1. Cloud Computing forFinancial Institutions Vivek Kejriwal Business Solutions GroupRetail and Corporate Banking HCL Financial Services

2. IntroductionAbout Cloud ComputingEver changing IT world has resulted into plethora of alternate delivery models that have enabled business fororganizations. Cloud Computing, as touted by many, is not just an alternative delivery model or alternate way inwhich enterprises will buy IT services. It is a complete paradigm shift from the way IT is perceived by enterprisesas well as service providers. The three major changes that Cloud Computing brings are around Rapid / NearZero Implementation Timelines, Usage based granular payment services and massive scalability.IT will become a complete Service and the whole concept of Plan, Build, Implement, Run and Optimize willcollapse into a single block of Service called Cloud Computing.Cloud computing in simple terms is about Virtualizing / abstracting everything (XaaS). Infrastructure, platforms,applications, integration and services are all virtualized and made available to the user community in a matter ofseconds on a flexible usage based payment mode.Internet which forms the basis of cloud computing has traditionally always been depicted as a cloud with all thecomputing being performed in this cloud. Users interact with this cloud and the storage or computation of theirdata is invisible to them.Cloud Computing aligns (extends) itself well with the major technological / delivery model innovations in ITSpace be it ASP, SaaS, Pay per Usage, Grid Computing, Utility Computing and SOA (abstraction of servicesfrom applications and abstraction of applications from platforms and infrastructures)Current Challenges @ Financial InstitutionsMost Financial Institutions (FI) face problems in either trying to set-up/ scale-up IT infrastructure. The bulk of ITbudgets are often swallowed up in: Maintaining huge storage & processing facilities ? ? costs for software License Deployment, versioning and migration of applications ?The prospect of a huge initial investment combined with the high running costs often deters the introduction andacceptance of new technology despite IT being important to an FIs strategic advantage. Many FIs, often, do notutilize the available resources to their optimum capacity. They get caught up in the technology while failing torealize that the end users of any technology are primarily interested in using the technology rather than beingbothered about its internal workings or how it is delivered to them.What it means for Financial Institutions?Cloud services have challenged the traditional nature of Financial Institutions. Touted as one of the mostimportant technology shifts in recent times, cloud services claim to provide solutions for a majority of ITrequirements ranging from e-mail and Web hosting to fully managed applications as well as vast on-demandcomputing resources.Cloud computing offers FIs the capability to create a highly mobile and virtual structure and provides flexibility toscale up/ down based on demand. 3. Several IT organizations within FIs are organized either based on businesses or with a combination ofbusinesses and technologies. Cloud computing services enable FIs to overcome silos by creating a single hub.The technology supports scaling up with just an internet connection & browser while all the IT assets (data andapplications) are hosted in the Cloud Service Providers data centre.Work is platform independent due to the centralized nature of data, processing and services. Whosoever wantsto upgrade or avail of a service can do so from the Cloud. Centralized enterprise level network administration isalso made possible where updates and patches can be applied once and will be valid for all those connecting tothe resources.Superior computing power can be brought within reach of FIs, who will be able to hire systems on a need basisper-user. This prevents expenditure on temporary needs or expenditure on infrastructure in case of scaling upof operations. The systems management component controls the provision of the tools for accessing theservers. Charges are applied based on the usage of services.Potential ThunderstormsThere are some key concerns that need to be addressed before FIs decide to adopt Cloud Computing. ? Financial information of transactions and customers are critical to a FI, and the protection ofSecurity:data from intentional or accidental loss or leakage is vital both for operational and reputational reasons. ?Portability & Preservation: A FI might lose visibility of the computation being performed. Movingapplications and data across providers might create problems especially if it is not a smooth transition.How and when a backup is taken is not in the hands of the FIs but that of the providers. ?Legal issues/Privacy: In case a government agency wants to access the data for surveillance or anti-terrorism purposes or a court orders the disclosure of data which users had considered private hitherto,there arises a host of legal