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Cloud Computing

for
Financial Institutions

Vivek Kejriwal

Business Solutions Group


Retail and Corporate Banking
HCL Financial Services
Introduction
About Cloud Computing
Ever changing IT world has resulted into plethora of alternate delivery models that have enabled business for
organizations. Cloud Computing, as touted by many, is not just an alternative delivery model or alternate way in
which enterprises will buy IT services. It is a complete paradigm shift from the way IT is perceived by enterprises
as well as service providers. The three major changes that Cloud Computing brings are around Rapid / Near
Zero 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 will
collapse 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 of
seconds 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 the
computing being performed in this cloud. Users interact with this cloud and the storage or computation of their
data is invisible to them.
Cloud Computing aligns (extends) itself well with the major technological / delivery model innovations in IT
Space – be it ASP, SaaS, Pay per Usage, Grid Computing, Utility Computing and SOA (abstraction of services
from applications and abstraction of applications from platforms and infrastructures)
Current Challenges @ Financial Institutions
Most Financial Institutions (FI) face problems in either trying to set-up/ scale-up IT infrastructure. The bulk of IT
budgets are often swallowed up in:
Maintaining huge storage & processing facilities
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License costs for software
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Deployment, versioning and migration of applications
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The prospect of a huge initial investment combined with the high running costs often deters the introduction and
acceptance of new technology despite IT being important to an FI’s strategic advantage. Many FIs, often, do not
utilize the available resources to their optimum capacity. They get caught up in the technology while failing to
realize that the end users of any technology are primarily interested in using the technology rather than being
bothered 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 most
important technology shifts in recent times, cloud services claim to provide solutions for a majority of IT
requirements ranging from e-mail and Web hosting to fully managed applications as well as vast on-demand
computing resources.

Cloud computing offers FIs the capability to create a highly mobile and virtual structure and provides flexibility to
scale up/ down based on demand.
Several IT organizations within FIs are organized either based on businesses or with a combination of
businesses 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 and
applications) are hosted in the Cloud Service Provider’s data centre.
Work is platform independent due to the centralized nature of data, processing and services. Whosoever wants
to upgrade or avail of a service can do so from the Cloud. Centralized enterprise level network administration is
also made possible where updates and patches can be applied once and will be valid for all those connecting to
the resources.
Superior computing power can be brought within reach of FIs, who will be able to hire systems on a need basis
per-user. This prevents expenditure on temporary needs or expenditure on infrastructure in case of scaling up
of operations. The systems management component controls the provision of the tools for accessing the
servers. Charges are applied based on the usage of services.
Potential Thunderstorms
There are some key concerns that need to be addressed before FIs decide to adopt Cloud Computing.
? Security: Financial information of transactions and customers are critical to a FI, and the protection of
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. Moving
applications 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 Leading
Swiss Bank. Also, regulations demand that historical data be preserved for certain periods, and there
have to be mechanisms for ensuring this. Finally, several countries have laws around the location of
data, which may take away some of the flexibilities of the cloud model.
? Dependence on constant connectivity: FIs need uninterrupted and high bandwidth for seamless
connection to the cloud. Interruption in connectivity would result in a severe outage for the entire FI. This
concern is accentuated with the recent catastrophic data loss event that ‘Magnolia’ experienced
Not surprisingly large FIs tread carefully when it comes to the adoption of cloud services. One of the reasons
why FIs have been skeptical to explore cloud computing based services is that the potential cost savings are not
worth the trade-offs in terms of control, management and integration.
Seeding the Cloud
Cloud computing to a large extent depends upon the Service Providers infrastructure. It is important for FIs to
gain more visibility on a service provider's policies and track record on data security before using their services.
Some of the issues which FI’s should take in consideration before utilizing the cloud services are details about
users 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
continuity plans, visibility to investigate any unethical and illegal access and ROI or value-addition generated to
the FI in quantifiable terms. Similar concerns have been echoed by experts and researchers worldwide.
Cloud Computing @ HCL
HCL has a dedicated CoE setup for this emerging technology. The team consists of accomplished experts who
have 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 the
work already done in this space is detailed below:
? HCL has conducted internal benchmark tests using the Compute Unified Device Architecture (CUDA).
CUDA can be easily integrated with clusters and grids that provide computing power to Cloud. HCL
teams have profiled a few financial algorithms (binomial tree, trinomial tree based option pricers) on IBM
CELL blade processor and also on CUDA. Speedups were around 40x to 60x on a GeForce 8800 GTX
compared to AMD Athlon running @ 2.41GHz. On redesigning the algorithm completely to suit the CUDA
architecture, speedups up to 200x could be achieved. Looking at the price to performance ratio, CUDA
speedups were found to be much more impressive than speedup on the blade processor. Leveraging the
CUDA’s success HCL created CUDA accelerated option pricing engine named ‘parafin’.
? HCL has also helped its customers in the area of grid computing that helped a leading global bank reduce
its overall risk computation process. HCL reduced the processing time from 30 hours to 6 hours over a
year by deploying a combination of hardware virtualization and re-writing the risk code to facilitate
parallel processing. The re-engineering initiatives provided suitable platform for future complex
valuation methodology and integration of major product areas resulted in substantial savings in
regulatory 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 University
of Melbourne, to work collaboratively in the area of grid-computing and High-performance computing
using Open Source software. HCL is also in talks with Cloud Providers to provide end-to-end Cloud
Services Solution jointly.
? HCL’s experience with Cloud platforms and SaaS providers: HCL has been involved in providing
solutions through cloud platforms like Azure for its customers. HCL’s solutions include creating the cloud
infrastructure for cost effectiveness and on-demand scalability.

