Cloud Computing Guidelines Expected to Boost Cloud Spending By $50 Billion, Decrease IT Spend $25 Billion, UBS's Feig Says

A framework for security, interoperability, regulatory requirements and transparency should accelerate adoption of cloud computing services among financial services and other companies, says Andrew Feig, executive director at UBS

Bank Technology News | June, 2011

What holds banks back from using cloud computing? Confusion about what it is, concerns about security and delivery and a lack of standards. To resolve that third point, the Open Data Center Alliance has released a set of guidelines for cloud computing vendors this week.

The Alliance came out with a set of guidelines for cloud providers and their customers this week. “Hopefully this will increase the investment in cloud among our membership and the industry, says Andrew Feig, executive director, Technology Advisory Group, GTIS at UBS and board member of the Alliance, who spoke to us in an interview yesterday. “Accelerating adoption should accelerate savings,” for the members.

The group now has 280 members representing $100 billion in IT spend. These are all large corporations with vast networks of data centers. In addition to UBS, Deutsche Bank, JPMorgan Chase and NAB are members of the steering committee. Contributing members include ING and BBVA. All the firms have committed to using the guidelines in their purchasing decisions and many have already begun using them in their RFPs, RFIs and discussions with their vendors, Feig says.

The group expects to see cloud adoption grow by $50 billion between now and 2015, which should lead to a savings in annual IT spend of $25 billion annually, based on a 15% reduction in operational costs and Bain’s $142 billion annual spending estimates.

But Feig sees such savings as a side benefit. “In the end, we want to adopt the best solutions for our businesses and anything that can help us get to those solutions faster, obviously time is money as well,” he notes. “Some of the work we’ve done is in making a lot of the heavy lifting go away so we can focus on more of the real issues. That’s really the goal, to take some of these non-differentiating problems we see out there off the table. For instance, if we had one way to start and stop a virtual machine across the technology vendors and providers, that’s not something that differentiates one thing from another, but there’s 10 different ways to do that across 10 different providers. That’s 10 times the work we have to do as consumers of these systems.” If we can level the playing field for some of these nondifferentiating features, it should help us move faster.”

The guidelines fall into four categories: security, automation, management and policy, and transparency. “These were the areas most outlined by our membership as focus areas,” Feig says.

All the ODCA member firms have committed to using the guidelines in their purchasing decisions, Feig says.

The size of the cloud computing market varies by analyst firm. Market Monitor, a market-sizing service from The 451 Group and Tier1 Research, says the market will hit $16.7 billion by 2013, which represents a compound annual growth rate of 24 percent from 2010. Gartner estimates that worldwide cloud services revenue will top $148.8 billion in 2014, up from $68.3 billion now, including both public and private cloud services. IDC estimates that public cloud computing services have already exceeded – as of 2009 -- $16 billion, and will reach $55 billion by 2014.

In addition to Intel, which is the initiator of the Alliance, Dell, EMC, Parallels and Redhat have all joined. Dell has a cloud offering, EMC sells a cloud in a box offering with vmWare; Redhat is also active in this space.