Back in the US After a Productive Philippine Trip

Just concluded a productive 4-week trip to the Philippines where I met with students/faculty from the top universities, AmCham members, and industry leaders to discuss the emerging Cloud Computing trend. Overall, I met with over 200 people and left with the following impressions:

• ICT Industry leaders are aware of Cloud Computing’s importance, but unclear of specific implications to their respective industries. Much of my discussions revolved around connecting the dots between the massive cost-economies that the cloud will bring and the often eye-opening business value potential.
  
• Minimal Cloud Computing awareness outside of the ICT industry. Though there is an opportunity to educate, with a little bit of background, almost everyone I spoke with saw the potential to make IT available to the mass of small businesses and how Cloud computing enables Philippine Intellectual Property (IP) to profit locally and globally.

Some pictures from events at UP, DLSU, and a meeting at 6750.

Nicole Paterno from the Brain Gain Network was also kind enough to do this write-up:

• Cloud Computing Talk by returning technologist Alvin Gendrano
  http://www.bgn.org/news/item/2228

Philippines the Next 4 Weeks

I will be in the Philippines with the family for the next 4 weeks to combine IT/Cloud Computing advocacy with vacation.

I’m looking forward to spending time with the kids, a full booking of meetings, family gatherings, out-of-town adventures, and speaking engagements at top universities.

Cloud Computing Expo Next Week

Attending the Cloud Computing Expo in Santa Clara next week. Based on the keynotes, it’s shaping up to be a hybrid and private cloud heavy conference. Not a surprise given the major sponsors (VMWare, CA, Microsoft, Oracle, Cisco, Intel, etc.).

Keynotes:

• Hazan Rizvi (Oracle Fusion) – Extreme Performance for your Cloud Platform
• Tony Bishop (Adaptivity) – The Enterprise Cloud Revolution
• Pete Malcolm (Abiquo) – The Key to Enterprise Cloud Adoption? It’s a Matter of Business Policy
• Eron Kelly (Microsoft) – The future of Productivity in the Cloud: Office 365

 

Talk Tracks:

• Enterprise-Level Cloud Computing & Virtualization
• Cloud Security, Storage & Management
• Performance & Testing
• Real-World Cloud Computing & Virtualization
• SOA in the Cloud
• Cloud Solutions
• Architecture, Standards & Compliance
  

Technorati Tags: Cloud Computing,Cloud Expo,Oracle,Microsoft,VMWare,CA,Enterprise,Private Cloud,Hybrid Cloud

NetSuite OneWorld PH Launched

NetSuite CEO Zach Nelson recently launched a localized version of OneWorld, it’s cloud-based CRM/ERP/E-Commerce suite for global businesses with multinational and multi-subsidiary operations.

Already boasting mid-to-large scale business customers like AnTech Inc, Jollibee, ABS-CBN Global, and SQL*Wizard, this month’s announcement emphasizes the growing demand for cloud solutions in the country. This makes a lot of sense for NetSuite which doubled it local operations last year and already offers its standard cloud-based business suite in the country.

Note, however, that unless you are a multinational firm with Philippine operations already using NetSuite, or a Philippine firm with a foreign subsidiary, this announcement is likely not for you. This explains why NetSuite is focusing the message in BPO and exporter-rich cities like Metro Manila and Cebu.

One thing that’s unclear is local pricing, but if in line with global rates, it will cost $399/month and $99/month per user before add-ons. Support will then cost an additional 22.5% to 37.5% of the license cost. At PHP20,000+ per month, NetSuite won’t be a viable solution for small businesses, franchisees, or start-ups. There is no question that this offering is valuable as it helps increase productivity and is priced competitively versus on-premise ERP solutions, however current pricing does not help get cloud business solutions in the hands of small businesses.