Based on the above experience and as part of HCL’s commitment to this emerging technology, HCL has
developed an architectural framework for Cloud computing.
HCL Cloud Architectural Framework
The reference architecture consists of a base taxonomy of various cloud computing elements as shown in the
diagram below. HCL’s different Lines of Business have come together to form this architectural framework in
conjunction with world renowned partners.
Base Taxonomy:

Developers Enterprise Users User


Consumers Enterprises Community

Cloud Management Tools

Clients

Applications Services

Private Cloud
Public Cloud

Platforms
Development Cloud
Tools Components
Database Security

Network & Connectivity

Infrastructure

The 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
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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
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the need to install and run the application on the customer's 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
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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)
HCL’s Reference Architecture

User
Enterprise Users Consumers Enterprises Developers
Community
Cloud Clients – iPhone, Windows Mobile, Thin Clients, Thick clients

Access Internet Based - Web

Services – Integrated SOA driven, Loosely Coupled, API Enabled

Customer Business Other Cloud Services Other Non-Cloud Services

Applications – Web Enabled, Cloud Enabled

Platform - WEB SERVICES

App Platform Java, .Net, Python, PHP Web 2.0 / Web Enabled

Storage – Database, Metadata driven

Infrastructure

Computing & Storage Network & Security

Above shown is HCL’s reference architecture framework for Cloud Computing which is based upon four main
fundamentals –
?Elasticity
?Security
?Billing
?Metering
Way to Go: Hybrid Cloud Environment
HCL believes that, while there is merit in looking at the ready cloud infrastructure and platforms available in the
market, it is also relevant to look inwardly at a company’s own investments. HCL believes that significant
investments in the IT footprint in terms of infrastructure and software can be reused (in case not optimally
utilized) in form of a private cloud. HCL can help clients in transforming the current IT landscape into a private
cloud. HCL is in the phase of developing relevant partnerships for leveraging existing ready to deploy cloud
services provided by enterprises in this space.
HCL has also developed expertise on tools that can enable efficient service delivery for a cloud computing
environment and has also developed its own IP tools in this front.
HCL believes that most of the organizations will lend themselves well to the concept of a Hybrid Cloud where in
existing infrastructure can be transformed into a private cloud and at the same time organizations can make use
of 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 cloud
would adequately take care of country specific laws in terms of data storage, data privacy, data security
amongst the other requirements mandated by the regulatory authorities.
Looking for the Silver Lining
Instead of a Big-Bang approach, Financial Institutions should follow gradual steps by identifying some of the
best candidates that might include applications or businesses that witness unusual spike of load at any given
time. While in case of Banks there is ample opportunity to explore clouding, in case of exchange traded Capital
markets, where the bulk of key applications are already clouded, there could be a case for resource clouding.
The cloud's 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
? Payments processing
? Trade and Cash Management
? Internet Banking
? Claims Processing for Insurance (P&C during Seasonal Natural Disasters)
? Risk computation
? Expiry of Futures & Options Contracts
HCL Service Offerings
HCL’s offerings in the area of cloud computing are detailed in the following sections.
Hybrid Cloud enablement Services
HCL Reference Methodology for Transforming existing IT landscape into a Hybrid Cloud Environment -
? Complete Financial Analysis of IT Budgets / Costs in different brackets
? Applications (Critical, Non-Critical, Redundant - Licenses)
? Infrastructure (including Datacenter space / power etc.)
? Tooling
? Internal IT Personnel
? Complete Inventory analysis (requirement, utilization, over capacity, heterogeneity)
? Business case development for moving to Internal / Private Cloud
? Business case development for productivity applications that can be moved to Cloud (e.g. Workflow,
Voice Services, Messaging)
