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Public and Private Cloud - The Global Debate Continues

Public and Private Cloud - The Global Debate Continues
June 13, 2019

Opinions in the financial services domain are divided. Should they adopt public cloud architecture (off-premise IT applications and capabilities), or embrace private cloud platforms (on-premise cloud capabilities with their existing IT)?

The pro-public cloud team asserts that the flexibility to consume IT-related services on a pay-per-use model, speed of access to resources, an option to rapidly scale processing capabilities up and down make it the ideal model to deploy. The private cloud supporters, on the other hand, claim that both on-site and private cloud capabilities offer the highest levels of visibility, control, privacy, security, and proximity to physical data at all times.

Cutting through the noise around public vs private cloud. Read More @hclfs

Before jumping to the conclusion on what is the ‘right’ answer to the public or private cloud confusion, let us take a look at the realities revolving around cloud solution approaches.

Cutting Through the Noise around Public vs. Private Cloud

Neither private nor public cloud platforms are going away any time soon. A recent IDC study reveals that the total IT spending on cloud infrastructure is expected to grow at a five-year compound annual growth rate (CAGR) of 10.9%, reaching $99.9 billion in 2023, accounting for 59.5% of the total IT infrastructure spend. These numbers for cloud IT infrastructure assert that for some financial institutions, either private or public cloud platforms can be the appropriate choice today.

Moving workloads into public cloud platforms have and continue to help financial institutions lower costs and build a dynamic IT environment capable of highly integrated and automated operations. For instance, the Deutsche Bank, as part of its global transformation program, is collaborating with CloudMargin, a collateral and margin management cloud solution provider. The move aims to integrate the latter’s public cloud platform into its collateral infrastructure. Besides cost savings, the association is expected to enhance the client experience by creating a networked cloud solution for the bank’s collateral management. The transition will result in additional transparency, lowered operational risks, and simplified processes.

But for large enterprises with complex IT architectures, moving data and applications to the public cloud generally involves working through security, operational, and financial issues. According to a survey conducted by McKinsey, only about 60% of companies have migrated less than 10% of their workloads to the public cloud.

Hybrid Cloud: Best of Both Worlds Now a Reality

Enterprises looking to capitalize on the advantages of both public and private cloud are focusing on leveraging the power of both, by adopting progressive hybrid cloud models. According to a recent report, the global hybrid cloud market is poised to reach a value of $138.63 billion by 2023, at a CAGR of 22.70%, during the forecast period of 2018 to 2023.

Hybrid-cloud models have three primary variants:

  • A private-front or backhauling topology which routes traffic through private data centers. It deploys apps partly or completely in the public cloud so that an enterprise can implement internal cybersecurity measures and benefit from public cloud features.
  • A public-front topology, similarly, places applications in the public cloud but permits users to access them directly via CSP-provided cybersecurity controls which are applied by default. In this model, the data are stored in a private cloud with added security controls.
  • A clean-sheet or public-cloud topology that positions data and applications in the public cloud. In such a scenario, financial institutions execute cybersecurity controls from a third-party source.

Once an enterprise has built more sophisticated cloud capabilities and cybersecurity controls, they can migrate their applications gradually to a hybrid cloud model following a private-front topology. Then, toward a public-front and eventually into a clean-sheet topology.

But before deploying hybrid cloud infrastructure, finance decision-makers must look at their business as a whole to determine which business functions need the service and which areas can continue to be on-premise.

Banking on Hybrid Cloud: A Case in Point

Cloud has become mainstream for financial institutions grappling with growing costs, continued margin pressure, and the imperative to become more agile and offer more personalized customer services. The financial sector is outpacing other industries with the deployment of hybrid cloud reaching 21% penetration compared to the global average of 18.5%. However, high-performing banks and financial firms are counting on a hybrid cloud strategy to stay on top.

For instance, the United Overseas Bank (UOB) has become the first organization in Southeast Asia to deploy VMware Cloud on Amazon Web Services (AWS) for its hybrid cloud infrastructure. The Singapore-based bank will leverage the offering to support its digital innovation journey. The new platform has been jointly built by AWS and VMware in compliance with UOB’s security demands.

It is expected to enable applications deployed in this environment to benefit from disaster protection and optimized access to AWS’ array of services. According to VMware, the effort and cost associated with migrating applications to the hybrid cloud are also reduced. The cloud solution delivers cloud infrastructure and operations that are consistent with the ones deployed within customer data centers and extends processes and practices proven to support applications.

Cloud innovation is fast becoming a fundamental driver in digital disruption and is increasingly gaining more cogency in the evolving business landscape. Gartner predicts that by 2020, a corporate no-cloud policy will become as rare as a no-internet policy is a today.

So, regardless of the size of your business — be it in retail banking, forex, investment banking, or insurance, be wiser about the choice of cloud platforms. They can make a huge difference between gaining a competitive edge and falling behind your rivals.