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Home Vision Financial issue 04 A cloud reality check

A cloud reality check

Taking a blended and phased approach to the adoption of cloud services will enable organisations to achieve their agility and cost reduction goals without increasing risk

A buzzword, a revolution, a cost reduction champion, a security risk: cloud computing assumed many guises in 2010. After a year of hype and conflicting headlines, it is not surprising that industry analyst firm Gartner* declared that ‘confusion is rampant’ and ‘misconceptions abound’ in a report at the end of 2010.

Despite this lack of market clarity, the interest and implementation of cloud-based environments is predicted to gain momentum during 2011 – even in the financial services sector, which has so far been wary of this new IT delivery model. TechMarketView estimates the total UK spend on cloud computing services will top the £6 billion mark in 2011, representing a 14.6 percent increase on 2010’s figures.

Matt Lovell, Computacenter’s Chief Technology Officer, commented: “The ongoing need for financial services companies to minimise costs and maximise agility will put cloud computing high on the CIO agenda during 2011. However, given the concerns that continue to surround public clouds, the focus will be on developing private environments.”

Overcoming adoption challenges

Security remains the top adoption obstacle for public clouds along with issues around service levels, interoperability and vendor lock-in. According to a survey by Forrester Research**, 69 per cent of respondents at organisations with 1,000 employees or more cited security as their biggest concern in relation to cloud computing.

For financial services companies, there’s also the problem of data sovereignty; a problem that many public cloud providers are unable to alleviate due to their use of disparate datacenters across the globe. 

In addition to the operational challenges, the cloud computing market remains riddled with conflicting definitions, vendors, rate cards and analyst predictions. “The lack of clarity surrounding cloud computing could lead some CIOs to dismiss the concept entirely, which can be a rash decision. If a CIO doesn't make the leap, business units might take the lead instead, resulting in an uncontrolled mix of cloud services that not only increase cost and complexity but also expose the company to greater operational risk and regulatory challenges,” comments Matt.

Pragmatic and blended approach

To help financial services firms cut through the cloud hype and take their first steps towards this new IT delivery model, Computacenter has launched C³.

C³ takes a pragmatic approach to the adoption of cloud services by enabling companies to blend onsite and offsite IT delivery models to achieve an optimal balance between risk, performance, agility and cost.

“C³ draws on our managed services expertise to provide financial services firms with the flexible commercials and scalable IT resources that come with public clouds but without the associated operational risks,” comments Matt. “As part of C³, we can help organisations establish private clouds either on or off premise and combine these with other resources, such as public clouds, hosted environments or internal datacenters, to enable cost-effective and dynamic IT service delivery.”

Unlike its public cloud counterparts C³ guarantees data sovereignty in the UK, which is essential for financial services firms if they are to meet industry regulations for storing information within the boundaries of the EU. Establishing private clouds as part of the C³ framework also enables banks to apply their own security policies – from encryption to rights of access – for both data protection and auditing purposes.

Given the lower risks associated with the private model, it’s not surprising that this is where financial services firms are focusing their interest and investment. A survey of IT executives from top-tier banks conducted by professional services firm Accenture, found that 83 percent of respondents consider setting up private clouds their first priority and, although the market for public cloud services is growing quickly, banks are neither leading the demand for these services nor pushing ahead aggressively by launching cloud services of their own***.

This trend towards private clouds is not just limited to the banking sector.Gartner**** foresees a similar adoption curve for other industries, predicting that through 2014, IT organisations will spend more money on private-cloud-computing investments than on offerings from public cloud providers.

Private clouds, however, are no panacea, as Matt warns: “Private clouds introduce a new approach to IT sourcing and consumption, which will change the relationship with the business and introduce a more service-oriented culture. To ensure a successful adoption, banks need to ensure they have the right foundations in place.”

Flexible but robust security controls 

At the core of these foundations is, of course, security and data protection. Although private clouds allay many of the concerns over data segregation and access that are associated with shared public environments, banks still need to do their due diligence.

“A number of managed services and SaaS providers are extending into the private cloud space, but this doesn’t automatically mean they will the have security expertise, certified facilities and scalability to deliver in this new market,” comments Matt.

CIOs also need to understand how data within a private cloud is being managed from a business continuity perspective: Is it being replicated and in what timeframe? How long would recovery take?

