Category Archives: News & Analysis

Netflix, News & Analysis, Policy and Regulation, Spotify, taxation

Will Chicago’s “cloud tax” affect enterprise cloud services elsewhere?

Chicago is taxing some cloud services, an increasing trend in the US in recent years

Chicago is taxing some cloud services, an increasing trend in the US in recent years

Financially troubled and looking to raise funds to plug a swelling hole in the city’s budgets, Chicago recently extended its existing tax laws to levy a 9 per cent surcharge on cloud-based entertainment streaming services like Netflix and Spotify as well as certain software services hosted on cloud platforms in the city. But will the tax laws in Chicago – and elsewhere – soon be stretched to include other cloud services?

The tax law, an extension of existing laws, came from two separate rulings from the City’s Department of Finance. One covers “electronically delivered amusements”, which relates to music, TV and video streaming services like Netflix and Spotify, and another covering “nonpossessory computer leases,” which effectively includes rented storage and compute resources.

The law covering “electronically delivered amusements” doesn’t require those services to be hosted locally (only consumed locally), but the law relating to “nonpossessory computer leases” does, which means local cloud providers are due to collect 9 per cent on their transactions (the exception being when streaming data is in question / interaction with the “rented equipment” is minimal).

The reasoning for the legal reform is simple enough. Cloud is becoming the dominant means by which software and media are being delivered and consumed, and as a result web-based vendors are dominating brick-and-mortar outfits, with the city feeling the pressure from a loss of related sales and property tax revenue. Naturally, the city is looking to compensate that loss with more cash.

Some have suggested this sets a worrying precedent for the way cloud services could be taxed in the US going forward, but some legal experts believe it is not yet clear how the ruling will apply to a wide range of different kinds of cloud services in practice.

“It is likely that we will see more State and local government adopting a tax for certain services to compensate from the loss of revenue from other services that are not generating as much revenue as they did in the past,” Francoise Gilbert, managing director of the IT Law Group told BCN.

A number of US States have already determined they would tax such cloud services as a sale or license of software; information or data processing software; or a digital product or service.

New York, Colorado, Pennsylvania and Utah are all examples of States that have enacted rulings whereby remote access to software via the cloud is taxable if the software is used by in-State customer; Missouri and Tennessee also extend their tax laws to cloud services that are hosted out of State.

But some of those rulings have been challenged before, and a successful challenge can seemingly depend on how a state defines a cloud service and the level of the stack that offering sits in.

In April this year for instance the New York State Department of Taxation (which does tax some cloud services) released an advisory on a case where a company provided infrastructure-as-a-service to a business.  The Department found that the service provided by the cloud company is not taxable because it was used by one of the provider’s customers to run their own software application (advertising software).

“In purchasing an instance, a customer is provided with an operating system that is necessary for the instance to interact with Petitioner’s server network. The operating system represents prewritten software. The customer uses the operating system to perform certain administrative functions, such as to download an application, delete an application, or search for a file,” the advisory opinion reads.

“By granting the right to use the third-party operating system, Petitioner is transferring the right to use prewritten computer software within the meaning of § 526.7(e)(4) of the Sales Tax Regulations. However, a customer does not subscribe to Petitioner’s Cloud Computing product in order to use the operating system. Rather, it subscribes to the product in order to run an application of its choosing using Petitioner’s computing power. This makes Petitioner’s Cloud Computing product different from those products where the vendor’s transfer of the right to use prewritten software to the customer is what the customer primarily wants from the vendor.”

The opinion also concludes APIs do not constitute a taxable pre-written software good.

“It is not clear whether the Chicago tax decision will have an effect on cloud computing services in general.  For several years, States have examined the different categories of services and have opted, or not, to classify the service as taxable,” Gilbert explained.

But she reaffirmed that States will likely continue looking at cloud services for extra revenue, and that consumers shouldn’t write-off potential unintended consequences of taxing one class of cloud services or another – mainly, more taxation.

Alex Freedland, Dell, Josh Lindenbaum, Mirantis, News & Analysis, Redapt, server

Mirantis gets into the OpenStack converged infrastructure game

Mirantis is teaming up with Dell and Juniper to create converged infrastructure solutions

Mirantis is teaming up with Dell and Juniper to create converged infrastructure solutions

Mirantis unveiled plans to work with a range of vendors to deliver OpenStack-based converged infrastructure solutions for enterprises.

The Mirantis Unlocked Appliances are built by Rack Partners and come pre-validated by Mirantis with its own commercial distribution of OpenStack and pre-integrated by Certified Rack Partners.

This is Mirantis’ first big foray into the converged infrastructure area – a segment dominated by Dell and HP, which offers its own HP Helion OpenStack-based converged infrastructure solutions.

