Barclays partners with IBM for private cloud project

Anyone who hasn’t been asleep for the last six month will be well aware of the concept of cloud computing, but so far there has been more talk than action. One man who has explored further than the prevalent marketing spiel is Barclays Bank global head of middleware, infrastructure and service delivery Kenneth Merritt.

Merritt has been working with IBM to upgrade the retail banking business’s infrastructure by adopting a pay as you use model with internal customers. The project, which is one of the first serious private cloud initiatives, is ongoing and has been running since 2009.

At the time the project was mooted, the bank was still under intense scrutiny, following the global credit crunch and it was not a perfect time to float innovation ideas, but Merritt recalled he went straight to the CIO of global retail banking Jim Ditmore, who championed the idea amongst his c-suit peers. Ditmore was the previous holder of Merritt’s role, so it’s safe to assume he was keen to help out and it was the push Merritt needed to get the project accepted.

Merritt maintains it was an easy decision for the budget holders, because it was designed to have minimum impact on capital expenditure, with a swift ROI.

The infrastructure is used to run file transfers, such as money transactions and data on the 50 million customers in 50 countries that Barclays operates in.

It has been rationalised so that it can be re-used and duplicated for other business processes. Internal customers pay a fee for using the infrastructure and the revenue is used to finance further build-outs. There’s no big up-front investment.

The new infrastructure is heavily dependent on internet-based services and so it can be quickly set up. Merritt said so far, up to 85 per cent has been saved on the cost of a number of systems, including staff authentication, customer authentication, Java application hosting and data transmission.

As a result of adopting the simplified and more agile network infrastructure, Merritt’s staff of 270 people has been reorganised. Previously, it was divided into operational and development groups, but now a third group of product managers has been added, whose job it is to sell infrastructure services into business-line internal customers.

These people were existing staff that have been retrained into much more business aware roles and act as mediators between the IT department and the business. Merritt says there are five product management teams with 10-20 staff in each one.

The approach Merritt has taken could typify the response the banking industry will take to the concept of cloud computing in the near-future, by adopting the utility benefits of the model, but stopping short of handing core infrastructure responsibilities over to an outside organisation.

He thinks that this private cloud model will be preferred by the large banking companies, perhaps with a move to some sort of hybrid model only by 2015.

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