concerns, the latest example being a US court ruling involving a LeadingSwiss Bank. Also, regulations demand that historical data be preserved for certain periods, and therehave to be mechanisms for ensuring this. Finally, several countries have laws around the location ofdata, which may take away some of the flexibilities of the cloud model. ?Dependence on constant connectivity: FIs need uninterrupted and high bandwidth for seamlessconnection to the cloud. Interruption in connectivity would result in a severe outage for the entire FI. Thisconcern is accentuated with the recent catastrophic data loss event that Magnolia experiencedNot surprisingly large FIs tread carefully when it comes to the adoption of cloud services. One of the reasonswhy FIs have been skeptical to explore cloud computing based services is that the potential cost savings are notworth the trade-offs in terms of control, management and integration.Seeding the CloudCloud computing to a large extent depends upon the Service Providers infrastructure. It is important for FIs togain more visibility on a service providers policies and track record on data security before using their services.Some of the issues which FIs should take in consideration before utilizing the cloud services are details aboutusers who would be able to access the data, does the cloud adhere to regulatory compliance, location (country)of Cloud and data, level of encryption for data communication and storage, disaster recovery and business 4. continuity plans, visibility to investigate any unethical and illegal access and ROI or value-addition generated tothe FI in quantifiable terms. Similar concerns have been echoed by experts and researchers worldwide.Cloud Computing @ HCLHCL has a dedicated CoE setup for this emerging technology. The team consists of accomplished experts whohave embarked upon several initiatives and experiments towards creating a service offering around this space.HCL started evaluating the various new technologies emerging in the area by around mid-2007. Some of thework already done in this space is detailed below: ? conducted internal benchmark tests using the Compute Unified Device Architecture (CUDA).HCL hasCUDA can be easily integrated with clusters and grids that provide computing power to Cloud. HCLteams have profiled a few financial algorithms (binomial tree, trinomial tree based option pricers) on IBMCELL blade processor and also on CUDA. Speedups were around 40x to 60x on a GeForce 8800 GTXcompared to AMD Athlon running @ 2.41GHz. On redesigning the algorithm completely to suit the CUDAarchitecture, speedups up to 200x could be achieved. Looking at the price to performance ratio, CUDAspeedups were found to be much more impressive than speedup on the blade processor. Leveraging theCUDAs success HCL created CUDA accelerated option pricing engine named parafin. ? also helped its customers in the area of grid computing that helped a leading global bank reduceHCL hasits overall risk computation process. HCL reduced the processing time from 30 hours to 6 hours over ayear by deploying a combination of hardware virtualization and re-writing the risk code to facilitateparallel processing. The re-engineering initiatives provided suitable platform for future complexvaluation methodology and integration of major product areas resulted in substantial savings inregulatory capital and reduction in credit line utilizations. ?Cloud Computing CoE is working on various partnerships to provide best-of-breed solutions to its clients.HCL has partnered with The Grid Computing and Distributed Systems (GRIDS) laboratory of Universityof Melbourne, to work collaboratively in the area of grid-computing and High-performance computingusing Open Source software. HCL is also in talks with Cloud Providers to provide end-to-end CloudServices Solution jointly. ?HCLs experience with Cloud platforms and SaaS providers: HCL has been involved in providingsolutions through cloud platforms like Azure for its customers. HCLs solutions include creating the cloudinfrastructure for cost effectiveness and on-demand scalability.Based on the above experience and as part of HCLs commitment to this emerging technology, HCL hasdeveloped an architectural framework for Cloud computing.HCL Cloud Architectural FrameworkThe reference architecture consists of a base taxonomy of various cloud computing elements as shown in thediagram below. HCLs different Lines of Business have come together to form this architectural framework inconjunction with world renowned partners. 