Many financial sector firms are realizing that the “cloud” can be used for purposes other than the conventional wisdom which was restricted to only back office and administrative systems. This session will focus on how cloud computing can be used in connection with core operations. What developments can we expect to see in the clouds in the near term? Long term? This session will explore available options and the trajectory of the “cloud.”
13. Define: Cloud Computing Platform or “service” accessed over a network to provide advanced, often transparent functionality for mass consumption and high-availability. Seasonal or as-needed utilizationis a classic use case. Evolutionary:ASP -> SaaS/PaaS -> Cloud
14. Generally Accepted Characteristics Self-Service Delivered over the network Elastic scalability (grow as big as you need, pay as you go...) * Think of it as renting IT resources vs. buying.
15. Some Challenges We Faced Customer base growing exponentially Limited resources (budget, staff, & time) Compounding system complexity Increasing scrutiny around financial integrity, compliance & regulations System performance suffered
16. Solutions We Found “Service” Oriented Architecture (SOA) GRID Computing – distributed computing Service Broker – asynchronous messaging Rules Engine – layers of abstraction Virtualization – HA, DR & Scale Storage Area Networks - iSCSI We discovered the “cloud” out of necessity.
17. Cloud -> Business Translation Consider the cloud a technical utility. Understand your risk tolerance and current business stage to establish a threshold for use. Stages of a business*: Stage 1: Existence (Speed to Market) Stage 2: Survival (Competitive Differentiation) Stage 3: Growth (Core Competency) Stage 4: Take-Off (R&D) Stage 5: Maturity Other: Declining Conditions (Defense) *Five Stages of Small Business Growth ~ Harvard Business Review 1983
18. Growth Phases *Five Stages of Small Business Growth ~ Harvard Business Review 1983
19. Technical Flavors Infrastructure Platforms Application Development Platforms Business App Platforms Special Purpose/Social Platforms:
21. Spotlight: Financial Institutions Mine masses of data for business value Private vs. Public cloud offerings Ideal future for infrastructure lifecycle upgrades MoSes – Risk & Financial Modeling Software Asset Price Generator Multi-Segment Corporate Modeling Variable Annuity Hedging
22. Why Consider the Cloud? IT Budgets have not kept pace with growing business needs Managing data growth & extracting value = major challenges Lack of scalability & capacity Firms are ill-equipped to handle infrastructure growth needs Enforced lack of agility + constrained budgets
23. Sounds Great – Right? Microsoft Azure - March 2009, ~22 hours RackSpace - June 2009, ~ 24 hours Salesforce.com – January 2010, > 1 hour Amazon – Numerous 2009-2010, ~ hours ea. Intuit – June 2010, ~ 2 days Cloud <> Perfect Transparency is Key!
24. Cloud Trajectory Enhanced Virtualization (DR, HA & Security) Hybrid Clouds Data Storage as a Service; Peering No SQL key-Value Stores Intelligent Workload Management (IWM) PaaS – to integrate private/public clouds
Hi, my name is Steve Robert & I’m an entrepreneur.I was fortunate enough to join a startup when my risk tolerance was high and my mental health low.10 years later, we’ve built a sustainable, profitable business that employs 35 people and is growing @ 70% per year.Therefore, my perspective is that of a Small Business, and what I believe are the characteristics for enabling growth and opportunities the Cloud can provide.
Billhighway is a “Quickbooks for Communities” – we serve due & fee-based organizations.We’ve been growing > 70% per year. We’re approaching 300k customersWe’ve been an early adopter of technology, leveraging many of the pillars of Cloud Computing; such as Service Oriented Architectures, Virtualization & Grid Computing – with datacenters distributed across several geographic regions.
I feel this quote adequately sets the stage for Cloud Computing – as it means a lot of things to a lot of different people, and standards are yet fully baked.
The word “Cloud” has created about as much debate as terms such as “Web 2.0” or “Social Media” so depending on your audience, they can be as dangerous as discussing Politics, Religion and in Michigan – Unions. Simply put, Cloud-computing offers resources accessed over a network – paying only for what you use.ToastMasters:[Think of it as an applicationservice that doesn’t run locally on your machine] – MS refers to it as “3 Screens” - The “cloud” has become an acronym for distributed services, or increasingly “experiences” - For example, you can access Facebook via your 1.) computer/browser; 2.) Smartphone; or 3.) multi-media devices such as xBox 360, iPad and soon TV. - When you update text or add a picture, it’s not stored on the device locally – close your browser and it’s available on the phone, etc. – all in the “cloud”
Here are a few generally accepted characteristics..In a nutshell, the conventional IT model front-loads capital spending on infrastructure, either buying capacity in advance or adding later at a higher costs and substantial business disruption.The Cloud on the other hand, enables new systems to be built/tested with minimal upfront investment resulting in systems that can be rapidly scaled to respond to improving conditions and business growth.
