Cloud Computing: How TransUnion Makes Money from Its Private Cloud

Credit reporting giant TransUnion replaced custom-developed services with cloud computer capabilities for its customers.

Many companies have braved cloud computing by moving low-risk applications such as e-mail to public clouds. But TransUnion, the $1.2 billion credit reporting company, is taking a greater leap: offering revenue-generating applications to its customers as a cloud service.

For nearly a decade, TransUnion has built software for banks, retailers and other companies to check the credit histories of consumers. Now TransUnion wants to get out of the expensive, time-consuming software development business and sees cloud computing as the way, says Scott Metzger, CTO at TransUnion Interactive, the subsidiary that launched the new services in July. "This can be a tricky line of business to manage because we're not a consulting outfit. We're a financial services company," Metzger says.

The ability to ramp up new products—as well as expand or contract operational capability quickly—for less money reflects "the whole promise of cloud," says Tom Pettibone, founder and managing partner of Transition Partners, an IT management consulting firm. TransUnion, Pettibone says, "is pushing the envelope."


To read more on this topic see: Early Cloud Adopters Ride Out Hype Cycle and Why Private Cloud Will Make IT Think Like Wal-Mart.


No More Custom Development

The custom applications TransUnion built connected clients with proprietary consumer data so they could, for example, look up credit scores or verify identities. Offering such software helped TransUnion compete with Equifax and Experian.

Software development, of course, is people-intensive and can be slow, which cuts into the profits TransUnion can make on each project. Under the old regimen of developing a custom application, it could take weeks or months for TransUnion to build a new service. On top of that, sometimes TransUnion had a backlog of requests stretching three months or so, Metzger says.

So TransUnion decided to offer customers access to its data through APIs. Customers can now build their own applications and access consumer credit data via TransUnion's private cloud, that is, its internal bank of secured servers. When a customer asks for a capability, TransUnion can provide access to the appropriate APIs within a week.

TransUnion can offer the same services and consumer data as before, but opening APIs to customers costs less than doing custom development. Metzger declines to specify costs or profits. To help protect its data on consumers, TransUnion uses ServiceNet, an access management appliance from Sonoa Systems, to control which customers can access which APIs based on profiles TransUnion and the customer create together. ServiceNet also lets TransUnion change its systems more easily. For example, previously, if TransUnion hired a new vendor to calculate sales taxes for its customers in various states, it would have had to tweak each of the custom applications to integrate with the new vendor. Now, TransUnion makes one change in the access management layer that ServiceNet manages.

Overall, TransUnion is happy to escape being an IT provider for its customers, Metzger says. "We can focus on providing the core intellectual property."

Contact Senior Editor Kim S. Nash at knash@cio.com.

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