5. Base Taxonomy: Developers Enterprise UsersUser ConsumersEnterprises CommunityCloud Management ToolsClients Applications ServicesPrivate CloudPublic CloudPublic CloudPlatforms DevelopmentCloudTools ComponentsDatabaseSecurityNetwork & ConnectivityInfrastructureThe base taxonomy consists of the following most important reference elements Cloud Clients - computer hardware and/or computer software which relies on The Cloud for application ? delivery, or which is specifically designed for delivery of cloud services, and which in either case is essentially useless without it. E.g. Mobile- iPhone, Windows Mobile, Thick Client FireFox, Thin Client CherryPal, Zonbu. Cloud Applications - A cloud application leverages The Cloud in software architecture, often eliminating ? the need to install and run the application on the customers own computer, thus alleviating the burden of software maintenance, ongoing operation, and support. E.g. Facebook, Skype, Bittorent, SalesForce.com, MS Online Cloud Services - A cloud service, e.g., Web Service, is "software system[s] designed to support ? interoperable machine-to-machine interaction over a network which may be accessed by other cloud computing components, software, e.g., Software plus services, or end users directly. E.g. Identity (OAuth, OpenID), Integration (Amazon Simple Queue Service), Payments (Amazon Flexible Payments Service, Google Checkout, PayPal),Mapping (Google Maps, Yahoo! Maps), Search (Alexa, Google Custom Search, Yahoo! BOSS), Others (Amazon Mechanical Turk) 6. HCLs Reference ArchitectureUserEnterprise UsersConsumersEnterprises DevelopersCommunity Cloud Clients iPhone, Windows Mobile, Thin Clients, Thick clients Access Internet Based - Web Services Integrated SOA driven, Loosely Coupled, API Enabled Customer BusinessOther Cloud Services Other Non-Cloud ServicesApplications Web Enabled, Cloud Enabled Platform - WEB SERVICESApp Platform Java, .Net, Python, PHPWeb 2.0 / Web EnabledStorage Database, Metadata driven InfrastructureComputing & StorageNetwork & SecurityAbove shown is HCLs reference architecture framework for Cloud Computing which is based upon four mainfundamentals ?Elasticity?Security?Billing?MeteringWay to Go: Hybrid Cloud EnvironmentHCL believes that, while there is merit in looking at the ready cloud infrastructure and platforms available in themarket, it is also relevant to look inwardly at a companys own investments. HCL believes that significantinvestments in the IT footprint in terms of infrastructure and software can be reused (in case not optimallyutilized) in form of a private cloud. HCL can help clients in transforming the current IT landscape into a privatecloud. HCL is in the phase of developing relevant partnerships for leveraging existing ready to deploy cloudservices provided by enterprises in this space.HCL has also developed expertise on tools that can enable efficient service delivery for a cloud computingenvironment and has also developed its own IP tools in this front. 7. HCL believes that most of the organizations will lend themselves well to the concept of a Hybrid Cloud where inexisting infrastructure can be transformed into a private cloud and at the same time organizations can make useof standard services available in market like Email over cloud, other productivity applications over cloud,payment services over cloud, infrastructure over a cloud.HCL believes, a Controlled Private Cloud Computing model that provides all the benefits of Cloud Computing,would be an ideal solution for FIs as the FI still has the ownership and visibility of its data. The controlled cloudwould adequately take care of country specific laws in terms of data storage, data privacy, data securityamongst the other requirements mandated by the regulatory authorities.Looking for the Silver LiningInstead of a Big-Bang approach, Financial Institutions should follow gradual steps by identifying some of thebest candidates that might include applications or businesses that witness unusual spike of load at any giventime. While in case of Banks there is ample opportunity to explore clouding, in case of exchange traded Capitalmarkets, where the bulk of key applications are already clouded, there could be a case for resource clouding.The clouds ability to spin up more servers to handle this demand would be a key driver for cloud enablement.Some of the areas that could be considered are:? Commercial Lending Origination and Servicing? Mortgages Origination and Servicing? processingPayments? Cash ManagementTrade and? BankingInternet? Claims Processing for Insurance (P&C during Seasonal Natural Disasters)? Risk computation? Futures & Options ContractsExpiry ofHCL Service OfferingsHCLs offerings in the area of cloud computing are detailed in the following sections.Hybrid Cloud enablement ServicesHCL Reference Methodology for Transforming existing IT landscape into a Hybrid Cloud Environment -? Financial Analysis of IT Budgets / Costs in different brackets Complete ?Applications (Critical, Non-Critical, Redundant - Licenses) ?Infrastructure (including Datacenter space / power etc.) ?Tooling ? IT PersonnelInternal? Inventory analysis (requirement, utilization, over capacity, heterogeneity) Complete? case development for moving to Internal / Private Cloud Business? case development for productivity applications that can be moved to Cloud (e.g. Workflow, Business Voice Services, Messaging) 8. Start Implementation of Internal Cloud ? ? Time Based Dynamic Profiling of