Credit Unions Must Explore Cloud Computing

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Over the last several years, the concept of cloud computing rapidly transitioned to reality. Cloud is the simple concept of having another company provide the technological building blocks needed to run the credit union.

Most credit unions are already using these cloud computing building blocks, like outsourcing online banking in an ASP (Application Service Provider) format or utilizing a service bureau solution. However, it is the next three to four years that hold the promise for how cloud will transform the way we work and think about technology.

Leveraging the cloud can be as simple as outsourcing website hosting or as complex as running virtual data centers, servers, SANs, etc. Over the past few months, I have noticed an interesting change in the cloud discussions we have with clients. Instead of explaining how this is safe and secure-the conversation has advanced to "show me how to get there and meet the FFIEC/NCUA requirements."


Issues For Small & Large CUs

There are many smaller credit unions that will be able to quickly and easily transition to the cloud. Once there, they will have to confront the challenges of managing a vendor to provide the service versus managing the internal components. The good news is that this should lead the conversation to be strategic vs. tactical. The bad news is that your hosting provider will still need regular communication and direction from you to know how to deliver the right technology to meet the credit union's business plans. This requires a partnership as opposed to a traditional client/vendor relationship and makes vendor selection even more critical.

Sharing your strategic direction related to membership growth, corporate culture/values and basic product deployment philosophy needs to be in sync in order for the provider to deliver the promise of the cloud.

For larger credit unions, the shift may take much longer. Large credit unions can have as many as one server for every two to three employees. Often, these credit unions have legacy technology and applications that are only provided by one or two vendors. This can mean many servers with older software, different databases and applications, none of which can be standardized. This is where the power of hosted services can deliver value. It is because of this large diversity of technology that cloud can help reduce costs, enhance efficiency and guarantee uptime.


Four Critical Building Blocks

We believe there are four critical building blocks that enable the credit union to be "cloud ready." They include:

* Bandwidth. Without high speed, redundant bandwidth, the credit union should not consider moving to the cloud. Just as people shouldn't go into a crowded room with only one exit, you will need options. Bandwidth is cheaper than ever and redundancy is absolutely obtainable without an additional spend.

* Messaging. The modern workforce has evolved beyond e-mail to include various collaboration methods. This requires solid tools to enable instant chats, video chats and on-demand screen shares that can connect both internal and external vendors while maintaining security. Once moved to the cloud, not only will you see a significant improvement in these tools, but lower costs, more options and better up-time. Finding a provider that deploys Microsoft's ADFS (Active Directory Federation Services) enables the credit union's platform to be synchronized with the provider's so that users don't need additional logins. This enables the credit union to move more applications to the cloud in the future.


Collaboration & Recovery

* Hosted VOIP. Moving your entire phone system to the cloud further enables your collaboration tools. Imagine being able to talk to your employees through your iPad while working on your laptop. Then remembering you have an appointment you have to get to, pushing *11 on your cell and having the conversation move with you. Enabling call recording, call routing or a new marketing message becomes as easy as logging onto the website and configuring your options. Adding a new employee takes one to two minutes plus you have enabled the organization to leverage future cloud services.

* Disaster Recovery. Moving to real-time replication or 15-minute snapshots with your DR provider allows you to test the quality of the cloud with less day to day risk. If you don't feel confident that your provider can recover you in the worst of times, you probably shouldn't be using them in the best of times. Moving to the cloud for DR enables you to test, tweak, and determine if your cloud provider is a good fit for production.

Each of these paths represents a strong block that will allow your credit union to take full advantage of the cloud in the future. Many have already deployed the Disaster Recovery step. Add in the other building blocks and get ready to wake-up (or better yet sleep soundly) in a year or two, not worrying about an air conditioning upgrade in your data center, or proposing an expensive SAN to your board.

Instead, you will be focused on mining the data from your members' shopping behaviors for early loan opportunity detection or figuring out how to engage Gen Y with peer to peer payments, and getting a full night's sleep.

Kirk Drake is CEO of Ongoing Operations, a Hagerstown, Md.-based CUSO. For info:

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