We've heard of private clouds, hybrid clouds, turnkey clouds -- now get ready for industry-specific clouds. The idea is to provide technology, business processes and services uniquely tailored to the needs of a particular vertical. So far, one cloud offering for airlines and two for financial institutions have been announced, and industry watchers expect even more to emerge.
While the cloud can be attractive for reasons including cost savings and agility, its value becomes even greater when providers can wrap vertical expertise and intellectual property around their offerings, observers say. Momentum is growing for the deployment of clouds specific to particular verticals because their resources are designed for communities that share special interests.
An industry-specific cloud can be thought of as a private, hybrid cloud. It's private "because you have to be allowed in by that community," but it's hybrid in that each of the members may use the public cloud to access resources, with appropriate security, says Eric Marks, CEO of consultancy AgilePath. "Everything I'm seeing suggests these are emerging; there is some traction and rationale behind them."
"There are a host of solutions and platforms and hubs that are emerging at this industry-specific level," agrees Charlie Burns, vice president at research firm Saugatuck Technology. "You're going to see a variety of traditional Fortune 1000 companies leverage cloud infrastructure to develop market-specific, cloud-enabled services that are unique to a targeted market." Such companies will become both users and providers of industry-specific clouds, he suggests.
So much so that Saugatuck anticipates an explosion in vertically-driven business process cloud offerings from not only traditional services providers like Accenture, IBM and the Indian vendors "but also from traditional business brands that are coming to market with business process as a service (BPaaS) solutions themselves," adds Bill McNee, founder and CEO of Saugatuck.
Industry-specific clouds, he maintains, are "the future. It's the new way of doing things."
Saugatuck projects that, by the end of this year, at least 75% of user organizations will use one or more cloud functions -- SaaS, cloud infrastructure and business services, among others -- to enable and support daily business operations. But the firm does not have any figures breaking down what percentage of customers will use industry-specific clouds.
Flying into the cloud
As one of the most logistics-focused and supply-chain-driven industries, air transportation is a shoo-in to move processes and costs to a model that can be shared in the cloud. After all, the major airlines fly into the same airports globally. SITA, the IT arm of the air transport industry, joined forces last spring with communications provider Orange Business Services, and the two recently announced plans to build a global, high-performance, managed cloud computing infrastructure to meet the needs of their respective markets. In other words, they are jointly building the infrastructure but each will sell the product in their respective markets. Orange Business Services is the enterprise services branch of France Telecom-Orange; it will sell the cloud offering to global enterprises.
In the case of SITA, it means doing away with a lot of IT redundancies in air transportation.
Each airline has its own network and probably 100 or 200 servers "doing pretty much the same things," notes Greg Ouillon, a SITA vice president, in Geneva, Switzerland. Some of the functions that all airlines provide include call centers that process reservations, as well as check-in, boarding, security and scheduling aircraft turnaround. "We felt it was a natural move to add a computing capability that would allow our customers to share even further with [common] IT infrastructure and save costs and gain benefits in service levels."
SITA's cloud computing infrastructure will be based on six "seamlessly" connected Tier III+ and Tier IV data centers in Atlanta, Frankfurt, Johannesburg, Singapore, Hong Kong and Sydney. Each data center will cover its own region, and the six will be connected via Orange's high-speed MPLS network.
The global infrastructure will enable Orange and SITA to offer their individual portfolios of cloud computing services: infrastructure as a service, platform as a service, desktop as a service and software as a service. Both Orange and SITA will continue to own the service relationships with their end customers.
Network connections between the data centers are secured with "premium levels of protection against malicious threats," according to SITA. The SITA/Orange cloud will provide highly resilient service through redundant connections, failover sites and network-based intelligent re-routing that can transfer traffic around any disruptions, SITA officials say. A key goal is consistent performance among all the data centers -- the two companies are aiming to achieve no more than 100 milliseconds of latency when their customers operate their applications in the cloud.
Malaysia Airlines was a pilot user of SITA's cloud-based desktop-as-a-service initiative for "every phase of the passenger journey -- from booking to check-in," explains Dr. Amin Khan, executive vice president of commercial strategy for the airline, in an email. He said his company experienced no latency and the response time "was acceptable."
The airline continues to evaluate SITA's cloud services to free up capacity, reduce costs and increase agility.
SITA's Ouillon promises that Malaysia Airlines' desktop applications will open within 10 seconds. These desktops, rather than running at the end of a low-speed line out of Indonesia, are running out of a cloud connected to a high-speed data center, he explains. The time it takes to download the data from the data center to the desktop is a few seconds, he says. An image of a desktop is published to a remote site so the airline agent can see on the screen what is happening in the cloud.
"All of a sudden, imagine you run your servers in an infrastructure that is shared, and you only pay for your use of it, so you don't have to spend capital dollars for new equipment," says Ouillon -- because, as with any type of cloud, "it's shared, it's optimized." Airlines will be able to resell or recycle their existing servers, he says.
All of the more than 30 airlines SITA has spoken to are interested in this cloud model, not just for cost savings, Ouillon says, but for business flexibility and agility. "Imagine all of a sudden you can have your employees work from home or Starbucks, so if you get an ash cloud over Europe or a bird flu, you can very quickly configure desktops and servers in the cloud and continue to access your app from an iPad."
Ouillon says that SITA is "actively engaged with several airlines at the contract or RFI/RFP level, especially out of Asia and the Middle East."
Air transportation is hardly alone in realizing the benefits of moving to industry-specific clouds. The concept is also taking flight in such heavily regulated industries as finance and health care. The federal government has even gotten into the act, offering cloud computing services such as infrastructure as a service, web hosting, storage and virtual machines to agencies on its apps.gov website.
