Sifma Technology Conference
STEP SEVEN: Use Machines To Make Extreme Profits From Extreme Frequency | STEP SIX: Flatten Communications Costs With Cable Connections | STEP FIVE: Co-locate. Even With Your Competitor. | STEP FOUR: Time is Money. Make Millions From Every Millisecond | STEP THREE: Spend Green, Go Green, Save Green | STEP TWO: Hands Off: Automating Reconciliation Can Dramatically Lower Costs | STEP ONE: The 70 Percent Solution: Cut Costs Upfront and As You Go, With Cloud Computing | Seven-Step Survival Guide: How to Thrive in Tough Times
STEP ONE: The 70 Percent Solution: Cut Costs Upfront and As You Go, With Cloud Computing
July 6, 2009
If cloud computing needed an imprimatur that its time has arrived in financial services, it may have come in a survey released June 24 at the Securities Industry and Financial Markets Association's Technology Management Conference and Exhibit in New York.
Nearly half of the 350 Wall Street I.T. professionals responding to questions posed by Sifma and IBM said they believed that "cloud" computing is the technology with the greatest potential to force business change in an era of budget restrictions and skill shortages. Estimated cost savings, by one count: 70 percent in upfront capital costs and another 70 percent in operating costs.
Cloud computing allows companies to buy or rent computing from data processing and communication providers, as needed, as a service coming in over the Internet or a private network. Last year, 21 percent of respondents picked cloud computing as the technology that could potentially most disrupt how Wall Street firms operate. This year, 46 percent picked it.
Now ranked as less important: modeling operational risks and mobile communication technologies.
"With the kinds of challenges Wall Street firms face, a trend toward cloud computing might be expected," said Ian Hurst, general manager, IBM financial services sector, in a statement on the survey's findings.
Cloud computing can keep head counts down. As companies grow, they can add capacity "in the cloud,'' instead of in-house. The services are ready to turn on at any time, eliminating installation costs. And provisioning of new services can be handled by non-technical employees.
"Cloud computing specifically addresses each of these with compelling economics, self-service and virtualization," Hurst said.
Cloud computing, in effect, commoditizes technology infrastructure, allowing users to acquire capacity, services and other resources in units or on a subscription basis. The model has the potential to substantially reduce the costs, complexities and headaches of technology, since a company purchases only what it needs and only for as long as it needs it.
Amazon Web Services, for instance, offers "slices" of 1.0-Ghz x86 computing for 10 cents an hour, storage at 12 cents a month per gigabyte and bandwidth at 15 cents or less per gigabyte per transfer, according to a University of California at Berkeley report. It's the computing equivalent of "on-demand" service.
Kevin Haar, CEO and president of cloud provider Appistry, Inc., based in St. Louis, MO, said that IT executives are looking to broadly adopt cloud computing in 2009, as a cost-effective answer to increasing regulatory pressure and tightening economic conditions.
Haar said cloud computing is able to save large amounts of money because resources are shared: "You can get higher utilization of low-cost processing power. Also, operational models are much simpler. The end user is able to pay for just what they use, rather than for all the infrastructure needed for peak demand."
Appistry's CloudIQ Platform family of products delivers and manages a variety of applications and services for public and private clouds. Cloud providers that compete with Appistry include RightScale and 3Tera.
One Appistry client who did a cost savings study reported more than a 70 percent reduction in capital costs with cloud computing, Haar said, with operational costs showing similar savings.