“The architecture Redapt designed with Mirantis, with Mirantis OpenStack at the core, solves for the complexity commonly associated with OpenStack,” said Josh Lindenbaum, vice president of business & corporate development, Redapt. “Redapt will work closely with customers to assemble, deliver and install Mirantis Unlocked Appliances that will arrive in the datacentre ready to plug and play.”

Its inaugural offering is tailored specifically for cloud-native applications, though it said it plans to release a broader portfolio of converged infrastructure solutions as it partners with more hardware and software vendors.

The first configuration will be built using server and networking technology provided by Dell (PowerEdge R630 servers for compute and foundation nodes and Dell PowerEdge R730xd for storage) and Juniper Networks (QFX5100s as the data path and a Juniper EX3300 for management) respectively, with configurations ranging from six compute nodes and 12 TB of storage to a full rack comprised of 24 compute nodes and 24 TB.

“About 20 percent of infrastructure is consumed through the appliance form factor because it is extremely easy to set up and operate,” said Alex Freedland, Mirantis president and co-founder.

“Mirantis Unlocked Appliances combines this ease of use with the openness and flexibility of OpenStack, delivered as a cloud-in-a-box. Our first appliance focuses on the most common OpenStack use case – developing cloud-native applications – and will be built and shipped by Certified Rack Partners across the ecosystem,” Freedland said.

Alastair Mitchell, Dods Research, Enterprise IT, Huddle, News & Analysis, Public Sector

Only one third of UK public sector comfortable with cloud – survey

Survey research reveals UK public sector workers still aren't sold on cloud

Survey research reveals UK public sector workers still aren’t sold on cloud

Only 35 per cent of public sector staff are comfortable using cloud-based services according to a survey report published this week.

The survey, commissioned by enterprise collaboration cloud service provider Huddle and carried out by Dods Research, petitioned more than 5,000 UK public sector workers on their views towards cloud services and collaboration.

According to the results just a third of public sector staff seem comfortable using cloud services, while slightly more say they have never used cloud services before.

The results come at a time when the UK government is looking to cut billions of pounds by cutting programmes and improving operational efficiency through the use of cloud services, a key pillar in its ‘cloud-first’ strategy originally revealed in 2013.

“The public sector frontline is stuck between a rock and a hard place,” said Alastair Mitchell, co-founder and chief marketing officer of Huddle.

“On the one hand, staff are being asked to remove £13bn of spend, but on the other, the new cloud-based IT infrastructures that are key to a large proportion of these savings are not yet sufficiently understood or trusted enough to be widely deployed. UK government has to up the rhetoric on cloud benefits and training, else the cuts are simply not possible,” he said.

“It’s really very simple. If public sector employees — and in particular those in IT roles — are not convinced of the benefits of cloud computing and the changes to working practices that can be delivered through it, then the £13bn public sector savings are not realistic.”

The UK government spent over £4.3bn on IT services last year, though the government has frequently said cloud services must play a leading role in reducing IT spending across the UK public sector.

Enterprise IT, ERP, Infor, Mark Humphlett, Merit Globe, Mikael Porat, News & Analysis, pharmaceuticals

Recipharm taps Merit Globe, Infor for legacy ERP modernisation

Recipharm has sent its ERP platform to the cloud

Recipharm has sent its ERP platform to the cloud

Swedish pharmaceutical manufacturer Recipharm has enlisted Merit Globe and Infor to modernise the company’s ERP systems to help reduce application fragmentation across the organisations.

Recipharm said it wanted to streamline its ERP system and reduce risk associated with its fragmented suite of legacy applications. It deployed Infor’s M3 cloud-based ERP platform to replace its existing on-premise solution.

“We can see that new features are being developed and industry-specific functionality added, removing the need for customisation.  This is critical for us as we instigate business process improvement projects,” said Mikael Porat, director of supply chain, Recipharm.

“Looking ahead we are assessing options outside of the ERP such as electronic signature , as this is of major importance for compliance within the pharmaceutical industry,” he added.

The project also included integration with a host of third party systems as well as a migration from IBM AS/400 to Microsoft SQL.

“Success in the pharmaceutical industry depends on managing two contrasting factors, continual product innovation and complete compliance with regulations,” said Mark Humphlett, director, industry and solution strategy, Infor.  “From an operational perspective this means an agile ERP and standardised processes are critical.  Customisations must be kept to a minimum and integration must be lightweight and flexible to support growth.”

Pharma is a heavily regulated industry and one of the main inhibitors when considering a shift to cloud services. Results from the BCN Annual Industry Survey earlier this year, which included responses from over 715 senior enterprise IT decision makers, suggest Pharma was among the top three least likely sectors to shift to cloud services in the next two years, Aviation and Emergency Services being the other two.