Banking on a financial cloud
The New York Stock Exchange (NYSE) is also hedging its bets that a cloud exclusive to the trading industry will take hold. The regulatory environment in the financial services markets has changed in the last few years, leading firms, especially smaller ones, to look for new ways to comply with regulations while still providing value to their clients.
"There's a move toward more oversight of financial markets, so firms have to be able to react to that," explains Feargal O'Sullivan, vice president of platform development at NYSE Technologies, a division of the NYSE. "There's a general move toward more efficiencies and electronic trading; the trading floor and Wall Street with a little man passing tickets -- those days are gone." In addition, he says, there's been a change in the types of instruments traded, and an overall need to reduce costs.
Over the summer, NYSE Technologies formed a partnership with EMC Corp. and VMware Inc. that allows financial institutions direct access to NYSE's technology services through its newly developed Capital Markets Community Platform (CMCP). Wall Street firms that sign up for the platform can use NYSE Technologies' servers to gain access to research, including historical market data and analytics, that previously was stored on individual firms' networks. The platform is currently available in the U.S., and the plan is to expand it globally, beginning later this year in Toronto and Tokyo.
So far there are four customers, NYSE Technologies officials say.
"Infrastructure as a service has caught the minds of people within financial services," says O'Sullivan. For the past several years, firms that were able to acquire the latest technology and deploy it ahead of everyone else saw a "tremendous advantage."
But now many of the companies in the industry have upgraded, spending a lot of money on their tech infrastructure, thus closing the competitive gap, he says. While some firms are still focused on having that cutting edge technology, O'Sullivan says, "it's not as much of a competitive advantage as it was five years ago. Profit margins have been squeezed, and the market is not as active as it used to be, so firms are obviously looking to reduce costs and ... leverage a shared platform."
The platform also lowers the cost of entry for smaller firms, because they don't need to buy servers, ship them and install them, O'Sullivan adds. Once they sign on, "We provide them with physical servers and we provision them, or if they ask for virtual servers, they use the vCloud Director Portal," which give clients access to a catalog of virtual services. "We're building a community with like-minded firms that want to trade with each other,'' says O'Sullivan, adding that NYSE already has a connection to "almost every financial services firm in the world."
NYSE Technologies is also building out an ecosystem of content and applications, he says, so that organizations that join its cloud can access an expanding number of features that they don't have to develop themselves. Among the services NYSE is offering is a risk-management gateway, which validates all trades. He says his company is also bringing other companies onto the cloud that will be able to use a wide variety of financial products from NYSE as well as from its competitors, such as risk management software.
Financial services firms that are interested in joining are required to sign a full agreement with terms and conditions and they will undergo a background check as a security measure and as part of regulatory requirements, O'Sullivan says.
Security is being handled by "applying the same set of security and policies we use to protect the NYSE market,'' says O'Sullivan, who declined to provide specific details, citing the nature of the industry. He did say the cloud offering is "heavily leveraging private virtual LANs, which shield everyone's traffic, hardware, firewalls." NYSE Technologies' cloud also leverages intrusion detection and prevention devices to monitor and track any sort of attempts at infiltration and intrusion, and then to "troubleshoot if something does happen."
There are two prices for CMCP: a monthly lease price for access to physical servers and a monthly price for what NYSE Technologies calls its "Virtual Cloud Pack," which would include, for example, 96GB of RAM and half a terabyte of storage, says O'Sullivan. While he declined to disclose specific pricing, he says, "We are confident we are very competitive with any cloud provider in terms of pricing."
Besides security, he says NYSE Technologies' value proposition is a WAN connection included in the price. "So [clients] get market data and trading without any additional bandwidth fees."
In addition to the NYSE, Boston-based financial services provider State Street Bank recently also announced plans to build a private financial cloud, offering real-time applications and services running in multiple data centers to clients.
Sharing can be good
In terms of how to sell the notion of sharing computing resources with your competitors, industry-cloud officials say companies often realize there are business processes that are good to share with others. "I could either invest in [creating] my own database of fraudulent business activities where fraud and risk mitigation is very important to me," says Moe Abdula, director of Cloud Solutions and Service Automation at IBM, "or I can acquire that information on my own at a higher cost, or get it from a particular [partner] in a financial cloud consortium or a community that has mutual interests around specific processes," presumably at a lower cost.
In contemplating whether other industries are ready for their own clouds, it's important to note that both SITA and the NYSE are marketing the trust and reliability of their brands within their respective communities. "We have developed trust over the years, and the idea is to extend that trust," Ouillon explains. "The industry feels comfortable sharing infrastructure with SITA, and we feel comfortable sharing the IT infrastructure amongst them."
At the network level, SITA has a number of mechanisms to share infrastructure, he says, and resources can be strictly private as if they were in their data center. Customers will have direct access to the infrastructure through their virtual private network, relying on MPLS technology or IPSec secured Internet access as they see fit, says Ouillon. The infrastructure itself is protected through several levels of firewalls and leverages VMWare Hypervisor technology, implementing security best practices for customers' separation.
But if a customer requests it, SITA will advertise the availability of some of their servers so other parties can access those apps, he says. "So if you're an aircraft manufacturer and you put an app in the cloud and want to advertise to the community, it becomes possible."
SITA and Orange Business Services are now fully engaged in execution, and all contacts with customers, analysts, and technology partners confirm the relevance and value of the community cloud approach, says Ouillon. "We are confident the ATI community cloud is the way forward to deliver the business agility required by the air transport industry."
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