7/31/2020 Focus on the cloud: Why go private?

| Financial Times

Special Report Technology sector

Focus on the cloud: Why go private?

Michael Dempsey SEPTEMBER 23 2011

Sometimes the most sophisticated concepts can be illustrated by one simple detail.

The private cloud is a case in point.

What marks out computer servers acting as private cloud infrastructure? In the
cloud provider’s datacentre, there will be computer chassis bearing the client’s
name. In the private cloud the customer has full rights over specific hardware, and
that can save a lot of money.

Openwork supports a network of 2,200 independent financial advisers working

throughout the UK.

The advisers delegate their administration and IT requirement to Openwork’s 350

staff, who have used the private cloud to replace their own server farm.

Kevin Jackson, IT director at Openwork, says the burden of paying for hardware
upgrades was a big factor in the decision. Openwork’s own data centre was coming
to the end of its life and Rackspace, a hosting and cloud computing provider, was
able to give Mr Jackson a flexible resource.

He describes his contract with Rackspace as like having a dial. “When we need
more capacity, we turn the dial.” This arrangement reduced the number of servers
used by Openwork from 63 to just 14.

Savings from the deal, measured from the cost of running machines and paying for
software licences and back-up arrangements over three years, amounts to £1.6m.

The cloud owes much of its economic pull to “virtualisation”, a neat software
device that fools a server into thinking it is more than one machine. It sees several
different bags of applications as if they are each running on a separate machine.

This enables the applications to exploit all of the server’s capacity and accounts for
the 75 per cent reduction in the number of servers Openwork uses. And the stickers
indicating Openwork’s slice of Rackspace real estate are a sign that a private cloud
is in operation.

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7/31/2020 Focus on the cloud: Why go private? | Financial Times

JPMorgan Chase offers the full spectrum of banking services in 60 countries under
the JPMorgan and Chase brands. Adrian Kunzle, chief technology officer at the
bank, runs the technology engine for both brands from his New York office.

For the past 18 months this operation has been sitting in a very large private cloud,
with JPMorgan Chase renting out capacity to its partner names who share the
resource.

Virtualisation looms large. “Worldwide we’ve probably got 20,000 machines in a

virtual field,” says Mr Kunzle, whose colleagues across the banking business are
“billed by the drink”.

The informal terminology that characterises cloud billing reflects the nature of a
resource that can be expanded and contracted in a matter of minutes.

This allows machines to be brought online for the development and testing of
applications and then taken off the balance sheet when that capacity is
unnecessary.

A host of external suppliers feature, but Mr Kunzle is emphatic that all of this
activity takes place “entirely within our firewall on machines we own or lease”.

The private cloud permits Mr Kunzle to operate security to JPMorgan Chase

standards without the compromises that adapting to a public cloud system would
require. He believes that CTOs will become happier with the public cloud as
common standards evolve and is clear in his conviction that the cloud is here to
stay. “This is not a hobby for us. It is how our infrastructure will be built for the
next ten years.”

The line between private and public clouds has been blurred by the emergence of
hybrid clouds.

Larry Ryan, financial services industry chief technologist at Hewlett-Packard,

notes that any company using on-demand software is in effect participating in a
public cloud.

“So you see a hybrid appear, where the client has absolute control over some things
inside a private cloud and is happy to rent others from the public cloud.”

HP is witnessing a huge push for private cloud computing from capital markets,
where services such as order routing and analytics can be collected on clouds
hosted by exchange authorities such as the New York Stock Exchange. HP’s
mammoth data centres offer cloud facilities to many financial sector customers.

The cloud is also altering the way the IT giant charges for software.

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7/31/2020 Focus on the cloud: Why go private? | Financial Times

“We’re moving to a model where the client accesses the software and only pays for
what is used,” says Mr Ryan, who knows that clients value rapid technology
reflexes.

“The private cloud is basically about transforming a bank’s IT centre so that it can
get resources faster and develop things quicker.”

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