Large banks and financial institutions are sitting on masses of data that executives are eager to mine for business...
value. Many are turning to public cloud and private cloud technologies to free up this data from legacy IT systems, but the shift is challenging.
Whether there are big budgets for increased IT spending…that isn't clear.
John Barr, financial sector analyst at the 451 group,
While some financial giants have advanced into public cloud services like Amazon Web Services (AWS), that's mostly for simulations, experimentation and "safe" data. Regulatory and privacy concerns are paramount. The advent of private cloud technologies -- software platforms that turn pools of computing resources into metered, self-service and flexible services -- are catching on fast, and 2010 may mark the beginning of an overall trend in how large financial firms think about IT.
"It's too early to say there's significant investment in cloud," said Kevin McPartland, senior analyst at the Tabb Group. However, he said financial firms have crossed the hump on awareness, and most are experimenting, planning or otherwise exploring cloud computing within their walls.
"There are definitely pockets of testing and proof-of-concept [projects] going on," he said.
Finding the value in cloud services
In some cases, public cloud services can look like an ideal future target for infrastructure lifecycle upgrades. The Hartford Financial Services Group sees a natural fit for its compute grid on AWS, using things like the distributed MoSes modeling software. Deustche Bank is experimenting with hybrid cloud -- computing and provisioning platforms that can span between a service like AWS and internal, private cloud-style infrastructure provisioning and management systems.
Tabb Group was a part of a recent survey that showed the financial sector is dealing with an explosion in IT needs, both in data growth and infrastructure. McPartland said that regulatory and privacy concerns spurred interest in private cloud solutions, but overall, IT budgets had not kept pace with growing business needs in the financial sector.
The Wall Street and Technology cloud survey said that a solid majority of firms felt that managing data growth and extracting value were major challenges. Survey respondents indicated that a lack of scalability and capacity to properly analyze the data were serious concerns. The survey also said that 57% are likely to purchase "cloud technology" within two years.
Budget questions slow possible cloud swell
Industry professionals warn that the end goals are more important than the specific technology. A VP of infrastructure for a global financial services firm said that it was probably true that, overall, firms are ill-equipped to handle infrastructure growth needs. He said that banks already invested heavily in their grid and cluster computing environments and would continue to do so; cloud was just a continuation of that pattern.
It's too early to say there's significant investment in cloud.
Kevin McPartland, senior analyst at the Tabb Group,
He said that financial firms were worried most about an enforced lack of agility, as IT budgets and HR budgets were under constant threat despite booming needs. If highly automated, standardized service models like private cloud let some of that pressure off, they were likely to find a warmer welcome than switching to public cloud models, at least for the near term.
"There is a much stronger focus on risk, both for compliance and to keep themselves solvent," said John Barr, financial sector analyst at the 451 group, via email. Barr also said that the people clamoring for more technology might not be the ones with their hands on the budget at these big firms, and that also added to the pressure.
Barr said he expected increased use of private cloud software within the industry, but vendors hopeful for a gold rush would be wise to watch their ambitions. Cloud is neat, and banks clearly need help with their IT demands, he said, "but whether there are big budgets for increased IT spending…that isn't clear."
Carl Brooks is the Technology Writer at SearchCloudComputing.com. Contact him firstname.lastname@example.org.