In a marketing mailer, NetSuite positions the new product with the following advantages:

• Grow faster. NetSuite gives you sales automation, marketing automation, and complete CRM – so you can sell more effectively and better satisfy customers.
• Save money. NetSuite provides the power of enterprise applications at a fraction of the cost. With a modest monthly fee and one application for all your key business processes, you save time and money.
• Make faster, better decisions. With role-based dashboards and all business data in one place, your employees have the real-time information they need to be more effective.
• Automate business processes. Streamline and systematize operations across your business.
• Eliminate IT costs and hassles. NetSuite is delivered as an on-demand service, so there is no hardware or software to manage and maintain.

The product supports the following features localized for the Philippines:

• BIR Revenue regulation No 09-2009 (Mandatory use of computerized accounting system for large taxpayers)
• VAT
  • 7 VAT codes required (Government, Export, etc.)
  • VAT declaration report
• Withholding Tax (Mandatory for top 20K businesses)
  • 79 tax codes
  • Based on income payment type (eg. C/Card vs Terms based)
  • Contractor relationship
  • Certificate of creditable tax withheld
    

Technorati Tags: Cloud Computing,NetSuite,SaaS,CRM,ERP,Philippines

Tata: Asia’s First Public Cloud IaaS TelCo

Tata Communications just became India’s first local Public Cloud Infrastructure-as-a-Service(IaaS) provider by offering compute, data transfer, and storage infrastructure services. Their new InstaCompute service delivers self-service, pay-as-you-use IT application and data center infrastructure services, accessed through the Internet. This is the first time that an Asian regional provider has established an Amazon EC2-like IaaS offering that allows users to rent general purpose servers provisioned in the cloud.

Tata’s new InstaOffice service was also announced providing Email, Calendaring, Groups, and Collaboration via Google Apps. Vinod Kumar, President and COO, Tata Communications says, “Driven by a rapidly evolving economy, Indian businesses desire flexibility and scalability of infrastructure as they pursue growth within India and overseas. Simultaneously, the competitive environment requires them to achieve their goals with low upfront investments. Tata Communications’ InstaCompute and [InstaOffice] will help our customers to quickly leverage advanced IT and networking services, without the cost and complexity associated with them.”

 
Tata’s new InstaOffice and InstaCompute services complement their existing contact center (InstaCC), customer relationship management (InstaCRM), and content management (InstaECM) services. These services, along with Tata’s $500M investment in data centers in India, Singapore, and abroad, makes Tata the early public cloud computing leader in South Asia.

As a sign of Tata’s aspirations in the region, they recently opened a 66,000 sq. ft. Tata Communications Exchange (TCX) data center in Singapore. Vinod Kumar further states "Our substantial investment in TCX, coupled with our submarine cable build-out, ensures scalability and global reach while delivering on our commitment to meet customer requirements. We will continue to lead the industry in offering superior data center and connectivity services into emerging markets. This is where we see high growth potential."

What does this mean for the Philippines?

This announcement has different implications for the Philippine Telco, Business, and Government sectors:

• Government – This serves as a wake-up call for policy-makers to craft data geo-location policies applicable to not just US-based IaaS providers, but also those based regionally. CICT, NEDA and DOST need to also pay attention as this allows the massive base of Indian developers and SI’s to more easily create innovative solutions for the Asian market with minimal up-front costs. The question then becomes whether we are resigning the Philippines to become a net consumer of these emerging regional solutions. Hopefully not…
  
• TelCos – Prudent for PLDT and Globe to closely monitor Tata’s forays into IaaS and SingTel’s announced alliance with Cisco and VMWare to set it up as a regional cloud computing hub. Our local carriers will need to decide whether to invest millions in CapEx or cede the local and regional Infrastructure-as-a-Service (IaaS) market.
  
• Businesses – Tata now joins the ranks of established IaaS providers (Amazon, Rackspace, etc.) and can be considered as a regional cloud alternative. Tata’s InstaCompute service is priced competitively compared to Amazon’s EC2 Std service and Rackspace’s default offering (see table).
  
