In 1956, construction on the United States’ largest interstate – I-90 – began in earnest. Once the entire interstate highway system was completed, it connected all of the major metropolitan areas in the US. It has been added to as the country has grown, and still serves as the common transportation infrastructure for commerce.
Part of I-90’s value is that it's standard and open for all to use. Unlike the early days of the railroads, where track gauges differed and companies refused to interconnect their networks, interstates are open to all who wish to use them. Since auto and truck manufacturers know the standard road width, they can design common vehicles that can operate on any expressway. Users don’t have to worry about varying heights of overpasses or differences in signage.
[To hear about how financial firms are managing their complex data architectures, attend the Future of the Financial Services Data Center panel at Interop 2014 in Las Vegas, March 31-April 4. You can also REGISTER FOR INTEROP HERE.]
Similarly, much of the value of technology comes not from increasing performance, but common standards and openness. Take the Internet, which has sped technology adoption through a common, open standard for transmitting packets of information.
Cloud computing holds the promise of doing this at a higher level through a common transportation layer and infrastructure on which applications run. By creating common standards for applications, cloud holds the potential to be disruptive and impactful.
This makes cloud strategically important for financial organizations. The financial services industry tends to be technology early adopters – the perfect market for cloud. In fact, Gartner recently reported that more than 60 percent of banks worldwide will process most of their transactions in the cloud in 2014 (“Top Industries Predicts 2014: The Pressure for Fundamental Transformation Continues to Accelerate,” October, 2013).
Still, many are confused about how to get there.
One path is through OpenStack, an industry-wide, open source collaboration working to create cloud functionality that can run on any service provider and work well with financial businesses’ existing IT infrastructures. The result can accelerate an organization’s cloud vision. Financial executives should know several things about this new road to the cloud, including:
1. Standardization is its foundation. The promise of the cloud has greatly eliminated the days when large technology providers tried to one up each other with giant, closed systems. But that promise is dependent on standardization. Thus, the more than 200 companies supporting OpenStack are striving toward a flexible, standardized platform that works interchangeably with any infrastructure. This is extremely important, especially since many financial companies have spent years investing millions of dollars in IT.
2. It must offer less cost, more innovation. Most IT departments are focused on “keeping the lights on,” not providing innovative solutions. The flexibility and low cost of OpenStack helps alleviate this by freeing up IT to focus on new applications, solutions and service delivery rather than inflexible, underlying infrastructure. This allows for faster delivery of new features and products, such as online tools to help customers better manage their portfolios, and can help attract customers and increase retention.
3. It needs industry-wide support.OpenStack receives widespread support from some of the most important players in the technology industry, all of which have come together to help companies break away from being locked in to a particular cloud vendor. While some of these players offer their own flavor of OpenStack, they still commit to the ideals of an open, standardized cloud. Therefore, unlike many technology purchases, it’s not really about choosing the technology itself, but selecting a vendor with the richest ecosystem and support, knowing that support extends to virtually an entire industry.
4. Its success calls for change.In the same way that corporate logistics departments were radically changed by the interstate highway system, cloud computing will require significant changes to IT processes and culture. OpenStack dispenses with the historic approach to IT, which often involves people working in separate silos, in favor of a world of possibilities centered on a homogenous, inclusive infrastructure. While that’s very freeing, it necessitates new ways of thinking. CEOs must ensure their CIOs are preparing their teams for the adjustments that will need to be made.
5. It’s continually emerging.The original design of the interstate system took 35 years to complete. Even then, it wasn’t done; it continues to grow and evolve. Similarly, OpenStack is an evolving technology, and companies need to be prepared for updates and maintenance. So far, we’ve gotten at least two new releases every year. That keeps OpenStack fresh and evolving -- and companies on their toes.
Many banks have already seen success with OpenStack. They understand what OpenStack means for the financial services industry, and are harnessing its potential. That potential is real, and will likely keep OpenStack truckin’ through the financial realm for many years.
Jim Whitehurst is president and chief executive officer of Red Hat, the world’s leading provider of open source enterprise IT products and services. With a background in business development, finance, and global operations, Whitehurst has proven expertise in helping companies flourish – even in the most challenging economic and business environments. Since joining Red Hat in 2008, Whitehurst has grown the company, and its influence on a variety of industries, by reaching key milestones – the most notable in 2012 when Red Hat became the first $1 billion revenue open source software company.