Alexander Craig's blog

Infrastructure is expensive.  Whether you’re a small IFA or an international financial services vendor it is likely your IT will devour a reasonable chunk of your annual budget.  To make matters worse, Moore’s Law kicks in and you have to replace the whole shebang every 3-5 years.  Ouch!  But help is (apparently) at hand.  The wonders of “Infrastructure as a Service” (IaaS) and “Platform as a Service” (PaaS) promise to banish the woes of managing, maintain and upgrading racks of tin in a data centre – your server estate at least, will be replaced with a nice friendly and cost effective solution out on the Cloud that is someone else’s problem and that you can put down to OpEx.  But is it all too good to be true, does this Cloud really have a silver lining?

Cutting to the chase, the answer is, “probably”.  This is certainly more positive than an emphatic “no”!  To understand why it’s not a resounding “yes, move to the Cloud now” we need to look at what IaaS and PaaS actually are in a bit more detail.

At a commercial strategic level they are actually very similar.  In essence, both offer “virtual space” on someone else’s large scale server infrastructure.  The benefits are that you no longer have to buy and maintain the underlying hardware (that becomes their problem), you can scale your use up and down quickly and (best of all) you pay as you go for what you actually use.

The main difference between the two is where the line is drawn between what the service provider is responsible for vs. what you are responsible for when it comes to looking after the systems.  In the case of IaaS (like Amazon Web Services) you typically take charge from the operating system up while for PaaS (like Microsoft Azure) you pick up the torch at the application level.  It’s all about abstraction and I’m sure the merits and detail of each approach will lead to heated debate between IT professionals (like Joshua Beil, David Chappell and Elastic Grid) for many years to come.

Suffice to say; on paper it all looks very good.   The bottom line is that most people in the financial service sector are in the business of financial services and IT is something they have to do rather than want to do.  So, anything that makes the IT easier and allows you to get back focused on the day job is a good thing!

This is probably why Gartner research suggests that Cloud computing (including IaaS and PaaS) is moving beyond the “hype cycle” and into mainstream adoption.

So, what can you actually do on an I/PaaS platform, where could it fit into the IFA market place?

Well, pretty much anything you would do in your existing data centre.  For example, Sage is moving a version of their SalesLogix CRM suite onto Amazon Web Services as a new take on SaaS delivery.  Meanwhile, there are a number of examples of organisations adopting I/PaaS as their preferred choice for solution development and testing such as NASDAQ and Intuit.

Worth a mention are Platform Computing who are starting to make waves with a PaaS offering that is designed to target the financial services sector.  They’ve got some impressive case studies including Citigroup and Société Générale.  What is interesting about this is their understanding of the importance of data affinity and security.  While all the Cloud vendors take these matters very seriously, FS in particular, remains (rightly) extremely sensitive to the minute detail of how data is handled, interchanged, processed and secured.  One of the trade offs in the Cloud is a loss of direct control of the physical boxes, their type, location and environment.

Of course, that’s the whole point!  But it does raise issues as well as solve them.  I suspect this is why vendors such as Amazon and Microsoft are introducing enterprise service level agreements (SLAs) with phrases such as “enterprise-class guarantee”.  The idea of extending a business’s private corporate network into the cloud is also catching on with Amazon’s “Virtual Private Cloud”.  All moves designed to try and set the minds of CIOs and legal teams at rest and ensure that sensitive enterprise applications (like most of those in the financial services ERP stack) can begin to be accommodated.

So, where does this leave us?

We’ll let’s do a quick tally up on the pros and cons:

• I/PaaS allows us to get rid of servers sitting in racks that cost a fortune to keep powered, up-to-date and backed up;
• We have a range of options open to us on platform and configurability so we should be able to move existing smaller applications over pretty easily;
• Best of all, we get to scale our new Cloud infrastructure up-and-down as we need only paying for what we use as we go;

But, on the flip side:

• We lose direct control over where our Cloud-based applications and data actually physically live;
• We’re trusting someone else to look after security, backup and resilience;
• We need to fall back onto some level of enterprise SLA to ensure our applications and data will always be available and safe;

On balance, provided you can be satisfied that you understand the cons, as well as the pros, of the I/PaaS then it is well worth getting on board.  After all, initial excursions into the Cloud can be kept very cost effective.  And if our friends at Platform are to believed you won’t be alone on a journey looking for that silver lining which may well be there!

Next time round I’ll be pulling everything we’ve explored in SaaS, IaaS and PaaS together to create a one-stop “Financial Services Cloud Crib Sheet”.

This article was first published on 26 November 2009 on the AT8 Group Blog.