Changing nature of cloud adoption
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12 March 2012
The concepts of data centres and virtualization have been around for long but the buzz and the hype around cloud computing has been a recent phenomenon. While the general buzz is high for cloud, the adoption rates have been much lower than expected. Initially, there was the huge concern around security with the tech teams in the firms having issues regarding the co-existence of the firm data possibly with their competitors' data. This has been one reason why the adoption of public clouds has been low and around the non-core processes of the financial services firms. While most of the firms might be willing to migrated their mail system to Google cloud, the reluctance has been higher for migrating say a trading platform deployed on the cloud. What has been relatively more successful has been the private cloud usage - a replacement of the old in-house infrastructure and ASP model through outsourcing of the infrastructure management to a third party provider without any of the aforementioned security concerns. While this has been getting lot of traction, the cost benefit analysis of such architectures as compared to the old systems are still not very clear - while the maintenance staffing goes down, whether the overall costs are lower is yet to be seen. The hybrid clouds are a good concept theoretically - the non-core processes in the public cloud with the core processes in a secure private cloud but in reality identity management across the 2 clouds as well as data flows between the two are serious challenges. It is in this context that the cloud offerings of the top exchanges become very relevant - for the trading venues, this is another revenue opportunity through which they can sell market data. For the firms, the trust around the exchange brand is higher as compared to any other 3rd party cloud provider and incentivizes them to migrate their core processes to the cloud. This is changing the prior biases and prejudices that financial services firms had for the cloud and Celent believes that this will drive an increased adoption of cloud offerings and firms will start becoming more willing to migrate their core processes to the cloud.
In an upcoming report, Celent looks in detail at the cloud adoption patterns in various segments in the capital market, including wealth management, hedge funds, and sellside players including exchanges and trading venues. While the spending in cloud was 2% in 2010, the share of cloud spend in technology spending has grown to 6% in 2012.