Quickly, a few lessons we learned – starting with the challenges we faced in 2004/2005. [insert picture of diagram?]Read, study, travel and consolidated practices by SUN (grid), Oracle (BPEL) & MS (XML & Service Broker.)At the time we were a Stage 1 business: StartupThousands of customers per weekHad to accomplish a lot in a short period of timeAccounting methods were difficult for developers to understand, lots of room for error – too many “decisions” within our logicnTier architecture limited scalability
2006 – OIGEssentially, without realizing it, we rolled our own customized geographically disbursed “private cloud” – each of the items listed here serve as fundamental tenants for many cloud initiatives.Lots of integrities, dashboards, scorecards & BIBy keeping our heads down, & flying under the radar we emerged at a market leader, with several patents and some unique service offerings that, now as a Stage 2 business, we had significant competitive differenciation.
Evaluating the cloud is different for everyone. As an executive or investor, we’ve found it helpful to correlate the business’ (or product) stage to establish a threshold for use.Here’s where the rubber meets the road. Goals and/or opportunities for a startup are quite different than that of a mature business. Financial institutions specifically have hurdles of their own, which we’ll touch on in a few moments.
Stage 1 Business or Incubator (startup) – Growth through Creativity. May want to leverage quick iterations & potentially more volatile deployments (speeding your time to market.) - EXAMPLE: Consume third-party APIs, leveraging the open source community and reduce ground-up development time & cost. - Remain Agile. Fail Fast. Iterate.A Stage 2 Business is about Survival – Growth through Direction. May consider business process outsourcing/scale & high availability - Consideration here may be to outsource non-core-competencies to industry; think: email, virtualization/storage/infrastructure - Determine what you’re in the business of, and strategically outsource everything else.As a Stage 3 Business experiencing Expansion – Growth often occurs through Delegation. Opportunities likely exist for product innovations, process efficiencies, increased productivity & potentially cost-savings - Here it might be time to consider Amazon Web Services or Google App Engine, if you haven’t already for pilot programs to quickly roll out product enhancements.As a Stage 4 Businesses begin to grow through coordination. A Maturing business may utilize the Cloud for strategic product management; maintaining today while building for tomorrow. - An EXAMPLE here may be an enterprise evaluating alternative platforms such as Windows Azure for green-field application development to compliment your XP & Scrum methodologies – your teams are doing Agile right??A Stage 5 business grows through Collaboration. A consideration here may be through strategic partnerships, extending functionality or integrating with 3rd party communities such as Facebook, Salesforce.com or Mobile app stores to continue perception of market leadership.And, often not discussed are businesses facing a Decline or challenging market conditions present opportunity for creativity & resourcefulness - Here it’s all about staying current, understanding what all the cool kids are doing, cherry-picking opportunity and making sure your brand isn’t becoming MySpace. - It’s important to remain current and relevant to your customers. What customer habits are shifting and how can you re-align yourself?
Now, based upon your type of business, there are several variations of Cloud services you may look to consume. These can apply to any business, based upon your pain points or perceived opportunities. [Hosted] Email has emerged as an early winner, at least for Google & Microsoft.For example, a company looking to quickly scale their applications up may look to offset infrastructure needs such as storage, processing & bandwidth using services such as Amazon Web Services (EC2/S3)Another example may be a development shop looking for a one-stop solution for development & delivery whereas Google App Engine & MS Azure offer tools & APIs to build custom web applications from the ground up.On the other hand, if you have a product and want to gain more exposure, you might consider extending functionality into an existing vendor ecosystem, platforms such as Salesforce.com.Last but certainly not least are special purpose [application] platforms such as Facebook, Google’s open-social and even the iPhone app store – which present tremendous opportunity catered to specific environments. Mobile isn’t going anywhere and people are now consuming products and services in very different ways then they used to. The internet space changes quickly, you should re-evaluate your strategy every 6-12 months. Example: Google. Lot’s of beta software, quick proof-of-concepts. Some stick, most don’t. - Chrome & Android adoption are two examples that are both exploding! Why? Because they push product to the market in extremely short development cycles, where many of their competitors wait a year or more. They understand the marketplace opportunity and strike while the iron is hot.The underlying idea is, the easier it is to develop and deploy highly scalable web applications, the more innovative and creative solutions we’re going to start seeing. We’re lowering the development bar and speeding time to market = REAL TIME WEB.