  
  

Back to http://cloudphilippines.blogspot.com

Philippine Development Forum in San Jose, CA

A group of concerned Microsoft Filipinos, Tina, and I made the trip from Seattle to San Jose (California) for the first ever Philippine Development Forum on Sep. 24. The event format was based on the World Economic Forum where relevant statistics were shared to help ground moderated discussions. At this year’s inaugural event, the push was for “Practical and Implementable approaches to help spur Philippine Development”. The goal was to synthesize the resulting ideas into a paper that will be presented to President Noynoy Aquino.

Pres. Noynoy Aquino, Dado Banatao, Mario Montejo (DOST), Ivan Uy (CICT), Fernando Zobel Ayala, Winston Damarillo, Felipe Medalla, Paco Sandejas, Sen. Chiz Escudero, and a host of other concerned  Filipinos graced the occasion.

Philippine Competitiveness Lagging our Asian Neighbors

The World Economic Forum recently released its 2010 country rankings. At face value, some would focus on the Philippines’ 2 point improvement (from 87th to 85th). However, what this doesn’t show is that the Philippines is still in the bottom 1/3rd of the 139 countries in the report. More concerning is that we are 7th among our ASEAN neighbors and now 26 spots behind Vietnam which has surged 16 places forward.

Dissecting the numbers shows that though we are ranked 35 for market size, the following 4 pillars drag us lower in the country rankings:

• Institutions (125 of 139) – Primarily a measure of Graft and Corruption.
• Innovation (111 of 139) – Due to inadequate R&D, scientists, engineers, and intellectual property protection.
• Labor Market Efficiency (Rank 111) – As a reflection of hiring/firing practices and general business/labor relations.
• Infrastructure (104 of 139) – Due to the quality of our transport, energy, and telephony infrastructure.
  

Other statistics mentioned:

• $8.9B trade deficit in goods. This is not immediately apparent in GDP reports as the goods deficit is hidden by growth in remittances.
• Only 3% of the Philippines’ GDP spent on education
• Each classroom-full of new students (40) born every 12 minutes will cost an additional P1M to educate
• Only 7% of students choose science and engineering
• 50% Graduation rate in Science and Engineering
• Every time 1 Masters student graduates in the Philippines, Vietnam produces 6 MS graduates and Thailand produces 25
• To get on par with our Asian neighbors, we need 7,000 PhD’s, we only have 1,300.

 

What can be done?

While recognizing corruption as a key issue that the government needs to resolve, the forum focused on what was actionable today. In this case, the main thrust was on promoting world-class innovation through science and technology research, education, investment, and entrepreneurship. Often mentioned was how we could create a silicon-valley like ecosystem of investors and technology leaders to start-up globally competitive businesses around high-value IP developed in the Philippines.

• Shankar Sastry from the Banatao Institute @CITRIS Berkeley discussed the following emerging technology trends to help spur the imagination of those in attendance:
  • Ubiquitous Wireless Access – He showed WiFi standards modified for long-range applications in a rural barrio setting.
  • Sensory Webs – Tiny devices able to relay real-world data will proliferate measuring energy usage, traffic patterns, weather, healthcare, etc.
  • Cyber Physical Systems
  • Telemedicine in Healthcare
• Dr. Guevarra, Chairman of the Engineering Research and Development for Technology (ERDT) mentioned projects such as Research in a Box and encouraged US-based Filipinos to put up research institutes in the Philippines
• Dr. Dayrit from Ateneo suggested the creation of a community of scientists and engineers
• Dr. Lebrilla, Chairman of UC-Davis’ Chemistry department suggested that educating scientists alone will not be sufficient as educated Filipino scientists are in demand globally and will likely just depart.
• Senator Chiz Escudero while frankly recognizing that the issue was hard, reiterated that the government is working to eradicate corruption. We need to encourage students to choose Science and Engineering over nursing and business jobs. He also mentioned how the Philippines was the #1 rice importing country and how we need scientists to improve rice production technology.
• Ms. Lilia De Lima mentioned that corruption had no place in the PEZA.
• Dr Paco Sandejas, VC and founder of the Brain Gain Network (BGN) appealed for Fil-Am scientists and engineers to get connected and to recruit each other to go back home to the Philippines where they can make a difference.
• Mario Montejo, Dep’t. of Science and Technology Secretary, reiterated the need to reverse Brain Drain by creating a culture of innovation (Human Capital, R&D, and Commercial Applications)
• Ivan Uy, CICT secretary, emphasized the push towards e-governance
• Doy Vea from PLDT SMART advocated releasing a tsunami of entrepreneurial spirit
• Dado Banatao, successful VC and Chairman of the PhilDev Foundation, was encouraged to see the frankness from government leaders when discussing the controversial issue of corruption. He also reiterated Paco’s call for Brain Gain and added that Angel Investing to support Philippine entrepreneurs with great ideas can likewise be effective. Lastly, he challenged entrepreneurs to understand the market, create unique solutions, stand out, and plan to execute properly.
  

