At the end of October, ADM Hosting announced that they were the first Estonian company to become an Amazon Web Service partner. ITuudised asked what it took to achieve this status, what it means exactly and what are the plans for ADM Hosting from their Managing Partner Klemens Arro.

The following is an interview with ADM Hosting Managing Partner Klemens Arro.

How did it come to be and what does it mean for you to be an Amazon Web Service partner?

At first, we set our sights on this status to prove our own expertise. That was our preliminary goal. But the more we dove into it, the more we started to discover added bonuses that come with being a partner. The first thing we had to do to qualify was prove our technical prowess.

How long did that take?

We took the first steps in the middle of last year so, altogether, it took almost a year. Part of the process is getting people personally certified. For example, we had to have two architects certified. The preparations for one exam took a couple of months.

We also had to undergo a separate accreditation process for the business side of could services, such as how to sell these services or what would be the most optimal solution for a certain situation – keeping data on the cloud or on your own servers – what is the total cost, etc. We also had to get technically accredited and there were exams for developers who write code on the cloud, so they could do it in the most optimal way for that solution. If you compare just the coding side to traditional solutions, then the usual recourse is to take a set thing, put it on a server and spend 50 or more percent to optimize it for that solution. If you optimize the code for the solution at hand and only then create the infrastructure that fits that solution, the cost is noticeably smaller.

For one case, we decreased costs by 30% simply by optimizing.

There was also a security accreditation, which focused on everything from all the usual security and cyber hygiene requirements to cloud service solutions and the way things must be encrypted and what you should look for.

When the personal accreditations were done, we had the architects and other accredited individuals we needed, then we had to prove the quality of our customer service. For this, we had to find real clients and describe what we had done for them during the accreditation timeframe. Then, the clients assessed us. After that, the Amazon people looked over the architects and other things, judged us based on standards and whether our clients were truly satisfied with the service. Then, the economic side followed. We had to achieve a minimum turnover suitable for Amazon to prove that we are able to provide a certain volume of service. By now, we have more than 10 projects.

ADM Hosting is a division of ADM. ADM has almost 60 employees and ADM Hosting has 3 permanent employees. Depending on the needs of projects we can also cross-use our workers.

How many people were involved in this action?

Throughout the whole time, 9 people were involved.

Why did you decide to do this?

Our first objective was to prove our skills. Throughout the process, it started to become clearer what we really wanted. Since Amazon’s strategy is based on having many partners and offering their own service through them, they also have a lot of programs to support sales and offer training, such as different workshops, webinars and on-site classes.

At the moment, we are working with Amazon to create a common sales strategy. Our goal is to cover the Estonian market, increase our market share in the UK and to enter the German market.


What is the service or solution that you now offer and how is it different from other cloud solutions?

VPS (Virtual Private Server) systems are very common in Estonia for managing larger services. Compared to the cloud, VPS is a suitable tool for a relatively small website with maybe an e-store that needs its own environment to handle a certain load but if it crashes every now and then, it’s not a big deal. But when you are talking about a critical aspect of business that can’t crash and is very expensive when it does or something that has to scale based on volume, then the cloud comes into play. In this case, you can take all the components you need, put them all in one place, set them up and then automate the processes involved. It’s quite common to have campaigns that raise the volume of visits to your site exponentially. With VPS, you are either paying too much constantly or have to raise the capacity of your site during the campaign, which is a lot of work that you have to do by hand. With a cloud solution, you set up the service to account for temporary increases in the load. This also means that when the load is smaller, the cost to you is smaller as well.

Security risks are also easier to mitigate on a cloud because it has default encryption and auditing support. If you build your own solution, you have to build those from scratch, which is time consuming and expensive.

With large clients, different regulations and laws are very important. With traditional servers, this again means a lot of work with access and log-ins for regular audits – all that needs a lot of time and attention. One common regulation is PCI Compliance, which means that if you use payment solutions, you must prove that your devices, processes and solutions are secure enough. Cloud service companies have built these services into their devices and automated the control mechanisms that immediately let you know if something is not up to regulation.

There are only 3-4 serious cloud service providers in the world: Amazon, Microsoft Azure, Google Cloud and IBM SoftLayer. They are all directed at their own niche, but Amazon is the largest and most flexible with 49% of the market share. Microsoft, Google and IBM have 7% and the rest is spread among smaller service providers. Compared to the others, Amazon has a ten-year lead making them competitive and giving them a toolbox that anyone can use according to their own specific needs. The solutions offered by other cloud service providers are directed towards a specific niche such as developers, hardware solutions, etc.

What was the most difficult part of the process?

Getting people certified. If you are going through the process while you also have a day job, it can take a lot of time to finish. Finding the time to do it was the hardest part.

With this certification process, is there a danger of someone wanting to change jobs and you having to certify a new person?

Yes, the certification is personal. The partnership status is given to the company so if a person wants to leave, they can prove their expertise in other endeavours. Our goal is to certify all our people. We pay for the exams, all the training and try to find enough time so that we always have only certified people working for us.

Our next goal is to get higher level certifications. Right now, we have architects at the basic level, but we also want to have professional level architects, which is the level that has the most complicated exam in the world. Our objective is to have two such architects working for us.

How many people are certified in total?

2 architects, 3 business accreditations, 3 technical accreditations and one security accreditation. In total, we have 7 accreditations and 2 certificates.

Why did ADM undertake this process?

We had a project once were we saw this as the only way to achieve what was needed. There was a “Black Market Online” platform used by the Black Nights Film Festival. It was a video streaming platform where a global jury and other interested parties could watch films. The material was very large film files with high security demands, so the films wouldn’t get leaked before their official premieres. There was also the technical complexity of converting the videos so that they could be watched on any computer because we didn’t know what computers the jury members would have. It would have been very expensive to create such a solution ourselves. So, we started looking into solutions offered by Amazon. After that, we started getting other small projects that proved that the Amazon service supports our needs like scalability, mass e-mails to a large client base and other tools so well that we started to realize how many problems we could solve with them. We came to the conclusion that we needed a separate team to work on that.

