This week’s technology news – 3rd October 2014

Is another Black Monday looming for the major IaaS players?

The stockmarket crash of October 1987 was a harrowing period of economic history that had repercussions around the world.  In 2014, senior industry leaders are looking warily at the prospect of a potential collapse around the major public infrastructure-as-a-service (IaaS) players which could yet de-stabilise world markets again.

The historic ploy of slashing prices to base levels and expanding networks to take market share may all be about to unravel as the financials behind the biggest Cloud players is challenged.   “Hundreds of millions of dollars has been spent on building out public cloud infrastructure. We don’t know anybody in the world who is profitable”, said Steve Brazier,CEO of Canalys, who warned resellers to be very careful about directing customer business before checking out the financials of the major cloud suppliers. An isolated comment would be one thing to make headlines, but when it is echoed by other heavyweights including Cisco’s Snr VP of worldwide cloud and managed services sales, Nick Earle and others like Sue Barsamian, worldwide channel head HP’s Enterprise Group, it starts to add gravity.

Amazon Web Services (AWS) lost $2bn in the last four quarters and its parent, Amazon, is forecasting losses between $410m and $810m this quarter, believed to be largely focused on AWS.  AWS cut prices by 36% in Q2 and this hit revenues at a time when cap-ex increased 51% to $1.29bn. Neither Microsoft nor Google will separate out their costs around public infrastructure clouds, but the cost against profit is not anticipated to be any different a picture in this cloak and mirrors area.  Rackspace in the meantime, an early pioneer of public IaaS, is now shifting attention to the managed services market.  The difference may lie in whoever has the deepest pockets to ride out this perfect storm.  AWS is sitting on $5bn of cash, but put against Google’s stockpile of $61bn and Microsoft on $86bn, then AWS is by far the more fragile contender.

Why should we care?  Well, consider this… the CIA runs on AWS, as does NASA and the Dow Jones for example.   If AWS were to fall over from lack of cash, the bailout would have to come from the banks or Federal bail outs – and that would be more than just be a ripple on the financial markets worldwide.
The new EU Reformation
The EU General Data Protection Regulation, currently called the “EU Data Protection Directive”, will be immediately binding in all of the EU member states when it comes into force.

It will reform data protection legislation and online privacy rights and is expected to boost the digital economy. So a few key questions:

Who will become responsible for data protection in an organisation under the new regs?  Companies (250+ employees) must appoint a Data Protection Officer to take responsibility for the organisation’s legal obligations, noting that data protection is not just an IT issue, it is a people issue.

How will personal data be categorised?
There will be various types of data definitions requiring restrictions ranging from: “Personally identifiable information” (PII), usually considered to be either personal or sensitive information, the latter holding more restrictions than personal data, as well as other categories including children’s data (under 18) and employee data.

What should I do now?
PII – firstly, companies should review the existing PII they hold, be it printed data or electronic.
Policies – policies should then be reviewed to ensure they are up to date and enforced (eg. encryption of data, document shredding etc.), including checking confidentiality clauses with 3rd parties.
Educate the workforce – all staff need to be aware of the inbound changes and educated accordingly – and sooner rather than later to avoid future digressions.
Global security review – finally, a top down review of the information security system should be undertaken to check policies, procedures and infrastructure are in place to protect the company from a potential data breach.

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