How do PhilDev goals link to Cloud Computing in the Philippines?

The nascent shift to cloud computing feels so much like the wave that ushered the Internet’s arrival. Two decades ago, the internet wave caught the Philippines off-guard and it was not able to capitalize on the worldwide phenomena. The Philippines cannot afford to stand still this time around and is presented with a unique opportunity to catch the Cloud wave before it completely crests through home-grown innovation. We have early thought-leaders thanks to Winston Damarillo’s G2iX (Morphlabs, Exist) but need entrepreneurs, VCs, and angel-investors to further innovate in this ripe environment. We have a few ideas in mind…

Technorati Tags: PhilDev,Noynoy Aquino,Philippines,Cloud Computing,Banatao,World Economic Forum,Global Competitiveness,Innovation,Entrepreneurship,VC

Philippine Electricity Cost Implications

Cloud Computing allows businesses to save on capital expenditures by having someone else own the server infrastructure and by shifting operating expenses to a provider with better cost-economies. One of these major operating expenses is Electricity. In fact, an APC Study concluded that the electricity bill accounts for 20% of a US data center’s Total Cost of Ownership (TCO).

 

The APC study was based on US data centers where electricity is relatively cheap. The graph below compares US rates with more expensive electricity rates (US cents per KWh) in Asian countries.

Philippine Implications

It’s apparent that the Philippines has the highest electricity rate in Asia and this has three implications:

1. Larger Percentage - Electricity is a larger percentage of a Philippine data center’s lifetime TCO costs. Extrapolating the US baseline using regional rates in the table below shows that almost half of a Philippine Data Center’s TCO goes to the electricity bill.
    
   
2. Competitive Regional Disadvantage - As our electricity rates are higher than our Asian neighbors, Infrastructure-as-a-Service (IaaS) providers in the Philippines are at a competitive disadvantage. Providers from China, Thailand, and Malaysia will enjoy lower power rates that they will be able to pass to their consumers in the region. I fully expect bigger providers like Amazon (AWS), Microsoft (Azure), and Rackspace to start deploying data centers in these countries to serve the emerging Asian market for cloud computing. In fact, these providers already have beach heads in Hong Kong and Singapore.
   
   Unless electricity gets more affordable, Philippine Cloud IaaS providers will be constrained to the local market making it doubly difficult for any to achieve economies of scale.
   
3. Important Consideration – At nearly half the total Philippine data-center cost of ownership, electricity (inclusive of distribution and back-up generator costs) becomes a more important consideration when evaluating cost savings by moving to the cloud. From a purely value-maximizing perspective, it should be pretty obvious that the best cloud infrastructure compute and usage costs will come from countries where electricity is cheaper. In this regard, I advise evaluating usage costs from the largest-scale providers from China, Malaysia, Singapore, and Hong-Kong. Note, however, that additional cross-country bandwidth costs will also need to be considered.

Conclusion

Cloud computing effectively allows for electricity arbitrage where computing moves from countries with expensive power, like the Philippines, to those where the tariffs are lower. Though our expensive power limits our IaaS providers’ regional competitiveness, Philippine businesses can save relatively more in electricity costs by shifting to the global cloud. Note however that electricity is not the only consideration as bandwidth costs need to be factored in as well. Bandwidth costs will be the subject of a future post.

