The Forecast from Wall Street: Clear with a Chance of Clouds.

The Capital Markets are normally an early adopter of new technologies but this has definitely not been the case with cloud and managed service technologies. To understand why cloud adoption has been slow, we need to look at the drivers for the industry over the years. For the most part, Capital Markets firms have led technology adoption, but it has been in the front-office as a top-line revenue tool. Essentially the “weapons” for them to compete. But the benefits of ‘Cloud’ are mostly about reducing in-house IT infrastructure for cost savings…or are they?

Over the course of the past few months, the trend seems to have started to shift in favor of Cloud & Managed infrastructures. We are seeing an increased number of firms—small, large and even Tier 1 global firms reach for outsourced management of their systems. But it doesn’t appear to be the cost savings that are driving most of this; rather, the true benefit of cloud seems to be business agility.

There are several reasons why business agility is emerging ahead of others at this time. One is a time to market issue: the ability for a developer to simply "spin-up" an instance in the cloud. This outcome allows the developer to launch a new capability for his business without waiting for in-house resources to purchase, install or even allocate equipment. A second benefit is scalability. The financial markets are under rapid change and firms are coming, going, or merging at a feverish pace. The Cloud enables firms to rapidly expand (or contract) their infrastructures, or transfer them to a new firm without complicated IT relocation projects. Done properly, Disaster Recovery is a thing of the past as there would be no "recovery" if an infrastructure is properly load-balanced between multiple geographically dispersed sites.

But many firms (let alone the regulators) are not quite ready to just plunk down a credit card and lease their mission-critical infrastructures on an hourly basis. In fact, leasing a public cloud service on a continual basis like that is often MANY TIMES more expensive than running your own stack.

The smart mix today seems to be to build your own internal “private” cloud, perhaps with the help of a managed services company like Rackspace or vertically specialized organizations like the ones that have emerged around the hedge fund community. The result is a convergence that enables the best of both worlds: a virtualized infrastructure but also the peace of mind associated with realizing both cost savings and the increased security of owning your own equipment. Mix this in with a dedicated instance of public cloud for development & testing and, at the end of the day, you'll have the most agile and scalable infrastructure on the street!