Published : 13 years ago, on 03/01/2012

The acceleration in the adoption of cloud computing over the past five years has been exponential and the take up by financial firms has been a case in point. A 2011 Gartner survey of CIOs * from financial services companies shows clearly that the risk management potential of cloud computing makes it the answer to the prayers of those attempting to keep data secure yet available amid a welter of threats and pressures. Yet misconceptions about the drawbacks and benefits of cloud persist; IBM’s Nick Davis sorts the wheat from the chaff.

A cloud computing system is a model of consuming and delivering IT and business services that  enables users to get the resources they need, when they need them. From advanced analytics and business applications to IT infrastructure and platform services, including virtual servers and storage, Cloud can provide significant economies of scale and greater business agility, while accelerating the pace of innovation.

This is particularly suitable for businesses as it partly removes the limitation of needing a dedicated IT system (with its own implementation cost, life-cycle, and other running costs) to cater to a specific business need, and also allows centralised control including system upgrades and the deployment of new services.  In enterprises it is operational efficiency that enables the business flexibility and cost savings that drive private cloud deployments. Efficiency is at the heart of all cloud computing projects.

Security is also a priority for any CIO and there is a common misconception that this is a cloud computing weakness. This is an idea born principally of the poor image of an insubstantial ‘cloud’ of data which is difficult to control and fostered by uninformed media hype. Of course nothing could be further from the truth if proper compliance, data management and security policies are put in place; central control of data means that security software can be quickly updated and physical access can be tightly controlled.

The rise in employees bringing their own tablets and other devices into the workplace is a classic example of how cloud computing can add value. Personal devices can be very insecure, since they are unlikely to have the same level of security as work systems and may well be used privately to connect with the internet in an insecure manner.

A cloud system can eliminate the issue of sensitive data on personal devices by holding the documents centrally, allowing the user to access what they need, when they need it, through a VPN or other secure connection. This means that data will not be lost through the often-cited ‘laptop-left-on-train’ type of incident and speeds up disposal of devices at end-of-life. If a company accepts use of personal devices in conjunction with its cloud system as standard practice, then security applications can be held within the cloud itself ready for transfer to the individual device along with the required operational information.

A cloud system is above all an agile system and involves a number of features that can give companies a competitive advantage in the marketplace.  Firstly there is automatic provisioning; capacity expands with surges in requirement without specific tasking.  Secondly a standardised environment gives all system locations simultaneous upgrades and service deployment. Thirdly self-service IT provides a service menu from which software and applications can be loaded.

These benefits all combine to enhance operational agility; the way in which IT resources fulfil fluctuating business requirements. Operational agility improves business agility – where speed of reaction or implementation improves customer interaction and enables companies to get ahead of the game. If a customer can steal a march on its competitors through slick computer system practices then the IT Department has truly done its job. The cloud’s reaction to new business completes the virtuous circle – if demand spikes it will automatically provide resource to meet it. If the new venture doesn’t come off, the spare capacity will be available elsewhere.

The positive bi-product of flexible capacity for project teams is that they do not have to worry about the associated costs of computer resource provisioning for their new product. In this way specialist employees can play to their strengths and concentrate on the location of new revenue streams and expansion of current business areas.

By no means is there only one type of cloud and to make best use of cloud technology it is important to understand the principal types and what differentiates them. The two basic models are private and public clouds and often a company will deploy a hybrid involving elements of both.
A private cloud implementation gives organisations the opportunity to realise some of the benefits without compromising on the control required to assure the integrity of data, systems and processes.  In a public cloud, either public infrastructure, such as the internet, is used to access the central computer or the resource itself is shared.

The advantages of public clouds can include reduced cost because servicing, maintenance and security of the resource are shared with other users. Some large clouds form ecosystems with hundreds of companies sharing one central resource which means not only a massive cost saving to each, but also the ability to share high volumes of data very quickly. However, the sharing of confidential data is seen as a risk by many CIOs of Financial Services companies where large volumes of critical information are the norm; thus FS firms like to retain a private cloud capacity for their more sensitive data storage.  Often a hybrid of the two systems is used where the advantages of public cloud are exploited for more routine functions while other processes are kept secure, behind a firewall, in a private cloud.

Adoption of cloud computing is, of course, a major step for any organisation and as such is not without risk and must be undertaken as part of a carefully planned and executed process. But in truth the real risk with cloud computing is not moving to it soon enough; cloud capacity can enable companies to expand exponentially and established firms who are slow to change their IT infrastructure can find themselves overtaken by those to whom cloud has lent speed and agility. Not engaging with the issues and the potential of cloud is simply not an option for any business with large quantities of data and an appetite to maintain or increase market share.
*    http://www.gartner.com/it/page.jsp?id=1835114