Saturday, July 10, 2010

Cloud computing, risks and returns

I have watched the growth in cloud computing with interest. Wikipedia defines cloud computing this way:

Cloud Computing is Internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on demand, like the electricity grid.

The ideas behind cloud computing are not new. What is new is simply the question of scale facilitated by technological and market change.

Despite the growth, I was interested to see an article by Gordon Peters on IT Wire suggesting that almost half of Oceania IT professionals say that the risks of cloud computing outweigh the benefits, according to the first ISACA Oceania IT Risk/Reward Barometer survey.

ISACA says that CIOs are increasingly interested in cloud computing because of its potential to deliver lower total cost of ownership (TCO), higher return on investment (ROI), increased efficiency and pay-as-you-go services, and that IDC has said that cloud services will outpace traditional IT spending over the next five years, representing approximately $51 billion by 2013.

“Yet IT professionals see risks in entrusting information assets to the cloud,” according ISACA which recently surveyed 218 Australia and New Zealand-based IT professionals who are members of the global, non-profit professional association.

I can understand the cautions, but also think the short to medium term economic benefits will continue to drive market growth. What we all do if entire systems go down is, however, a bit of a nightmare.  

Thursday, July 08, 2010

Is Australia's trade position as good as it seems?

On 6 July 2010 the Australian Bureau of Statistics released the latest Australian trabalance goods & services May 10de in international goods and services figures.

You can see from the attached graphic how the balance of trade on goods and services has returned to positive. This was greeted with a degree of glee. However, the results are not as clear cut as that. 

A very significant contributor to this result was a rise in non-monetary gold exports. These rose in seasonally adjusted terms by $772m or 66 per cent.

We can compare this with:

  • an increase in rural exports in seasonally adjusted terms of $235m, up 11%
  • An increase in exports in seasonally adjusted terms of non-rural goods of $385m, up 2 per cent.

The main components contributing to the rise in seasonally adjusted estimates for non-rural goods were:

  • coal, coke and briquettes, up $329m (10 per cent)
  • metal ores and minerals, up $157m (up 3 per cent)
  • other manufactures, up $52m (up 4 per cent).

If you look at these numbers, you can see just how important gold was.

If wecredit exports May 10 now look at other aspects of trade performance, I have had a particular interest in services, in part because of the importance of Australia's international education sector. I have been monitoring this closely because I expect this to drop by at least a third over the next year.

The adjoining graphic shows just how flat Australia's service exports have been. The country is simply not doing very well here.

While the overall return to surplus on trade in goods and services is welcome at this point in the cycle, it seems to me to be vulnerable.

In do try to adopt a slightly contrary position in my analysis. By this I mean that I like to test common assumptions and views. I am been concerned for a little while that the structure of our trade has been increasing Australia's economic vulnerability. However, detail here is a matter for another post.