Technorati Tags: Philippines,Electricity,Arbitrage,TCO,Cloud Computing

Oracle’s Cloud Announcement at Open World

In a twist of fate, Oracle announces the Exalogic private cloud appliance at this week’s Open World event. Exalogic is meant to run as a scalable application-tier server that naturally tandems with Exadata storage servers. This is a great move as Exadata is selling well ($1B in pipeline revenue). An Exalogic appliance runs Solaris/Linux and includes the following:

• 30 servers with 360 cores
• 960GB of SDD
• 40TB Storage
• 4TB Read Cache
• 72GB Write Cache

The appliance will start at $1M plus maintenance, so it is obviously targeted for bigger enterprises, Platform-as-a-Service (PaaS), or Software-as-a-Service (SaaS) providers.

This is an interesting development as it signals Oracle’s product entry into cloud computing, a business and computing model that can fundamentally change how hardware and software is purchased. As Oracle has the lion’s share of the existing enterprise database and application server market, they have the most to lose with any shift. It also represents a big turnaround from when Larry Ellison explained “Why He Hates Cloud Computing”.

So, why is Oracle jumping into Cloud Computing now? I think they’ve realized that being on the bandwagon allows them to define the emerging market. This is supported by the slide below (from Larry’s keynote) where CC is defined very narrowly as Platform-as-a-Service (PaaS). In the PaaS model, the Exadata and Exalogic products are potential building blocks that they can sell.

What does this mean for the Philippines?

I doubt that local enterprises or local PaaS providers will shell $1M (P45M) for a highly scalable cloud application server appliance like Exalogic. At a starting price of $1M (P45M), that’s already an entire local data center with half a dozen racks. To further put that amount into perspective, that single appliance, if purchased by a local SaaS/IaaS provider like IPConverge, will already consume 11% of their recent IPO Listing.

Oracle’s move is still worth noting though as an example of how even the most reluctant of enterprise software leaders are jumping into Cloud Computing.

Advantages of Cloud Computing

Cloud Computing is an important trend for established and start-up businesses because it costs less, is quicker to set-up, is more flexible, and is accessible by mobile workers. Ultimately, it allows business leaders to concentrate on growing their portfolio of products and differentiating in the marketplace rather than worrying about hardware, software licenses, updates, and IT staff to keep servers running.

NIST, the US standards body, defines Cloud Computing as follows:

“Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”

Sharing resources among organizations reduces the overall cost for a business and effectively outsources IT applications, server, and storage functions to a central vendor.

I see the Cloud benefiting three types of businesses in the Philippines:

1. Start-up businesses –
   The cloud reduces up-front costs (Capital Expenditures) on server hardware and software which helps accelerate return on investment (ROI). It also levels the playing field for our local entrepreneurs wanting to penetrate the global market for web solutions (PCs, mobile phones and iPADs) by allowing access to the same global data centers used by Amazon, Microsoft, and Google.
   
   
2. Businesses with no IT –
   For the Philippines to better compete in the global economy more local businesses need to start utilizing technology to increase revenue, reduce cost, and bolster productivity. The cloud allows businesses to ease into technology by providing standard business productivity tools like e-mail, customer relationship management, collaboration, accounting, and HR management without having to buy server hardware or invest in infrastructure.
   
   
3. Businesses with in-house IT –
   As businesses with existing IT infrastructures go through periodic hardware and software refresh cycles, the Cloud becomes a cost-reducing option. Instead of having to purchase a one-size fits all perpetual software license and server hardware paid up-front, the firm can choose to pay for only what they use on a monthly basis by going to the Cloud. Though there is a need to invest in better internet connectivity, the business will not need to worry about electricity costs and keeping a Gen-Set always ready for power-hungry data-storage and application servers.

Asian Governments Adopting Cloud Computing

 

Just back from the Gov’t Cloud Forum in Singapore.