Start Implementation of Internal Cloud
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Perform Time Based Dynamic Profiling of Infrastructure Usage & not just Static Snapshot
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Begin Policy Based Management of the DC Infrastructure with a small step – Server Orchestration
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Introduce Policy based management of the Physical infrastructure
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Implement Capacity on Demand (Elasticity)
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Introduce Policy based management of Virtual Infrastructure
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Unify management of both physical and virtual infrastructure
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Provide Metered Infrastructure Use
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Invoke Management Policies to respond to LoB Needs
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Movement of productivity applications that can be moved to Cloud (e.g. Workflow, Voice Services,
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Messaging)
HCL Management Services
HCL provides end to end management services for efficient management of cloud. The key areas of
management services are –
? Dynamic Provisioning
? Change requests
? Re-imaging
? Workload rebalancing
? De-provisioning
? Monitoring
? Metering
? Billing
HCL works both on Cloud / SaaS enablement initiatives and have unique cloud offerings as described below -
Cloud / SaaS Enablement
HCL has worked with some of the largest ISVs in their Cloud enablement initiative. HCL has worked on
enablement initiatives of top 3 out of 5 ISVs on their enablement journey. Currently HCL is working in enabling
cloud 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.
HCL’s 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 wave
confidently and effortlessly. Complete with modules for aspects like customer management, OEM & partner
management, metering, billing and support, Agora helps ISVs / Service Providers monetize their SaaS
channels in weeks’ time span as opposed to months.
Agora, HCL’s Cloud / SaaS Service delivery platform, has been built by adopting the global best practices in
software architecture. The framework, built on top of a service-oriented architecture, is designed to give ISVs a
head start by automating critical aspects of SaaS enablement. Agora is technology neutral and integrates
seamlessly with existing ERP, CRM and other back-office applications via its Integration Service Bus which
effectively 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
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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
? On-board customers close to real-time through Agora’s automated system provisioning and application
provisioning capabilities
? Launch services quickly through simple configurations
? Support for multiple sales models like one-time, recurring, user based , usage based
? Support periodic offers and discounts on the service
? Supports multiple geographies, currency and tax rules to deliver SaaS business across the globe
? Handle online payments and process offline payments through Agora’s payment processing feature
? Promote new products / offerings through integrated web campaign and email notification systems
? Proactively share critical information with customers through Agora’s notification system
? Support customer through Agora’s ticketing system
? Create and manage distribution networks through Agora’s partner management
? Share the delivery infrastructure with partners to manage their customers, billing, payments
? Support for multiple distribution models like fixed price and variable price models
? 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 efficiently
Key Benefits of Agora
? Single platform that automates complete process require to run SaaS business
? Fully Integrated lifecycle management from customer registration à subscription à provisioning à
metering à 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
? Based on SOA based architecture principles for quick integration
Future Roadmap
HCL 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 be
consumed by enterprises in a pay as you go model. The entire CM processes are standardized and the
customer has an option to choose the tools they want to use – tools like Serena Version Manager, Serena
Dimensions, IBM Clearcase, Subversion, VSS are currently supported in this platform. The customer gets to
pay based on his usage.

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