SaaS provider Psoda shuns AWS for Macquarie Telecom

Customer data sovereignty concerns tipped the balance away from AWS and towards physical hosting for New Zealand SaaS provider Psoda.

New Zealand cloud software company Psoda, a provider of software-as-a-service (SaaS) project management software, has shunned public cloud infrastructure in favour of installing its own servers in Macquarie Telecom's Sydney datacentre, citing customer data sovereignty fears as the deciding factor.

Psoda was seeking to expand its footprint and customer base in Australia through delivering locally hosted access to its services. Australian customers are migrating into Macquarie Telecom's Tier 3 datacentre, Intellicentre 2 (IC2) this week, following a fortnight of configuration and failover testing, Psoda said.

Bruce Aylward, CEO of Psoda, said that hosting removes potential data sovereignty, latency, and transparency issues, which are a "major concern" for some potential Australian customers.

"We're looking to grow our presence in the Australian government and enterprise sectors. Hosting sensitive data internationally is a contentious issue for many organisations. The ambiguity of data sovereignty isn't going to go away. By hosting at IC2 for our Australian customers, we have removed this issue completely."

Psoda branched out into serving Australian customers from servers based in Auckland and Wellington, New Zealand, three years ago, Aylward said.

Current customers include the Department of Transport NSW, Chandler McLeod, the Sydney College of Law, and the Australian Curriculum, Assessment, and Reporting Authority (ACARA).

However, it has proved difficult to achieve ministerial-level sign-off for government customers to host data offshore, he said.

Aylward said that three providers were considered: Vocus, Amazon Web Services (AWS), and Macquarie. Psoda spoke to customers and potential customers about their preferences, and also made site visits, he said.

Even though AWS is now offering hosting in Australia, however, it was discounted because data hosted on its servers is still potentially subject to subpoena power from US courts and security agencies.

The financial services sector is similarly concerned about maintaining sovereignty over its data.

Data sovereignty concerns have been heightened by Edward Snowden's revelations about government surveillance and demands by US courts for data and communications held offshore but on servers owned by US cloud companies.

In April, for instance, cloud storage provider Box said it was working on giving encryption keys to customers for their cloud data. Box chief executive Aaron Levie said no such subpoena had ever been received for the data of an enterprise customer, but so-called "blind subpoenas" — where governments go directly to the cloud provider without the customer being told — are a risk.

Aylward said the search for a provider to support Psoda's growth plans started around March, and a contract was inked six weeks ago.

Two physical Intel-based servers were installed with 64GB of memory in a load-balanced cluster with failover. However, Psoda has contracted for a 6U rack, allowing room for expansion, Aylward said.

"We have aggressive growth plans for the Asia-Pacific region, and to make our mark, we knew we had to prove our commitment to local businesses and government agencies. Removing all potential hosting barriers was an important first step," he said.

Hosting onshore with high levels of security and robustness is critical, he said.

Macquarie Telecom will execute activity on behalf of Psoda through its remote hands service, said James Mystakidis, group executive of hosting at Macquarie Telecom.

"They need this level of involvement as Psoda's solution includes collocation and self-managed firewalls," he said.