Still, some industries may find only marginal use for cloud computing because integration can't be done as transparently as it can on-premise, says Colburn, the Finra CIO. Financial services companies must deal with so many compliance issues that a clear and complete view of their vendors' operations is imperative, he says. For example, like other securities exchanges and associations, Finra must adhere to the strict recordkeeping regulations in the Securities Exchange Act, which require keeping many documents, including e-mail messages, for five years. For the first three years, they must be "easily accessible." If a cloud provider won't specify exactly where Finra's e-mail is at any given time, Colburn says, he can't be sure that it is easily accessible. So for now, Finra's e-mail will stay in the regulator's own data centers, he says.
Dan Greller, co-CIO at Legg Mason, a global asset-management firm with $685 billion under management, hasn't put any systems in the cloud. Security isn't good enough yet and integration challenges give him pause, he says. "Commodity" applications, such as help-desk management, would be best suited for early cloud experiments, he says, in part because they don't need to be tightly integrated with Legg Mason's core business systems.
Bad integration can degrade overall application performance, which a financial services firm can't afford, he says. "Going to a more distributed computing model always brings up concerns about performance, and cloud is extreme distributed computing," he says. For example, if an analytics application running on-premise draws data from different transaction systems in the cloud, business analysts have to know how the integration occurs and with what latency so they don't make decisions or run analyses on wrong or old data. (See "When Integrating Cloud Apps, Stay Focused on Users.") So while Greller doesn't dismiss cloud computing, he wants to see how standards evolve before making a serious commitment. If he knows that any cloud vendors he might work with will adhere to solid standards, then integration will be easier and more reliable, he says.
Money Isn't Everything
Cloud vendors may have technology and pricing that appeal to cost-cutters, but some vendors haven't yet figured out how to be business partners with CIOs who aren't looking only to save money, says Steve Cranford, a managing director at PricewaterhouseCoopers.
CIOs considering ways to improve operations, generate revenue and find competitive advantage don't just want to hand over critical systems to cloud vendors simply to lower costs, says Cranford, who consults with CIOs building business intelligence and data-management systems. Some CIOs want cloud vendors to consult with them about bigger goals, including integrating competing cloud systems with each other and merging cloud systems with those on-premise. Cloud providers are taking some steps toward providing this capability. Amazon, for example, works with Capgemini to help CIOs evaluate cloud offerings. Verizon offers "vendor-neutral" cloud consulting. But consulting is not central to cloud vendors' business models, Cranford says—at least, not yet. "Most cloud providers are heavy technology companies—speeds, feeds and firewalls."
Colburn, who has piloted some cloud applications, agrees. "We're seeing maturity issues with some of the product lines," he says. "We and they have to walk before we run."