Based on the great set of presentations and speakers, it is obvious that Governments in Asia are serious about Cloud Computing. Here are some of the key cloud initiatives discussed at the event:

1. Korea	Korea has an ambitious 5-year plan establishing K-Cloud, the ecosystem for Cloud Computing in the country.  K-Cloud Goals: Increase Cloud Computing Usage by 500% Reduce Government IT Infrastructure Costs by 50% Be a Top Player in Cloud Computing Delivery and Research To reflect how serious the Korean government is about these goals, they have formed a combinatory planning group composed of the Communications Commission, Ministry of Knowledge Economy, Ministry of Public Administration and Security
2. Japan	Dr. Yoshiaki Tojo from Japan’s Ministry of Economy, Trade, and Industry highlighted Japan’s Government 2.0 initiative (Government as a Platform). With the METI project (Idea Box), they were able to deploy an interactive social media application that allowed Japanese Citizens to submit ideas to the government. It’s a concept Dr. Tojo touted as a form of Participatory e-Government.
3. Singapore	Dr Lee Hing Yan, Singapore’s well-regarded father of Cloud Computing highlighted the growing ecosystem in Singapore and how the country is poised to be a regional cloud service leader due to it’s well placed hub of high-speed undersea cables. Singapore’s major thrusts into the Cloud include: Catalyzing the use of Cloud Services by prequalifying cloud providers like SingTel and NCS. Attracting “Queen Bee” Cloud Players like: Verizon Business Savvis Fujitsu Amazon Salesforce.com etc. Competency Development Enhancing Privacy and Security through certification (ISO 27001) Forging R&D Partnerships
4. Malaysia	Malaysia’s government sponsored Super Corridor (MSC) has put cloud computing as the number one priority in its top 10 strategic technologies for 2010.

 

What About the Philippines?

In contrast, the Philippine government has been cool on Cloud Computing, instead focusing on potential issues like security. Though it’s great to see the private sector take the initiative (PLDT AppFarm, NetSuite, IP-Converge, CloudSolutions, etc), the public sector needs to help lead with policy and investment prioritization to compete with our Asian neighbors who already get it.

Technorati Tags: Philippines,Cloud Computing,Asia,e-Government

Attending the Government Cloud Forum in Singapore

I will be attending the Government Cloud Forum in Singapore this week where the following topics will be covered:

• Government-as-a-Service
• Off-Premise Computing
• Growing the cloud computing ecosystem in Singapore and Asia
• Virtualization and Cloud: Security and Moving between the two
• What to look for in a Cloud Computing service level agreement
• Cloud computing standards and security
• Etc.

Looking forward to meeting with the key figures driving Singapore’s Cloud Computing initiatives and hearing about what may be applicable in the Philippine setting.

Another Amazon EC2 Price Cut

Amazon recently cut the price of its Elastic Compute cloud (EC2) service by about 20%, likely to put competitive pressure on VMware’s new vCloud Director. This is great news for existing customers and makes cloud computing more accessible to small businesses. Though good for customers, one potential concern for IaaS providers like AWS is the resulting profit margin dilution.

The new EC2 price list is available here.

Cloud Computing in the Philippines, Why Now?

Let's face it, Cloud Computing has not taken root in the Philippines the same way that it has caught fire in developed countries or generated levels of enthusiasm evident in other ASEAN countries like Singapore or Thailand. This is a net result of four conspiring factors:

1. Infrastructure Deficiencies
2. Security and Privacy concerns with Public Cloud  Data Storage
3. Lack of Critical Mass in Demand
4. Insufficient Understanding

I'm pleased to report that though these factors have succesfully stunted the adoption of Cloud Computing in the Philippines, the following undercurrents lead me to believe that we are on the cusp of seeing broader adoption in the next 1 to 3 years:

1. Consumerization of IT 
2. Proliferation of always-connected Smart Devices
3. Broadening internet reach in the Philippines
4. Continued Emergence of the Private Cloud and Utility Computing
5. Exponential growth in personal and business data
6. Emergence of classes of applications, business models, and services enabled by Cloud Computing
7. Rise of the BPO and Call-Center Industries
8. Recent launch of the first Philippine Cloud Computing Service (PLDT link)

We'll dive into each as we go along.