'Cloud computing' is more concept than reality, for now - East Valley Tribune: Business

'Cloud computing' is more concept than reality, for now

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Posted: Tuesday, June 7, 2011 1:21 pm

There's been a lot of talk about putting more information into the "cloud," though it hasn't exactly hit the mainstream.

But that is changing as people become more comfortable with the idea of having their data and applications stored on a remote, managed server. And the concept is sure to get more attention after Apple CEO Steve Jobs introduced the iCloud Monday at a developers' conference.

Industries that already made some use of cloud computing -- whether done internally or by using an outside provider -- are starting to do more with it. One is the financial services industry, known for handling sensitive information and following strict regulations.

Mike Eaton, founder and chief executive officer of Cloudworks in Westlake Village, Calif., said it's not surprising that banks, credit unions, brokers and others are stepping into the cloud.

"A lot of financial services have had some component of their business in the cloud before," he said, adding later, "They now see they can put all of their eggs in that basket."

Building the infrastructure to protect information is expensive, Eaton said. But companies such as Cloudworks offer a cost-effective way -- for small banks and credit unions -- to build in the redundancies and security they need, he said.

Instead of the capital outlay for everything from additional servers to backup network connections and power supplies, firms contract with the cloud services provider for a monthly fee.

In January, Cloudworks partnered with Ongoing Operations, a business continuity and disaster recovery company serving credit unions. The partnership offers virtual desktops and hosted Microsoft Exchange services to credit unions.

Cloudworks has expanded its operations by adding data centers in Arizona and Maryland that are compliant for the financial services industry.

Eaton said the tragedy after Japan's earthquake and tsunami makes it clear why a company with California-based operations would want facilities elsewhere to back up data and keep service going.

"For any of our clients, it gives us disaster recovery capability," he said.

For larger firms, size and the need for control may drive them to keep operations in-house, while using the basic premise of the cloud -- storing everything remotely with backups in place.

In an April report, Forrester Research predicted the cloud-computing industry would grow from a $40.7 billion global market in 2011 to $241 billion in total revenues by 2020. It cited factors such as the economy and the demand for flexibility in software and hardware in driving some of that growth. Companies using cloud-based services -- particularly those provided by an outside party -- can quickly expand or cut the system or applications to meet their needs.

Across industries, the trend is toward more widespread adoption of cloud-based systems.

But some concerns remain.

The security and log management firm LogLogic reported on its recent survey, which found many financial services firms still had data security and transparency concerns.

The survey found that 34 percent of respondents believed cloud computing was not strategic to their company.

"While the cloud holds many benefits for the enterprise, we're not surprised to see that financial services firms are hesitant to adopt cloud computing," LogLogic CEO Guy Churchward said in a statement.

He said cloud computing providers must address security and transparency before there is more mainstream adoption among financial services firms.

Corporate leaders in that industry are no different from those in any other, Eaton said. "I don't think anybody considers their data to be trivial, whether they're manufacturing electrical components or a bank."

The difference is that financial institutions have regulators overseeing how they are managing data as well, he said.

"We're just now getting to the point that people are comfortable it is a viable solution," he said.

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