So, who are the Cloud Providers?Essentially, anybody with internet ground to loose (or gain.)This slide shows a small sampling.According to Gartner Research: “Cloud Computing will be as influential as E-business” - That’s a bold statement.Merrill Lynch analysts predict that by 2011 the volume of cloud computing market opportunity will amount to $160BN, including $95BN in business and productivity apps (e-mail, office, CRM, etc.) and $65BN in online advertising.
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.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.Finding the value in cloud servicesIn 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.Mats Andersson, CTO of Nasdaq’s OMX Exchange, said Nasdaq uses cloud computing systems, but only inside the company’s firewall and only to access historical market data. Exchange IT officials aren’t yet ready to trust “the cloud” with transactional data, he added. http://www.privatecloud.com/2010/10/05/wall-street-eyes-cloud-computing-cautiously/ MoSes = financial modeling software - http://www.towerswatson.com/united-states/research/1161/ - http://www.towerswatson.com/united-states/services/Financial-Modeling-Software - http://www.privatecloud.com/2010/10/05/wall-street-eyes-cloud-computing-cautiously/
Banks havealready invested heavily in their grid and cluster computing environments and will continue to do so; cloud is just a continuation of that pattern."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.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."
So all this sounds great – right? Here’s a few things to consider..What is your tolerance for disruptions, if any? A question you may want to ask yourself is – is being an early adopter or pioneer of more value than a reliable service? I think we know Twitter’s answer.Lastly, when households first bought light bulbs and signed up for electricity service from the utility, they still chose to keep some candles and matches around the house. With Cloud, common sense and basic risk management will determine how you protect cloud assets or if you go into the cloud at all. - Microsoft beta service = unexpected outage during beta period. low/acceptable impact- Rackspace = high impact, UPS/Generator failure, banks of racks went down. BUT, transparent and accountable – tweet & blog the entire event! Competitors = #rackspacefailSalesforce.com – 68k customers impacted, visibility of force.com dependent on salesforce.com being up.Intuit – entire online presence & main website impacted for almost 2 full days. Occurred again < 30 days later, for several hours.Amazon, service iteruptions & disasters. Jun 2009 = Lightening damaged power supplies to several racks, down ~ 5 hoursMay 2010 = 3 [unrelated] outages over 1 week; UPS failure, power distribution short-circuited (8 hours) & 2 days later, car struck utility pole cut off power to data center for 30+ minutes.
Technologies tend to take different routes:A linear trajectory, when the technology matures in sync with the adoption - VirtualizationA trajectory where the technology matures and then veers into the mainstream – noSql, cloud storageA trajectory where the users force standardization and maturity in a technology – Hybrid Clouds, PaaS, IWMNo SQL (Google’s BigTable, Amazon Dynamo and Cassandra, used by Facebook ) These data stores may not require fixed table schemas, and usually avoid join operations and typically scale horizontally - http://en.wikipedia.org/wiki/NoSQLI am sure Amazon, Microsoft, Google, Rackspace, Savvis and others have implemented some form of IWM; but the algorithmics and programming models are not yet available as mainstream packages. I believe that this is a domain that will be driven by the users.http://doubleclix.wordpress.com/2010/01/10/virtualization-and-cloud-computing-road-ahead-trends/
So you need to do your homework. Green-field projects are one thing, while enterprises may opt to Maintain today, while building for tomorrow.There are significant PROs & CONs and only you can determine what is best for your business.Reduced costs & speed to market are certainly compelling.However; latency, SLAs and reliability are still concerns for many.With a little due-diligence, some strategic risk-taking, there is a tremendous opportunity to leverage the cloud to some capacity – but you’ll ultimately have to decide for yourself.
Hopefully this session helped raise some awareness around what the cloud is and what it can do for you. Remember to align your business’/product’s stage & risk tolerance to the various cloud flavors and you’ll be able to cut through some of the noise.Thank you very much.