IT in the Cloud

“The cloud is the next big thing,” the head of IT at one of the largest banks in India told gtnews recently, and a number of IT managers seem to share similar sentiments. IDC’s associate vice president of Australian Research, Tim Dillon, said recently that the cloud is “the next thing” and “those organisations that pick up on it early will achieve greater success.” SunGard’s Michael Bosacco, vice president of treasury solutions, echoed that view in gtnews this month, saying that “the cloud can play an integral role in helping organisations to position themselves for growth,” and it can “act as an enabler for consumable treasury services.” A key question is when treasury, cash management and payments in Asia will actually move to the cloud.

The definition of what the cloud encompasses can often seem vague. Infoworld says it can range from “virtual servers available over the internet” to “anything you consume outside the firewall, including conventional outsourcing.” The US National Institute of Standards and Technology (NIST) defines it more specifically, saying it is “a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources” that can include networks, servers, storage, applications and services.

While many companies using the cloud engage specialist service providers, companies can build their own cloud. The benefits of the cloud can range from a lower cost of infrastructure and quick access to more storage or bandwidth on through to the ability to tap into IT resources that may be scarce internally and access to the latest versions of software that are kept updated by a third party.

While companies may be moving to the cloud quickly in other parts of the world, Asia generally isn’t moving as rapidly. Asia Cloud Computing Association chief executive officer (CEO) Per Dahlberg recently told CIO Asia that cloud adoption in Asia is “held back by factors ranging from a lack of broadband readiness to concerns around security, vendor lock-in, performance, availability, reliability and a general understanding of what cloud computing is.” Furthermore, he said, Asia’s fragmented regulatory framework “is one of the biggest challenges in the region”. Security and regulatory issues seem particularly important.

Data security has indeed been a significant concern for companies in Asia, and many of them have continued to manage applications and data internally in order to protect their information. How companies manage security may be shifting, however, a recent survey of more than 1,000 organisations in Asia by CA Technologies found that “42% of organisations say cloud computing will be a key component of their data protection plans in the next year.” The finding that 95% of the companies surveyed “admitted they have experienced application and data loss incidents in the last year” may also make the cloud increasingly important.

Even if security concerns lessen, regulations still remain an important issue. In Singapore, for example, the Monetary Authority of Singapore said in July that “in the case of cloud computing, financial institutions should be aware of unique attributes and risks particularly in the areas of data integrity, recoverability and confidentiality, as well as legal issues such as regulatory compliance and auditing.” Similarly, the Australian Prudential Regulatory Authority said in a circular last year that it “wishes to emphasise the need for proper risk and governance processes for all outsourcing and offshoring arrangements, including cloud computing.” Other regulators in Asia have raised similar concerns, making companies wary about moving too fast.

In the short term, the concerns of regulators, boards, management and even some IT professionals about the risk and security posed by using the cloud indicate that Asia may continue to lag behind other regions. In the medium term, however, the benefits of cost, flexibility and increased security mean that usage of the cloud by corporates and banks alike is likely to gain traction faster than many may expect.

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