Cloud Computing In Finance

Disruptive Innovation | Enabling Technology

Technology and Human Intelligence

• • •

Moore's Law o In information age, technology growth is exponential (not linear) o Financial system benefits from technology advances o Magnify both positive and negative outcomes (leverage, chainsaw) Murphy's Law o Whatever can go wrong will go wrong o Human behavior plays an important role in Finance - Feynman o "Imagine how much harder physics would be if electrons had feelings" Technology high complexity & high coupling o Use advanced technology to cope with Murphy's law (0 growth) o Steve Jobs (iPhone, WALL-e) encapsulate technology complexity o Decoupling Moore from Murphy: Version 2.0

Six Waves of Disruptive IT Changes

• • • • • •

System wave from proprietary to Commercial off the shelf Device wave from dumb to smart Network wave from proprietary to open internet Content wave from voice to multimedia (big data) Service wave from general to personalized Architecture wave from centralized to decentralized and then to cloud
Cloud is end results from all of the above

Technology Evolution .

on-demand IT resources. These shared. and natural gas services to household Cloud computing delivers abstracted IT resources over the Internet .What is Cloud Computing • • • • Virtualized compute power and storage delivered via infrastructures of abstracted hardware and software accessed over the Internet. water. are created and disposed of efficiently. Making IT Services just like electricity. are dynamically scalable through a variety of programmatic interfaces and are billed variably based on measurable usage.

therefore.Abstraction of Hardware • • • • • • • • Hardware as a device become smart It can be coded. it can be automated Reconfiguration lead to monetization of hardware Presentation Summary Benefits of Cloud Risks of Cloud Industry path of evolution to Cloud Components path of evolution to Cloud Financial Cloud and Future of IT .

The ―Cloud‖ = 10X Improvements Agility Ease of Use Scalability Investment Risk Reliability Cost .

not to be locked in proprietary hardware and software) .Agility and Control • Securities firm operating environment external forces • • • o o o Regulatory Environment: Relationship with government Market: Relationship with customer Competitive Environment: Relationship with peers Changes are unpredictable Adapt to changes by repurpose system Automatically adapting to unpredictable changes (not have to worry about investment obsoleteness.

Faster time-to-market •Deploy infrastructure with a mouse or API •No cabling. screwdrivers.Ease of Use. unboxing. racking. buying •Middle of the night •Do it yourself remotely from anywhere anytime .

Scalability •Control your infrastructure with your app •Nothing to purchase and take delivery on •Instant .

hiring people to operate facility. hiring contractors to build the property.Scalability .Capacity Efficiency •Conventional model: acquire land. Very capital intensive •Only efficient in one day out of the whole life Capacity Under Utilization Capacity Constrained Time . purchase hardware. purchase software.

even operating systems Rebuild it instantly after testing Better at matching cash flow (risk hedged) .Reduction of Costs and Financial Risk •―Turn off the lights‖ = turn off servers you aren’t using •Ex: Turn off development and test environments •Pay for only what you use •No need to buy in advance •Zero Capital Outlay •No contracts Nothing to buy. nothing to risk Cancel immediately Change instantly.

High Availability •Based on enterprise grade hardware •Design for failures Fail safe: •Automatically spin up replacements •Use multiple clouds •Disaster Recovery. business continuity •Stability and Security •Regulatory Requirements of redundancy .Reliability .

legal.Skill Acquisition and Global Reach • • • • • Instantly powered with all the hard to acquire skill sets Leveraging external expertise reduce project complexity (hiding intrinsic complexity from user) Relieve responsibility of maintenance. cross cultural. and innovation Instantly reach anywhere around the global. typically 70% of IT budget So that IT department can focus on what they do best in economic specialization. and language barriers .

laborious process. click. and that was it. WSJ * ." says IT Manager. It was just click. click.The Evolution of IT "It was not a cumbersome.

hard to leave the ecosystem. o portfolio managers position. Privacy being compromised has legal and compliance implications.• • • • Risks of the Cloud Ecosystem JIT availability creates high dependency. Information privacy in a community ecosystem. o Traders trading strategy. one way ticket (no exit strategy). o brokerage firm's customer data. . • The Scariest thing to tell a compliance officer is "we are taking our data to the cloud". earthquake in Tokyo may affect NYC (独立自主,自力更生) Community switching costs high.

New Industry Utilities .

The optimal committee has no members.Augustine's Laws • • • • • • If a sufficient number of management layers are superimposed on top of each other. Ninety percent of the time things will turn out worse than you expect. The optimal size is a small size Cloud tap into the benefits of scale of ecosystem without costs of large system inefficiency as specialization possible . So does increased business base. The other 10% of the time you had no right to expect anything. it can be assured that disaster is not left to chance The law of insatiable comfort: Decreased business base increase overhead.

more reliable . lower risk.Evolution to Cloud •Colocation – 1st step to outsourcing •Managed Hosting – dedicated servers managed by 3rd party take some pain away •Cloud Hosting – Lower cost. easier.Outsourcing Services .

Traditional Hosting Costs Continue to Grow •High CapEx •Low facility asset utilization (55%) •High Depreciation (42-50%) •Power/Cooling costs > Server Costs •Not ―Green‖ •30% hardware obsolescence . ―Servers: Why Thrifty Isn’t Nifty‖ Source: Forbes.Source: Forbes. Kenneth Brill.com.com. ―Servers: Why Thrifty Isn’t Nifty‖ .