Frank van der Post, IS Group, Kpn, M&A, News & Analysis, Telco Cloud

KPN acquires cloud provider IS Group

KPN has acquired IS Group, a Dutch cloud service provider

KPN has acquired IS Group, a Dutch cloud service provider

KPN has acquired IS Group, a large Dutch hosting and cloud services provider, for an undisclosed sum. The operator said the move will help bolster its business solutions portfolio.

Founded in 1996, IS Group offers managed cloud services and virtual desktop solutions to businesses in the Netherlands.

The company only operates datacentres in the Netherlands and claims annual revenues of roughly €25m, KPN’s primary market, and although the Dutch operator already offers some cloud services to enterprises it said the acquisition would allow it to expand its managed hosting capabilities with services like cloud-based workspaces for SMEs.

“Our business customers are increasingly asking for cloud-based services to support their growth,” Frank van der PostKPN has acquired IS Group, a large Dutch hosting and cloud services provider, for an undisclosed sum. The operator said the move will help bolster its business solutions portfolio., chief operating officer of KPN. “Together with IS Group we will be better able to service our customers in their transition to the cloud, with solutions that increase efficiency and flexibility, while allowing for rapid scalability.”

The move fits with KPN’s broader strategy of divesting its operations in other European markets – Belgium and Germany – to build out a broader portfolio of services in its home market of the Netherlands. The company has been fairly proactive at bolstering its cloud cred at the same time.

Last year KPN joined the Cloud Team Alliance, a partnership inked between Belgian telco Belgacom and Numergy, a French cloud computing specialist, which enables participating organisations to extend the coverage of their cloud services by sharing networks and technical resources that help each operator optimise their network architectures for cloud computing. Earlier this year the company also joined the newly formed Dutch Datacentre Association (DDA), which represents close to two thirds of the local datacentre and cloud sector.

Cisco, Europe, Internet of Things, IoT, News & Analysis, Robert Vassoyan

Cisco bolsters IoT partnerships with French startups

Cisco is beefing up its IoT strategy and targeting French startups to do it

Cisco is beefing up its IoT strategy and targeting French startups to do it

Cisco is making good on a promise made in February to team up with the French government on a $100m initiative to help fund local Internet of Things (IoT) startups, partner with local businesses and cultivate IoT-specific skills.

Among the company’s initiatives include a competition to develop enterprise-focused IoT services and apps that foster social and environmental innovation, and a partnership with the NUMA Sprint accelerator programme which will see the company support up to 22 IoT startups incubated in the programme.

Cisco also said it’s partnering with Actility, a provider of IoT and machine-to-machine services for energy management, to improve connectivity between low-power sensors using LoRaWAN, and investing in Parisian startup 6Wind, a software firm developing software-defined networking and network function virtualisation solutions.

“Innovation is in the DNA of Cisco. France has almost limitless potential and our mission is to support innovation across our entire ecosystem,” Robert Vassoyan, chief executive of Cisco France. “These first initiatives demonstrate our active cooperation with innovative companies to aid them in their development, and show that we are committed to continuing our efforts in this area to drive growth, competitivity and employment of our country.”

Cisco has stepped up its IoT strategy as of late, most recently buying connected things tracker and network security specialist OpenDNS for $635m.

cloud pricing, Infrastructure as a Service, News & Analysis, SoftLayer

SoftLayer ups RAM, drops storage and compute costs

SoftLayer rejigged its cloud pricing

SoftLayer rejigged its cloud pricing

SoftLayer announced new pricing model it said would make the company more competitive among other cloud providers, in part by not charging for many of the networking costs.

“While other cloud providers advertise “low” prices for incomplete solutions, they neglect to mention extra charges for essential resources like network bandwidth, primary system storage, and support. At SoftLayer, our servers already include these necessary resources at no additional charge,” the company explained on its blog.

“Our new pricing model includes a redeveloped ordering and provisioning system that offers even more granular pricing for every SoftLayer bare metal and virtual server, from the processor to the RAM, storage, networking, security, and more.”

It also announced location-based pricing, meaning the company will uniquely price cloud services based on datacentre location.

Under the new cost model compute (dual Xeon ES-2620 4U processors) and storage costs dropped while RAM prices increased slightly – though the company said users can expect to save close to 40 per cent overall.

The latest round of cloud cost cutting follows similar moves from others to strip out fees and drop cloud service prices. AWS, Google and VMware have all adjusted their pricing downward in the past few months.

Big Data, Camden Council, Enterprise IT, IBM, News & Analysis

Camden Council uses big data to help reduce fraud, save money

Camden Council is using big data to tackle fraud and save cash as its budgets slim

Camden Council is using big data to tackle fraud and save cash as its budgets slim

Camden Council is using a big data platform to create a ‘Residents Index’ to help tackle debt collection, illegal subletting and fraud.