At first, there was a need but then came the temptation to use more and more opportunities on offer. Does ADM now offer it as a separate service?

I would even call it a new and separate line of business.

The need to optimize before using a cloud solution – what does that mean exactly?

That depends a lot on the client’s application. You can move things to the cloud without optimizing them but often you can’t access all the benefits of the cloud without optimizing first. With the cloud, the option for scalability is definitely useful as is the fact that if you optimize all your options, you can really cut costs.

ADM was interested in becoming a partner. Was Amazon interested also? How interested?

We were actually surprised by their high level of interest. First, because they have no partners in Estonia and very few in the region in general. But Amazon’s business model is based on having partners to do well so they are very interested in new relationships. Even to the point that if we got lost in the routine of our day jobs, they came to tap us on the shoulder to remind us.

ADM’s new line of business. What expectations and goals do you have for it?

From the business aspect, our first objective is to grow 30-40 times in the next five years. We haven’t had any active sales campaigns yet. Others have always found us. Now, we need to build up our new lines of business. Next year we will start dealing with sales ourselves. Our goal is strong growth.

Our second objective that we want to accomplish in the near future is to achieve Amazon’s next level of partner, the Managed Service Provider. There are few in the world who have that level.

In addition to Amazon, we also want to start working with other cloud solutions. Our next focus will be on Google Cloud. We already have some smaller things on Google Cloud that we have been servicing for over a year, but we want to increase that volume and plan to apply for a similar partnership status.

The Estonian market has a unique understanding of the cloud. We have local companies offering cloud services but they are clearly different from high-capacity cloud service providers in terms of their capabilities and dependability. This has made “cloud” into a magic word.

But if you really focus, you see that this is a business and field that shouldn’t be ignored any longer.

Why don’t people understand it?

The word cloud is used a lot but it’s still obscure. No one has really explained what it is. There are so many myths around it. Every time I sit down with someone, I have to start overturning these myths. For example – where is my data really located, this doesn’t seem secure – those are both myths. But if someone takes the time to dig a bit deeper and see under the first layer to what a cloud really is, then they start to get interested, whether they are Heads of IT in a medium-sized company or marketing managers estranged from the world of IT. The cloud is not just Dropbox.

I’m fairly certain that the cloud will get rid of the need for hosting on traditional servers. Nowadays, it is not practical to build most solutions on a physical server because it is expensive and has huge surplus costs. There are still solutions where traditional servers make sense. So traditional servers and hosting services won’t go anywhere but cloud services will definitely take a chunk for themselves.

What are the primary advantages of the cloud?

  1. Scalability, which gives you reliability and cost effectiveness as your load grows.
  2. Security.
  3. Regulations.
  4. Larger data volumes.

Some companies are legally bound to save their data for the long term. Nowadays, keeping your data on the cloud, especially as a backup, is much cheaper than buying a hard drive and keeping it on all the time. Putting backups on the cloud is a very strong trend in the world. The service is put on the cloud and keeping it there costs next to nothing.

There is also the cost of purchasing hardware vs. the cloud. When compiling a new budget with plans to buy hardware, I recommend you calculate whether it makes sense to buy physical devices. Compare the cost of your purchases to the cost of holding your data on the cloud. In addition to purchase costs, you also have the costs of keeping your devices in operation and other related costs. If you think that you have an IT department and they can deal with it and they don’t cost you anything, then know that every move they make actually incurs a cost for your company. If you add all these costs together, then keeping a simple box in your building and in operation can actually be quite expensive.

When it comes to dependability, achieving a 100% uptime with a solution that you built on your own machines would require a very large investment. 100% uptime becomes impossible. But thanks to the nature of cloud services, ensuring 100% uptime is noticeably cheaper and you can achieve it much faster.

What is the biggest obstacle or danger to using cloud solutions?

The biggest obstacles are people’s mindsets. Which are mostly made up of myths. If you talk to people, then the first question you hear is whether it’s secure and how will they know where their data is and all that – it seems like the biggest and most magical thing that no one really understands so, at the end of the day, they’re still using someone else’s computer. On a technical level, there aren’t many obstacles – you can put anything on the cloud but some things you can also automate so that they don’t take up all the capacity you have.

The biggest danger is when cloud migration and management is done by a person who knows nothing about the cloud. This happens quite often. We have consulted companies that have migrated to the cloud at some point but still haven’t discovered the magic of the cloud. It turns out that they took what they had before and just plopped it onto the cloud. The monetary benefit to this is small. If you plan to migrate, then you should think out the steps and do it in a way that you benefit from the move – for example, by scaling or saving on costs as you move things to one spot or adding a support system. The biggest danger is taking the wrong first step. If you still wish to do it yourself, then we recommend that you consult someone to discuss the key points of the move.

Finally, a wider question. The development of e-Estonia, digital Estonia – what could we do differently and better? What development potential do you see?

I like where we are right now as compared to the rest of the world. I can’t imagine having to do business in a paper-based world. Though I would like to see more updates. Most of our systems were created 10-16 years ago and were later fixed a bit here and there. The business with our ID cards shows our ability to react fast and move through a mass of people – but it hints at the fact that the architecture was built a long time ago and it may have been the latest solutions at the time, but not anymore. I’d like people to remain more up to date. But, otherwise, our state projects are very cool and ambitious. I’m particularly keeping my eye on the organization of data warehouses in data embassies so that our nation could be run without a geographic location but with all our systems remaining intact.