―Is Cloud Computing Ready for The Enterprise?‖ Forrester Research. and managed compute infrastructure capable of hosting end-customer applications and billed by consumption1‖ 1. Inc. highly scalable.Would Cloud Computing Do Better? ―A pool of abstracted. .

.Cloud Computing Is the Answer •More than SaaS •Prescripted & Abstracted Infrastructure •Fully Virtualized •Dynamic Infrastructure Software •Pay by Consumption •Free of Long-Term Contracts •Application and OS Independent •Free of Software or Hardware Installation Cloud computing is a disruptive innovation that all IT professionals should pay attention. because it will transform how IT services are delivered.

Costly Cloud Minutes Instant. Cloud Hosting Colocation Time Scalability Cost Weeks to Months Slowest. Rigid & Costly High CapEx Managed Days to Weeks Slower. no upfront no CapEx costs Low High . Managed vs. Payper-usage Costly. usage month/year contracts. somewhat flexible.virtualized “Green” Pricing model Low Buy Servers & Colo Rent Servers & Rent based on usage costs whether used or Hosting costs whether only not used or not .Colo vs. sometimes No contracts. based. Flexible.

Hosting Industry Move to Cloud •Technology has evolved •People demand more control •Instant gratification •In-house too costly from CapEx and Human Capital •Colocation for those who want to be physically there •Managed is not dynamic enough Cloud Computing -“Enabling Technology” to move from Traditional Hosting to Cloud Hosting .

Hosting Heads to the Clouds •Static → Dynamic = Quick & Easy Scalability •Cost Prohibitive → Cost Effective = Cost Efficiencies •Predictable → Unpredictable = Innovations •Stagnant → Growth = Evolution Traditional Hosting → Cloud Hosting = FUTURE! .

The Cloud’s Component Evolution •Maturation of Virtualization Technology •Virtualization enables Compute Clouds •Compute Clouds create demand for Storage Clouds •Storage + Compute Clouds create Cloud Infrastructure •Cloud Infrastructure enables Cloud Platforms & Applications .

Traditional IT Pyramid •Build upon a foundation •Layers equate structure •Building blocks: Infrastructure. Applications •Breadth vs. Niche . Platforms.

The ―Cloud Pyramid‖ Is Inversed 1000’s of Cloud Applications currently Handful of Cloud Platforms Elite group of Cloud Infrastructure providers # of Marketplace providers .

Defining the Cloud Segments •SaaS •Software as a Service •Storage as a Service •PaaS – Platform as a Service •IaaS – Infrastructure as a Service .

SaaS • • • • Software as a service Google Docs "Drive" to share editing of lectures TurboTax Tax Preparation Salesforce. Most common Cloud / Many providers of different services Disadvantages: No control or access to underlying technology • • .Cloud ―Applications‖ .com— A cloud-based Customer Relationship Management (CRM) platform that can be used by a firm to connect with customers and employees.

tightly configured • .Cloud ―Platforms‖ .PaaS • • • Platform as a service Google App Engine— A platform cloud that enables developers to build and host web applications on the same systems that power Google applications. more control than ―Application‖ Clouds. SalesForce Dev Platform Good for developers.

Cloud ―Infrastructure‖ . Storage. Network Capacity on the clouds Amazon EC2 NYSE Technologies COD (Computer On Demand) .IaaS • • • • Infrastructure as a service Provide Compute.

99% available is not enough .Financial Cloud • • • • • • Security level much higher than Amazon Security level of military cloud SFTI (Secure Financial Transaction Infrastructure) NY4 Center Not based on statistical availability 99.

Patching Capacity Config Standards IDS IPS .Power Connectivit y Licensing Break-Fix Support Performance Environmental Cabinet Layout Applications Installation Installation Virtualization Design Timing Services Automation Scaling NYSE Managed Devices Traffic Capture State Monitoring Traffic Analysis Network Storage Segmentation Anti-Virus Hardware/OS Trending Security Procurement User Auth.

networking • Tailored to customer needs • Deploy in weeks • Dedicated blade servers • Managed up through the OS • Pre-provisioned for SFTI services • Deploy in days • Managed or Unmanaged virtualized computing cloud • Pre-provisioned resources with SFTI access • Deploy in minutes * . storage.EVOLVE YOUR BUSINESS FROM COLO TO CLOUD Managed Infrastructure Compute on Demand: Solutions Physical Edition Compute on Demand: Virtual Edition • Dedicated managed servers.

Spending ($B) on Cloud by Global FS Companies (CAGR: 47%) next 20 years • $4B in 2010 to $27B in 2015 • Solutions (SaaS/PaaS/IaaS) o o Cost pressure on IT to continue Demands from the business for Source: The Tower Group .Cloud / “as a Service” Is the Future • Efficient delivery of IT services. faster delivery of business capabilities • Infrastructure Cost Reduction • Headcount Reduction • Elasticity and Scalability • Speed to Market • Dominate Financial Services IT growth Est.

IT must be a strategic partner in support change IT must evolve every aspect by adopting XaaS 50% of all new development done on Xaas Platform Have to manage legacy systems.Strategic Partner to Business Business changes is accelerating.• • • • • • • • • Future of IT . Integration with Social Media and Mobility Technology Strategies – Rethink Technology and IT strategies New Architectures – Current architectures must evolve and adapt to new and emerging technologies Business Strategy – IT as a true partner in strategy creation .