The service, based on IBM’s InfoSphere platform, centrally stores and manages citizen data collected from 16 different systems across London – including data from Electoral Services, Housing and Council Tax Services – to help give a single view of local residents.

Authorised users can access the platform to search relevant data and highlight discrepancies in the information given to the Council by residents to help reduce fraud and save money on over-procurement of public services.

It’s also using the Index to improve the accuracy of its electoral register. Using the platform, it said it was able to fast track the registration of more than 80 per cent of its residents and identify new residents who need to vote.

“Big data is revolutionising the way we work across the borough, reducing crime and saving money just when public services are facing huge funding cuts,” said Camden councillor Theo Blackwell.

“Take School admission fraud; parents complain about people gaming the system by pretending to reside in the borough to get their kids into the most sought-after schools. Now with the Residents Index in place, Council staff can carry out detailed checks and identify previously hidden discrepancies in the information supplied to the Council to prove residency. We have already withdrawn five school places from fraudulent applicants making sure that school places fairly go to those who are entitled to them.”

“The Resident Index has proven its worth, helping the Council to become more efficient, and now contains over one million relevant records. This is just one example and we have other plans to use the benefits of data technology to improve public services and balance the books.”

Early last year Camden Borough laid out its 3 year plan to use more digital services in a bid to save money and improve the services it offers to local residents, which includes using cloud services to save on infrastructure cost and big data platforms to inform decision making at the Council.

Cisco, Dell, HP, IDC, Kuba Stolarski, News & Analysis

Cloud infrastructure revenues grow 25% in Q1 2015

IDC Q1 2015 cloud revenuesRevenue from cloud infrastructure including servers, storage and switches grew 25.1 per cent year on year in the first quarter of this year – the highest rate in over a year according to analyst house IDC and the second highest level of total spending in the past nine quarters.

Cloud IT infrastructure spending climbed to 30 per cent or nearly a third of overall IT infrastructure spending in the first quarter of this year, up from 26.4 per cent last year. Private cloud revenues grew nearly 25 per cent year on year, which was slightly outpaced by public cloud growth at close to 26 per cent.

Kuba Stolarski, research manager, server, virtualization and workload research at IDC said the shift to cloud seems to be the main driver of growth in the IT infrastructure market at the moment.

“Cloud IT infrastructure growth continues to outpace the growth of the overall IT infrastructure market, driven by the transition of workloads onto cloud-based platforms,” Stolarski said.

“Both private and public cloud infrastructures have been growing at a similar pace, suggesting that customers are open to a broad array of hybrid deployment scenarios as they modernize their IT for the 3rd Platform, begin to deploy next-gen software solutions, and embrace modern management processes that enable agile, flexible, and extensible cloud platforms.”

HP, Dell and Cisco landed in the top three spots in IT infrastructure market share with 15.7, 11.9 and 9.3 per cent respectively. Lenovo’s four per cent year on year growth seems down largely to its acquisition of IBM’s x86 server business.

It hasn’t been the best quarter for storage on the other hand. Year on year quarterly growth rates declined slightly for both EMC and NetApp, and interestingly ODM direct sales also declined, suggesting both enterprises and the scale-out market still find big box vendors a competitive option when compared to lower cost Chinese and Taiwanese manufacturers.

Datacentre, Dave Turek, France, IBM, News & Analysis, Nvidia

IBM, Nvidia, Mellanox launch OpenPower design centre to target big data apps

IBM has set up another OpenPower design centre in Europe to target big data and HPC

IBM has set up another OpenPower design centre in Europe to target big data and HPC

IBM, Nvidia and Mellanox are setting up another OpenPower design centre in Europe to target development of high performance computing (HPC) apps based on the open source Power architecture.

The move will see technical experts from IBM, Nvidia and Mellanox jointly develop applications on OpenPower architecture which take advantage of the companies’ respective technologies – specifically IBM Power CPUs, Nvidia’s Tesla Accelerated Computing Platform and Mellanox InfiniBand networking solution.

The companies said the move will both advance development of HPC software and create new opportunities for software developers to acquire HPC-related skills and experience.

“Our launch of this new centre reinforces IBM’s commitment to open-source collaboration and is a next step in expanding the software and solution ecosystem around OpenPower,” said Dave Turek, IBM’s vice president of HPC Market Engagement.

“Teaming with Nvidia and Mellanox, the centre will allow us to leverage the strengths of each of our companies to extend innovation and bring higher value to our customers around the world,” Turek said.

The centre will be located in IBM’s client centre in Montpellier, France and complement the Jülich Supercomputing Center launched in November last year.

IBM has been working with a broad range of stakeholders spanning the technology, research and government sectors on Power-based supercomputers in order to satisfy its big Power architecture ambitions. The company hopes Power will command roughly a third of the scale-out market over the next few years.