Cloud computing still generates plenty of interest, but that interest remains stuck in an ever-revolving debate of doubt and concern. So if the cloud landscape is to ever fully mature, what more should cloud providers be doing to convince the industry of its worth? FST US investigates.
“Technology always finds a way to mature if the interest is there. ”
Overblown, overexcited, exaggerated and extreme – hype phrases that rarely infiltrate the financial service technology’s carefully crafted perimeter of suspicion and risk aversion. IT experts working within this field shy away from mind-blowing adjectives and extreme superlatives. They are naturally risk-averse, careful and considered individuals who cringe at the merest hint of hyperbole. But at the same time, they are inquisitive, intelligent, and under increasing pressure to perform, to do more with less and to further support the business goals of their organizations.
Hence, when a new industry trend comes along that promises all this and more, they take notice, but are wary of the ‘and more’ part. Cloud computing has been the number one source of hype hoopla throughout the industry for the past couple of years. Introduced as the solution to all CIOs’ concerns, the cloud landscape was meant to transform the ICT industry. It was going to improve systems, cut costs and make data more efficient, easier to store and access, and easier to scale. But here we are, on the cusp of 2011 and still the familiar concerns persist: ‘Is it secure?’ ‘How does it work?’ ‘Will it work for my business?’ ‘Does it actually add any value to my key business metrics?’
In an industry as fast-paced and technically savvy as financial services, are the cloud’s stuttering adoption rates a cause for concern? Or does the fact that – even in an industry as famously safety-conscious, decisive and unadventurous as this – cloud computing is still being deliberated over again and again hint at something positive for the technology? Is there a future for cloud computing in the financial services industry, or has the hype put a dampener on the cloud’s buzz?
It’s an interesting topic for which there are few easy answers. However, below are five steps the cloud computing industry could undertake in order to gain the trust and support of the technology executives working within the finance industry.
Step 1: Sort out security
Cloud security remains the number one concern. Clearly, the subject of security has been the biggest barrier to cloud adoption in the financial sector. Figures from the Eighth Annual Global Information Security Survey conducted by PriceWaterhouseCoopers and CSO Online show that 62 percent of the 12,847 global businesses they surveyed still have ‘little to no confidence’ in their ability to secure assets they put in the cloud.
“It is clear that a number of CIOs and IT executives within the financial industry are pushing back against the cloud,” says Malcolm Eylott, Senior Vice President and Global Head of Operations and Technology at TD Bank Financial Group. “The issue of general security is a concern for everybody, and until that is cleared up there will always be this necessary discussion.”
Len Johnson, Senior Vice President and IT infrastructure Manager at RBS North America, agrees. “The biggest concern we have with the cloud right now is security. In a private cloud environment I think security is pretty good, but it is the public cloud sphere where we still face issues,” says Johnson. “Losing data is always a major concern, but losing data across the cloud landscape means losing it in somebody else’s environment, which is completely unthinkable for people working in the financial sector.”
Step 2: Define what the cloud is
There is still a great deal of misunderstanding around the cloud. Figuring out what cloud computing actually is has been a continuous challenge for everyone working in the IT sector. Actually working out how to then leverage the cloud to one’s own end has proved even more troublesome, and it is this confusion and misunderstanding that is hindering the cloud’s wider adoption in the financial technology industry.
“Unlike a natural cloud, the cloud computing landscape hasn’t floated away,” says Hong Loh, Chief Architect at Legg Mason. “It has been around for two or three years and it is still stuck in limbo. So it is kind of like an unnatural phenomenon. What does the industry want with it? It has remained a buzzword because of this misunderstanding, and this conflict between the demand for the cloud and the confusion about its value.”
Eylott agrees that the way the cloud has been portrayed has deepened both the debate and the confusion around its true value to the financial industry. “Approaching the cloud through third parties can appear to be very, very risky,” says Eylott. “Adopting something like a public, outsourced cloud is not really that different to data center optimization or server optimization – something that most firms have been doing for years. The only difference being you have got somebody else managing your data for you, but you are no longer in control of the data centers and servers.”
Step 3: Differentiate the cloud from other technologies
The cloud has to compete with virtualization software and strategies. Cloud computing can be inclusive of virtualization, but they can also be implemented and extrapolated as two different processes. Both help to deliver optimized resources, scalability and on-demand utilization, but virtualization can be maintained and managed completely within a company’s own enterprise firewall. Does such competition hinder the cloud’s growth?
“At RBS, we have just completed a very aggressive section on virtualization,” says Johnson. “I have a target to virtualize 60 percent of the servers at 60 percent of our workstations. This program is driven by cost and recoverability issues. We have gone down the virtualization route rather than the cloud-computing route because of the ability to move a virtual machine from one environment to another, to replicate it quickly. So if you had a failure on one system you can easily move it over to another, replicate it and be moving again.”
“Is cloud computing about sharing service and utilities and hardware and software?” asks Loh. “If it is, then true virtualization technology enables that; it makes hardware sharing easier. Is this what the industry wants?”
4: Provide a more managed service space
Cloud as a utility could represent the future of the industry. Whether used as an analogy or as the reality, if the cloud computing landscape could re-engineer for itself a place in the utility field of businesses, then its future adoption rates could increase. The analogy goes that homes and business do not have their own electricity generators and instead rely on an external provider for electricity. This provider responds to their demands for service and scales accordingly. Swap ‘electricity’ for ‘hosted services’ and you have cloud computing.
“The vendors of cloud computing technology are looking to provide a utility-type service, almost like your power and your telephone service that you can easily buy without thinking too hard,” says Loh. “This is what the vendors want, but is this necessarily what the customer needs? Electricity works this way because it is a dumb thing. You plug it in and it works. Phone services work in a similar manner. But to expect everybody to shift their application to a cloud is unrealistic because the first step to sharing is being able to give up your data center and move it into a core location.
“However,” continues Loh, “if you can move your info into a managed service space where things like email, instant messaging and collaborative software can be hosted, then this type of value-added service is where the cloud computing landscape can really thrive.”
Step 5: Be patient
Cloud concerns will disappear, but it will take time. As security issues are overcome and the true value of what cloud computing can bring to the industry is realized, the majority of the concerns that surround this technology will fade from view. Cloud computing is still a relatively new phenomenon, and one that has warranted plenty of thought and consideration throughout the industry in just a short period of time. As IT experts begin to gain a better understanding of how to leverage this technology, the cloud computing landscape will become increasingly demystified.
“Grid computing is a classic example of how cloud computing can be leveraged for us,” explains Johnson. “It can slide into the cloud and you can then pull all the processor capabilities you want out of it. You could basically meter it up and down, as you need it. As we become more comfortable with this model, I think all of our fears and concerns will disappear. It is just like when PCs first hit the streets. Nobody thought they were going to amount to anything, but now we have got to the point where they are second nature for everyone. Technology always finds a way to mature if the interest is there, and that is what I think is going to happen with the cloud.”