Xero reveals redundant datacentre footprint amid marketshare push

Xero co-founder and CEO Rod Drury has revealed that the company has spent millions of dollars on a complete redundant datacentre footprint, as it works to wrest marketshare from cloud accounting incumbents.
Written by Leon Spencer, Contributor

Xero has ramped up its global redundant datacentre footprint in a bid to avert potential service outages, according to its co-founder and CEO, Rod Drury.

The cloud-based accounting software provider has spent millions of dollars investing in its datacentre infrastructure for the past year or two, Drury told the 1,300 attendees at the company’s fourth annual Xerocon partner conference in Sydney this week.

"We've spent millions and millions of dollars on something that you guys won't even see, and we may not even need," said Drury. "We now operate in fully geographic redundant datacentres."

"If a plane went into one of our Rackspace datacentres, your data is all ready to go, and we should be the fastest in the industry to stand that stuff up," he said.

Xero has partnered with managed cloud provider Rackspace since its earliest days as a startup in New Zealand, and it is now clear that for much of that time, it has quietly been building up enough of a datacentre footprint using Rackspace servers to establish a complete redundancy infrastructure — a feature that sets Xero apart from the pack, according to Drury.

"It's really hard for you guys to evaluate what everyone else has, and we didn't talk about this too much early on because it’s such a massive investment," said Drury. "But we've now made that investment; it's in place, so if anything catastrophic went wrong with Xero, we'd be able to get it up and running very, very quickly.

"You know, we've just seen another vendor that's been out for three days. We just think that's unacceptable, and it really ruins the trust in the cloud industry," he said.

Although Drury was careful to not to name the vendor in question, it is likely that he had in mind listed accounting software supplier Reckon. Reckon users lost access to their service last week after an upgrade resulted in extended outages.

According to Xero Australia managing director Chris Ridd, all of Xero's datacentre infrastructure, including the redundant digital space, is based in North America, specifically in the United States, where Rackspace conducts much of its business.

As Xero strives to work more closely with government in Australia, it remains to be seen whether the company's American-based datacentre infrastructure footprint may restrict the sort of work it do with government agencies due to data sovereignty regulations.

From Ridd's perspective, though, there is little to be concerned about. Large government agencies are not Xero's primary target; small businesses are its focus, and most small businesses are private commercial enterprises.

Chris Ridd 3
Xero Australia managing director Chris Ridd at Xerocon 2014 in Sydney.
Image: Leon Spencer

Additionally, the government entities the company already works with, such as the Australian Taxation Office, have had no problem with data being stored overseas.

Not surprisingly, Ridd supports the federal government's recent push to remove the dual ministerial permission currently required for certain government agencies to store data outside of Australia.

In Ridd's view, as federal and state governments in Australia work to make the move to the cloud in a bid to reduce IT infrastructure operational costs, the fear around data sovereignty is likely to diminish.

"It's changing, I think. [Communications Minister Malcolm] Turnbull and I spoke about this last year at an event, and he's absolutely aware of the productivity benefits to government of cloud services," Ridd told ZDNet. "But it's way outside of our realm, because we have very, very few customers that are government agencies."

"However, I am aware of the legislation changing, and the reason it's changing is that the government understands the value of going to public cloud-based services for a lot of their IT requirements," he said.

Ridd makes no secret of Xero's desire to support the government in its efforts to remove the barriers for its agencies to more easily reposition their IT infrastructure in the cloud.

"We want to influence policy to promote and grow the cloud industry, and also champion the small business cause, reducing red tape in technology uptake," he said. "I'm really optimistic about the government's agenda here."

Meanwhile, if Xero did see the day when it was required to guarantee the storage of data in Australia, it would be able to utilise Rackspace's datacentre in Western Sydney's Erskine Park. Until now, however, the economies of scale required to make that option cost effective have not presented themselves locally.

"Over time it would make sense for us as we scale out to a million plus customers," said Ridd. "You would start to have a situation where we would absolutely look at a distributed set of datacentres. So, when we cross that bridge, absolutely. Through Rackspace, we have the capability to host here if we deem that necessary."

Xero today released its growth figures for the past year, and a million plus customers is not an entirely inconceivable proposition. In the past 12 months the company has almost doubled its tally of paying customers in Australia to 147,000.

The company also announced a new key partnership in Australia with Telstra, in a bid to promote the benefits of cloud computing to their small and medium business customers.

From September, Telstra will be giving its business mobile customers the opportunity to experience Xero's brand of cloud computing first hand, by offering eligible customers a six-month free trial of the software.

Ridd also revealed today that Xero would be substantially expanding its Australian workforce, bringing up to 50 new developers into its Melbourne offices over the next 12 to 18 months.

"We're re-architecting the way we're doing product development, we're bringing more people in, really starting to look global and de-centralise," said Ridd. "We've now got over 50 developers here in Australia."

"But we now have shipped the first core feature function for Xero out of Melbourne, and we're now looking at Melbourne being a core part of the global product development capability for Xero.

"As New Zealand feels the strain of all of the demand in terms of the products we're developing, Melbourne is a great hub of innovation that can attract great talent," he said.

In addition to opening a new office in Canberra, Xero has also reached an agreement with Melbourne's Swinburn University, with the aim of getting involved in an industry-based learning program, which would see graduates be taken on by Xero.

"It's convenient too, because it's just down the road from the Melbourne office," he said.

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