Microsoft Jockeys for Position in the Clouds

Cloud computing provides some good news for financial services companies focused on emerging from the current economic downturn with a competitive edge: no longer are huge investments needed for those huge computing resources needed to get closer to the customer. Indeed, it is not expected to be long before a substantial portion of companies in the sector will be running some version of cloud computing. To find out more about the technology and how financial services institutions can benefit, Windows in Financial Services turned to Eikos Partners’ David Lattimore-Gay.

WFS: Let’s start first with a simple explanation of cloud computing. 

DLG: If you are already familiar with Software as a Service then cloud computing is the infrastructure that makes this possible. Your applications and data now reside on the Web, with no need for software to be installed on your computing device of choice. The advantage with this approach is that your applications and data are independent of your physical device. If the device is damaged, destroyed, or stolen, you lose nothing as all of your information resides in the cloud. 

WFS: It is on your list of industry changing technologies. Explain.

DLG: Huge computing resources are now available to anyone, not just the select few who can afford to build out large-scale data centers and all the support services that go with them. Essentially cloud computing has commoditized what is otherwise a complex, and costly, environment. This lowers the bar, allowing increased competition and opens up the door to new application innovations. Ultimately, given the flexibility the cloud offers with regard to resource utilization, for example, you pay only for what you use, I think we’ll see a wide ranging adoption as companies embrace the power of the cloud. 

WFS: How mature would you say it is? 

DLG: There are now a number of offerings within this space with varying degrees of maturity: Amazon EC2, Google Apps and now Windows Azure to name just a few. Given the choice that is now available, the clouds will quickly mature as they vie for market share. We certainly will go through growing pains with pricing models and cloud stability issues, but that’s to be expected as we really are at the initial point of mass utilization of these clouds.

WFS: Microsoft has entered this space with Windows Azure. Where do you see the company being successful? Do you see their business model changing? 

DLG: Windows Azure has made it fairly simple to build applications that can utilize the cloud by allowing developers to leverage their existing .NET skills. They also are providing developers with free access to Windows Azure and related services during the initial Community Technology Preview (CTP), which will allow developers to familiarize themselves with the offering. Success will be measured by the speed and number of applications that will become available for use, as well as the revenue generated from these applications. Microsoft should continue to mature the
Windows Azure offering and keep up with the demand for additional features. Microsoft has yet to announce its pricing model, but it has assured us that it will be competitively priced. Assuming it is, I think we will see a huge increase in the number of Windows Azure deployments. I don’t think that this is a change in business model, however. I do see this as a continuation of Microsoft’s goal to be the OS of choice. We have Windows Mobile, Windows Vista/ Windows 7, Windows 2008 Server, and now we have Windows Azure, the OS for the Web, so Microsoft now has it covered.

WFS: Do the large financial services providers stand to benefit from cloud computing? 

DLG: There are a number of issues that need to be addressed – regulations and security immediately spring to mind – but, in general, I think yes. How fast they can benefit from cloud computing will vary depending on the types of services they offer. Those that have already taken the Web 2.0 and Software as a Service plunge will probably benefit much more quickly than those that have yet to move in that direction, as they have already made the significant investment in retooling as well as figuring out the thought processes needed to best take advantage of utility / cloud computing.  

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