In addition to stringent security controls and responsive disaster recovery measures, private clouds need effective IT management tools and processes. As many financial services firms discovered with virtualisation, a new computing model can quickly spiral out of control if not controlled effectively with automated workflows, management policies and governance frameworks.

However, according to Forrester Research**, 44 percent of companies prioritising private clouds have no plans to invest in automation for their virtualised environments, which could prevent them from unlocking the full financial and agility benefits of cloud computing. 

Understanding the impact of private clouds on the existing IT infrastructure is just one of the challenges facing financial services firms as they begin their journey to the cloud. They also need to identify the right applications to migrate.

As with virtualisation, a private cloud-based approach will not be appropriate for all IT services. “The scalable and agile nature of cloud computing means that it is particularly suited to applications that can be easily standardised; require rapid provisioning and deprovisioning; or experience seasonal peaks,”
explains Matt.

Reaping the rewards without the risk

Based on this profile, many businesses – and vendors – have already pinpointed email as a prime candidate for the cloud. However, even with a commodity application, such as email, a cloud-based approach can come with a multitude of challenges.

“Before transitioning email to a cloud environment, banks need to consider how they will tackle data migration, security, and integration with line of business applications,” comments Matt. “All these factors can lead to increased costs, risk and complexity – especially in relation to public clouds, which can initially appear very compelling from a financial perspective.”

Solutions, such as Computacenter’s C³Mail, enable financial services firms to achieve the same benefits of a public cloud – lower costs, utility consumption, greater agility – coupled with the security, performance and integration needed in today’s connected workplace.  
Unlike public cloud offerings, C³Mail offers the flexibility of a dedicated or shared infrastructure with Computacenter implementing and managing the email infrastructure at a customer’s premises or at one of its high availability datacenters - an approach that satisfies the regulatory need for EU data sovereignty.
Based on Microsoft’s latest Exchange 2010 release, the service combines best-of-breed hardware and software with standardised and automated processes.

“C³Mail enables financial services firms to reduce the cost and complexity associated with messaging infrastructures, while ensuring end-to-end service availability and guaranteed outcomes for users,” comments Matt.

Billed on a monthly basis per mailbox, C³Mail offers an entry point to cloud services by providing the benefits of utility consumption models without the cost of IT asset ownership.

Computacenter’s pragmatic approach to cloud computing also embraces future opportunities for the agile provisioning of other workplace IT services, such as Microsoft SharePoint, presence and unified messaging.

Building foundations for the future

With cloud computing and IT service delivery evolving so rapidly, future-proofing is essential if companies are to maximise their investment in new models and existing infrastructure assets.

“Despite the current reluctance of banks to embrace the public cloud model, today’s private cloud architectures and services need to be designed with hybrid environments in mind,” comments Matt. “This means financial services firms need to think now about what other applications might be suitable for the cloud as it matures and start building a service catalog.”

Service catalogs with a self-service front-end for users are essential to realising the agility benefits that come with a private cloud - and will also help to simplify any future transition to a public environment.

Self-service forms a key element of C³Mail with users able to perform simple administrative tasks resulting in greater productivity and service flexibility. Such self-service, however, must also come with robust governance controls to meet regulatory and auditing requirements.

With so many interdependencies and potential risks surrounding cloud adoption, financial services firms need to work with an experienced provider that understands current and future delivery models - and how they will impact users, customers, regulatory compliance, business processes and total cost of ownership.

“Implemented effectively cloud computing will help financial services firms meet their goals for increased agility and decreased costs; services will be deployed faster to customers and employees, and capital expenditure avoided,” comments Matt. “To attain these benefits, banks must be ready to address the challenges that come with any new strategy or technology. Yes, cloud computing can be a threat, but it can also be a great opportunity.”

Find out how Computacenter can help you with your cloud strategy

Sources
* Gartner Predicts 2011: Cloud Computing is still at the peak of inflated expectations November 2010
** Forrester Research, November 2010, James Staten
*** Gartner, Private Cloud Computing: An Essential Overview, November 2010 (Thomas Bittman) 
**** “Gartner Says Security Must Evolve as Organizations Move Beyond Virtualization to Private Cloud Infrastructures”, November 2010 (press release: http://www.gartner.com/it/page.jsp?id=1464514)