Brendan McGowan, Director of Consulting Services

While the age of cloud based services seems to have arrived like a hurricane, it is nothing new to the financial industry.  For decades, community sized financial institutions have utilized cloud based services for their deposit data. Other cloud based services that could be offered by external providers were limited by the cost of technology. Nearly all non-deposit workloads were provided in-house and usually on-site. Recently however, key elements of information technology have evolved to a point that enables financial institutions to migrate critical applications to the cloud and focus on core competencies and revenue-driving initiatives rather than IT maintenance.

In the earliest days of computing, all of the data and computing was centralized in a mainframe.  The stationary mainframe was under the direct management of people who would later be known as “IT Professionals”. Users would access the data and computing power using dumb terminals. The workload was very light by today’s standards. Some text and numbers were moved across expensive, slow communications lines that were just adequate enough for the workload. When these terminals could be used across a phone line, users could be far from the mainframe. This was the birth of the cloud.

By the 1990’s computing had become so inexpensive that every desk had a PC powerful enough to play video and make calculations that previously required a room-sized mainframe.  Heavier workloads like large databases, document images, and graphically intense web pages were not easily supported by the WAN. Applications were written for the LAN speed environment. Servers were placed at each site so that the data and computing were on the LAN with the users. Communications technology had not kept pace with computing power. Still, service providers began to appear who offered to remotely host applications that generated these larger workloads. While computing had become cheaper, these service providers still had to run a large number of physical computers in large, expensive facilities. The user needed expensive communications circuits to get enough speed to make the service usable. The poor scalability of computing made these hosted services too expensive for smaller financial institutions to access.

The latest evolution of computing technology and communications has enabled service providers to deliver cloud based services that are now affordable. These key advancements include cheap Internet bandwidth, application optimization, and virtualization.

A T1 used to be something to brag about.  It is, after all, more than one whole megabit of bandwidth!  The mere cost told people that you were serious about the Internet. Today in terms of download speed, residential DSL or cable modem is several times faster than a T1. Every few months, the competing Internet service providers increase the available speed of their service without raising the price. The same holds true for business circuits.  Communications technology is currently seeing the rapid evolution that computing technology experienced in the 1990’s. Many institutions that have not evaluated their Internet and private WAN circuit costs in over a year are probably paying too much.

Original client-server applications were developed to be used on the LAN where speeds have been at least 100 Megabits for many years. Many cloud enabled applications that are used across the WAN today have been optimized to perform over slower Internet circuits while still providing a rich user experience. Developers have shifted to using web-friendly protocols like HTTP to move data. Even for applications that are not yet web friendly, software developers have created methods in moving only the screen changes of an application instead of moving all of the actual data. Someday, the browser may be the only client software that needs to be maintained.

One of the latest and most beneficial technologies, virtualization, has enabled cloud service providers to build highly scalable and secure systems in a smaller datacenter footprint than ever before. This means that fewer physical servers, fewer physical switches, less power, and less cooling is required to deliver a highly available, redundant, multi-tenant service. Cloud service providers can move critical workloads from one physical server to another without the user experience suffering. Physical hardware failures are automatically circumvented with little to no service downtime. The provisioning of new clients can be done in minutes instead of hours. Cloud service providers can now deliver services quickly and affordably. This means that end user applications can be turned on even faster and with higher availability versus using on-site equipment. The data and computing power can once again be centralized in a secure datacenter under the management of IT professionals. The client can use cheaper, simpler hardware and software at the desktop that require less maintenance and customization.

Financial institutions would gain significant efficiencies, availability, and security, while minimizing time and operational expenses by offloading critical services to the cloud.  Even more, fewer resources would be consumed maintaining in-house technology and applications could be accessed from anywhere. Instead of worrying about IT infrastructure, operational focus can be redoubled toward activities that actually support revenue generation for the institution. And if cloud based services arrive like a hurricane, the industry forecasts that the decision to join the cloud will be clear and sunny.

About Safe Systems, Inc.
Founded in 1993, Safe Systems is the national leader in providing compliance-centric IT solutions exclusively to financial institutions. As a technology partner, and recent winner of the MSP Best in Class Award by CompTIA and MSP Partners, Safe Systems has worked with over 500 financial institutions and manages over 20,000 network devices nationwide. Safe Systems’ scalable and cost effective solutions include IT managed services, compliance solutions, business continuity and disaster recovery, network design and installation, security services, and IT and compliance training. Safe Systems helps financial institutions to significantly decrease costs, increase revenues, and improve performance. For additional information about Safe Systems, Inc., please visit www.safesystems.com or call 877.752.0550.

About the Author
Brendan McGowan is Safe Systems’ Director of Consulting Services for community financial institution clients of Safe Systems. As Director, McGowan spends time researching and developing new product offerings and designing Safe Systems’ cloud services infrastructure. Additionally, McGowan reviews clients’ vulnerability assessments; assisting clients’ in their responses as well as making changes to their network as necessary. McGowan graduated from Georgia Southern University with a Business Management degree in Information Systems.

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