Infrastructure Usage & not just Static Snapshot Perform Begin Policy Based Management of the DC Infrastructure with a small step Server Orchestration ? ? Policy based management of the Physical infrastructure Introduce Implement Capacity on Demand (Elasticity) ? ? Policy based management of Virtual Infrastructure Introduce Unify management of both physical and virtual infrastructure ? ? Metered Infrastructure Use Provide Invoke Management Policies to respond to LoB Needs ? Movement of productivity applications that can be moved to Cloud (e.g. Workflow, Voice Services, ?Messaging)HCL Management ServicesHCL provides end to end management services for efficient management of cloud. The key areas ofmanagement services are ? Provisioning Dynamic? requests Change?Re-imaging? rebalancing Workload?De-provisioning?Monitoring?Metering?BillingHCL works both on Cloud / SaaS enablement initiatives and have unique cloud offerings as described below -Cloud / SaaS EnablementHCL has worked with some of the largest ISVs in their Cloud enablement initiative. HCL has worked onenablement initiatives of top 3 out of 5 ISVs on their enablement journey. Currently HCL is working in enablingcloud based subscription based delivery for other IT enabled services.HCL has built its own platform Agora - for SaaS enablement and delivery, which helps ISVs to adopt Cloud /SaaS based delivery rapidly.HCLs Agora platform helps ISVs to build their Cloud / SaaS Business, Channels and manage customers.Agora helps the Independent Software Vendors (ISVs) / Service Providers ride the Cloud / SaaS waveconfidently and effortlessly. Complete with modules for aspects like customer management, OEM & partnermanagement, metering, billing and support, Agora helps ISVs / Service Providers monetize their SaaSchannels in weeks time span as opposed to months.Agora, HCLs Cloud / SaaS Service delivery platform, has been built by adopting the global best practices insoftware architecture. The framework, built on top of a service-oriented architecture, is designed to give ISVs ahead start by automating critical aspects of SaaS enablement. Agora is technology neutral and integrates 9. seamlessly with existing ERP, CRM and other back-office applications via its Integration Service Bus whicheffectively protects the existing technology investments made by clients.Key Features of Agora Zero touch customer on-boarding and management- complete automation of critical components of ? SaaS delivery and distribution like customer acquisition, subscription, delegated administration ? Scale efficiently -- Handle high growth in volume of SaaS business without increasing the back-office staff to manage billing, payments through automated metering, billing and payment management ? customers close to real-time through Agoras automated system provisioning and application On-board provisioning capabilities ? services quickly through simple configurations Launch ? for multiple sales models like one-time, recurring, user based , usage based Support ? periodic offers and discounts on the service Support ? multiple geographies, currency and tax rules to deliver SaaS business across the globe Supports ?online payments and process offline payments through Agoras payment processing feature Handle ? new products / offerings through integrated web campaign and email notification systems Promote ? Proactively share critical information with customers through Agoras notification system ? customer through Agoras ticketing system Support ? Create and manage distribution networks through Agoras partner management ? delivery infrastructure with partners to manage their customers, billing, payments Share the ? for multiple distribution models like fixed price and variable price models Support ? Quick three step integration with applications to be delivered in SaaS model ? Integration with back-office systems made easy through an integrated Service bus ? Highly distributed and scalable architecture to handle increase in your business efficientlyKey Benefits of Agora ? Single platform that automates complete process require to run SaaS business ? Fully Integrated lifecycle management from customer registration subscription provisioning metering billing ? Highly flexible to suit the unique business needs of different types of *aaS business ? Highly scalable system, built to linearly scale based on the growth in the volume of the business ? SOA based architecture principles for quick integration Based onFuture RoadmapHCL is in the process of launching a new service called as Configuration Management as a Shared Service,where Software configuration Management is delivered as a Cloud Service. The tools and services can beconsumed by enterprises in a pay as you go model. The entire CM processes are standardized and thecustomer has an option to choose the tools they want to use tools like Serena Version Manager, SerenaDimensions, IBM Clearcase, Subversion, VSS are currently supported in this platform. The customer gets topay based on his usage.