What Financial Services Firms Should Look for When Selecting Cloud Solutions.
Cloud computing is transforming entire industries by enabling organizations to leverage advanced IT capabilities they might not otherwise have been able to afford. This is particularly true in financial services, where the cloud enables smaller firms to enhance customer service, increase efficiency, and gain competitive advantages.
Traditionally, organizations had to buy servers and storage devices, install and configure applications, and maintain a staff of skilled IT personnel in order to manage it all. With the cloud, a service provider handles all of that. Organizations simply pay a monthly fee to use the IT services they need. IT becomes a utility, like electricity, that's accessed on demand.
The business benefits of this model are well-established. Organizations can preserve capital, reduce operational overhead, and take advantage of the expertise of the cloud service provider. The cloud also makes it possible to try new technologies with minimal risk, go to market quickly with new products and services, and readily scale IT resources to support business growth or fluctuations in demand. Instead of spending their time maintaining data center infrastructure, in-house IT staff can focus on projects that drive the business forward.
Growing financial services firms can leverage the cloud to provide their customers with online applications and services. The cloud also creates an efficient and collaborative work environment and makes it easier for multiple branch locations to share information and stay up-to-date with the latest technology.
Despite these benefits, the cloud can be fraught with pitfalls for the unwary. Organizations need to understand how cloud computing works so they can make more-informed decisions when selecting cloud services. Financial services firms that lack in-house expertise in cloud services should consider partnering with a local provider that can help them develop and implement an effective cloud strategy.
What Is 'the Cloud'?
Cloud computing draws its name from the cloud symbol used to depict the internet in network diagrams. A cloud effectively conveys the concept of a complex infrastructure that has no clear boundaries or borders. Cloud providers implement hardware and software on a massive scale and deliver services to customers via the internet.
There are three primary cloud deployment models. In the public cloud, resources are owned by the service provider and offered to multiple customers in a multitenant architecture. A private cloud, in contrast, is operated solely for one organization, although it may exist off-premises and be managed by a third party. A hybrid cloud interconnects one or more public and private clouds, with the ability to move applications and workloads among them.
There are also three primary cloud service models. Most organizations are familiar with Software-as-a-Service (SaaS), which enables them to access a wide range of business applications on a pay-per-use basis. Platform-as-a-Service (PaaS) provides programming languages, frameworks, and other tools that allow organizations to develop and deploy applications onto the cloud infrastructure. Infrastructure-as-a-Service (IaaS) gives customers access to processing power, storage capacity, and other fundamental IT resources without the need to manage the underlying infrastructure.
Moving non-core applications to the public cloud can be an easy decision. There are proven SaaS solutions for email, productivity apps, collaboration, and more, and adopting these tools can save time, money, and headaches.
But while buying cloud services is relatively easy, migrating from one cloud solution to another is often difficult. Without an effective cloud strategy, organizations can wind up wasting thousands of dollars and putting their business at risk. Financial services firms in particular should carefully evaluate the various options and consider what impact the cloud will have on their operations.
Choosing the Right Solution
When developing a cloud strategy, it's important to recognize that the cloud isn't the best option for every application. Some applications and services will likely need to remain in-house for a variety of reasons.
At the most basic level, organizations should consider why they want to move a particular application to the cloud. If the IT infrastructure supporting the application is due for replacement or upgrade, then migrating to the cloud might make sense. Or if IT staff are spending a lot of time maintaining the infrastructure, the cloud can free up those resources.
After identifying workloads that are candidates for migration, organizations must evaluate each application's requirements. Workloads that require high levels of availability and performance may not be the best fit for the cloud.
Security is a key concern, particularly in the financial services sector, which is subject to rigorous requirements for data protection. Financial services firms must ensure that cloud services are deployed in SSAE-16 SOC 1 Type 2 data centers that meet Sarbanes-Oxley and Gramm-Leach-Bliley requirements. In addition, the cloud service should be deployed in multiple, geographically diverse data centers with redundant power and network connectivity.
Of course, the cloud doesn't eliminate the need for in-house IT infrastructure, and managing cloud services requires significant expertise. Financial services firms can maximize success by partnering with a local provider who offers a full range of consulting, hosting, and managed services.
In the cloud era, it isn't necessary to build and maintain IT infrastructure to support every application. However, there is wide variability in the availability, performance, and security of cloud services. Financial services firms should take a strategic approach to the cloud and ensure that the cloud services they adopt will meet their business and operational requirements and deliver a solid return on investment.
Nowak is director of information technology at RMM Solutions, a WBA Associate Member. RMM Solutions is a full-service IT provider with proven expertise supporting financial services firms. RMM's cloud solutions provide the highest levels of availability and security, backed by a team of professionals delivering world-class service.