The Bankwatch

Tracking the consumer evolution of financial services

Are Governments and Banks worrying about the wrong problems in the cloud?

The US government has 800 data centres and one CIO.  He has set a target of shifting 25% of the government’s $80 billion in annual IT spending to cloud computing.

The benefits are associated with cost savings.  These benefits are tempered with concerns about data security, and physical location of the servers within the US.

Cloud Computing’s Tipping Point | InformationWeek

There are few technology trends the U.S. government is embracing with such fervor as the cloud. In his Federal Cloud Computing Strategy report, published in February, federal CIO Vivek Kundra set a target of shifting 25% of the government’s $80 billion in annual IT spending to cloud computing.

I see Government as a microcosm of banks in how they do (will) view cloud services.  If you count each technology instance with its set of unique product focussed applications as a data centre, many banks would count 20+ data centres even though they are sometimes physically located within one building.  It is a fair comparison, because each hardware procurement is driven by the attributes and requirements of the application.

Before we even get to the cost and security matters, consider the banks management of disparate resources and you can see why business users in Banks are frustrated by the time and effort required to make what might appear at first glance relatively simple changes.

Which leads to my point.

Here are six benefits outlined here in 2008.  This summarises nicely what I see as the real prize, that is much broader and organisation changing than merely cost.

  • Reduced Cost
  • Cloud technology is paid incrementally, saving organizations money.
  • Increased Storage
    • Organizations can store more data than on private computer systems.
  • Highly Automated
    • No longer do IT personnel need to worry about keeping software up to date.
  • Flexibility
    • Cloud computing offers much more flexibility than past computing methods.
  • More Mobility
    • Employees can access information wherever they are, rather than having to remain at their desks.
  • Allows IT to Shift Focus
    • No longer having to worry about constant server updates and other computing issues, government organizations will be free to concentrate on innovation.

    Item 6 is probably the most significant here.  It means the responsiveness of technology groups to business and customer requirements will just get better and better.

    I believe the security question is a red herring.  Even the BusinessWeek article makes the bald statement that private networks are more secure than cloud networks.  Really?  First of all I question that when I consider the number of open access points in a multi thousand employee bank whether the lock down scenario is that powerful to exclude all threats.  Next if it is that much locked down then I would really question how that organisation is able to function effectively.  How many times did I lose my email at a bank caused by a lack of effective back up right at the time I needed it.  On the other hand I have never lost anything in Gmail apps, never had any consequential down time, and never had to speak to a support person.  In fact why is my browser based gmail faster than the MS outlook application?  Hmmm

    Lets go further on the security matter. Ask the 75 million users of Sony Playstation how secure their banking data is.  Information is already out there, and the prize for organsiations has to be to manage the information they control as effectively as possible taking into account all the risks and all the benefits.

    Relevance to Bankwatch:

    This matters because the technology issues created by multiple discrete data centres within banks create a mammoth hindrance to innovation, effective product development and frankly employee experience.  Government and Banks would be better served to consider multiple benefits to cloud computing that broaden the discussion from just cost.  Whatever number of data centres you have equates to a similar number of fiefdoms that brings the organisational complexity that comes with responsibility for a whole hardware to software environments operation.

    Cloud computing allows all the hardware and operating system maintenance to be abstracted out of the equation to the cloud provider thus freeing up internal capacity and mindshare to work on making the bank better for customers.

    Written by Colin Henderson

    April 28, 2011 at 12:25

    Posted in Uncategorized

    %d bloggers like this: