Hybrid clouds in financial services may be the right investment

Even in a highly regulated industry, shifting resources to an on-demand model can significantly help IT departments cut costs and improve productivity. IDC Canada weighs in

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It was back in 2011 when industry analyst David Senf noted that Canadian companies on a whole didn’t appear to have a comprehensive cloud strategy in place.

He still believes this to be true – and his stats bear this out.

The IDC Canada analyst shows research that reveals 35 per cent of line of business managers and only 25 of IT managers believe that the firm should formally adopt the cloud. Instead informal, ad hoc or cloud adoption on an application-by-application basis seems to be the order of the day.

But Canadian financial services organizations in particular have perhaps the most to gain by leveraging the cloud, specifically a hybrid cloud scenario that can deliver a strong ROI without a large technology infrastructure investment.

The Allure of the Hybrid Cloud

What does this mean for organizations such as financial services firms still on the fence?  For one, don’t fear the cloud.

Even in a highly regulated industry such as the financial services sector, cloud computing should be seen as a clear IT option in helping cut costs and improve productivity. The cited benefits include minimal up-front capital expenditure, shared service delivery via the Internet, its pay-for-use environment, and greater business agility.

But creating a hybrid cloud strategy often comes down to a lack of alignment between business and IT: Senf notes that 53 percent of business leaders believe that they should be the ones driving the cloud strategy while 70 per cent of IT managers note that they should be making these decisions. So there’s a definite disconnect that’s hindering adoption, Senf notes, adding and this doesn’t even get into the issue of the ever-shrinking IT budgets and resources available. A lot of IT budgets come from the business side rather than IT. There are two different approaches here that need to be reconciled, says Senf.

But while it still seems that organizations might still be hesitant to make that cloud leap, it is a allure of the hybrid cloud — a dual public and private cloud approach — is increasingly becoming too tempting to ignore; there is growing attention on standards-based heterogeneous and hybrid cloud architecture and IDC notes that hybrid cloud management is slated to be a $3.6 billion business by the year 2016. Another IDC/Infosys study notes that while private cloud deployments remain the top choice for most enterprises, 40 per cent of organizations are now adopting hybrid cloud platforms.

Kicking the tires on the hybrid cloud approach

As a recent Business Finance Magazine article suggests, the potential hybrid cloud benefits – keeping sensitive local data highly confidential while cutting operational costs as the analytical processing is in the cloud – is a highly attractive business model that has a clear competitive edge.

Senf says that organizations should adopt an incremental and scaled approach to leveraging the technology. Indeed, selectively deploying the public and private clouds within their systems helps them reap the gains of each. This type of environment could help cut data maintenance and storage expenditures using a public cloud services while leveraging a private network to secure and house the trade information and mission-critical data.  Understanding the types of cloud models, how best to engage an hosted or on-premise vendor partner and understanding the migration implications of moving sensitive data into the cloud are all things that business need to start thinking about from a holistic perspective, notes Senf.

There needs to be a larger awareness of the different cloud models that are out there and how they can benefit Canadian organizations, adds Senf. And in a financial services industry with specific business processes, taking advantage of the hybrid cloud approach can be a strategic IT approach in focusing more on optimizing financial services operations – and being more competitive in the process.

Learn more by watching Allstream’s on-demand Webinar, ‘Cloud Computing: Improve ROI on Your Data Center Strategy,’ today.

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