said.

The amount of stored data worldwide will reach 2.7 zettabytes by the end of this year and 35 zettabytes in 2020. A system is needed indeed.

The significant three are the Oracle Exadata database Machine, Oracle Big data Appliance and Oracle Exalytics In-Memory Machine reporting and analysis server – by reducing complexity and reducing costs, Oracle’s business analytics strategy will make the company, according to Hurd, the “best-of-breed in everything we do”.

The 11.1.2.2 release has new project financial planning tools, new Account Reconciliation Manager software, and there are enhancements to the Oracle Hyperion EPM application portfolio. Running the software on the Oracle Exalytics In-Memory Machine boosts software capabilities.

The software helps employees analyse data about manufacturing processes, inventory and product quality, and the enterprise asset application does as it says on the can – helps with the management of assets – i.e. plant, equipment and control related costs.

Alongside new analytical applications, Oracle announced the availability of the Oracle Endeca Information Discovery system – for structured, semi, and unstructured data. Acquiring Endeca Technologies at the end of last year has already paid off it seems.

Alongside the unveiling of the Oracle Enterprise Manager OpsCenter 12c, and it’s new capabilities including increased deployment of cloud computing workloads and the simplified management of Oracle’s engineered systems, Oracle has shown there can be no relenting with the continual development of technology.

Investments in IT are more beneficial than adverts

IT investments are “positively associated with profitability,” according to new research.

Various key conclusions were reached after a group of university researchers delved into the IT investments and financial data of approximately 450 companies.

Spending on revenue creating projects was simply more profitable than working at reducing costs.

Sunil Mithas, the paper’s lead author, from the School of Business at University of Maryland explained how a company that invests in a business intelligence system to help sell products, will see more bottom line benefits compared to investing in the automation of internal processes in order to reduce expenses.

There is no competitive advantage in a cost cutting system, as it will probably not be unique. Whereas revenue-generating systems "are highly differentiated from your competition" said Mithas, "It will be very hard for your competition to replicate that."

Management of IT spending varied from the consistent companies to others that would retreat after a project failure – though in the latter the danger was to then be left behind the competition.

The team came to the conclusion that IT investment was much more fruitful than advertising or R&D spending. One pharmaceutical example was written of in the paper; a project Pfizer which "enabled virtual teams from different business units around the world to collaborate in research and develop new drugs."

Due to a none disclosure agreement, the consulting firm that supplied the IT spending data could not be identified – a move that has drawn criticism.

“Unless the authors disclose the origins of the critical IT numbers, the entire paper must be considered speculation and not verifiable analytic proof," said Paul Strassmann, a former U.S. Department of Defence CIO and acting CIO of Nasa.

Mithas responded to Strassmann with confidence, explaining that the paper went through "a blind peer-review process by top academic scholars familiar with this domain of enquiry and such relevant data related details were shared with them."

As the reviewers were satisfied, Mithas believed the criticism to be “a little extreme.”