November 01, 2013

Challenge: Proprietary data centers, such as the ones that power much of the financial industry, are expensive to run and extremely inefficient. Budget pressures are forcing firms to look for hardware alternatives, which are just starting to hit the market.

Why It's Important: Capital markets technology and operating budgets have been under severe pressure for the past few years. This isn't news, as everyone from the CIO to the entry-level tech support employee has felt the pinch. Firms will continue to compress spending across the IT group for the foreseeable future, as industry revenues still haven't returned to 2009 levels (nor will they anytime soon).

At the same time, business users are demanding more applications, access to data and functionality. Technology intensity, according to Dr. Howard Rubin, founder of Rubin Worldwide, is outstripping IT organization's budget and capability to provide services. Rubin helps organizations determine genuine IT spending metrics by using Technology Economics. As a result, CIOs need to look past traditional cost savings (head count or "doing more with less"), and find other ways to reduce costs.

Open Source hardware specifications for server motherboards, racks and storage are available and arena production at some financial services organizations.

Where The Industry Is Now: Open source software development has helped IT organizations produce applications more efficiently and at a lower cost. More recently, the Open Compute Project (OCP) has been working to develop specifications for data center hardware that will lower the cost of computing for enterprises. OCP was launched in 2011 and has already released specifications for a motherboard (AMD Open 3.0), storage, racks, data center design and more. Current projects include open source standards for switches. Also, another offshoot of OCP is Open Infrashare, which is designed to help enterprise users develop infrastructure that reduces enterprise IT costs.

[To hear about how financial firms managing their complex data architecture, attend the Future of the Financial Services Data Center panel at Interop 2014.]

Facebook first launched OCP after it developed many extremely efficient technologies for its new Prineville, Oregon data center. The specifications resulted in "a data center full of vanity free servers which is 38% more efficient and 24% less expensive to build and run than other state-of-the-art data centers," according to the OCP website. Facebook took what it had leaned and offered the specifications to other users through OPC. Today, 1,500 technologists attend the OCP annual summit.

OCP, with the involvement of Goldman Sachs, Fidelity Investments, Facebook and dozens of individuals, has not just developed specifications and standards that just look good on paper, according to OPC participants. Some of them are using the specs in their own facilities.

"One of the benefits of Open Compute, from our perspective, was the fact that the power of the community is driving user driven design, versus having vendor driven design," said Matthew Liste, managing director of core infrastructure platforms at Goldman Sachs during a panel session at the InformationWeek CIO Summit in New York. "We want to buy what we need, not what a vendor designs for us. Now we have the flexibility to contribute directly, as well as understanding of what we're operating."

[For learn more about all of the topics that will shape the business technology landscape next year, download the November Digital Issue: Capital Markets Industry Outlook 2014.]

Focus In 2014: OCP will continue to develop other specifications and standards for hardware that is used in the data center. In 2014, enterprises should begin to adopt the open source hardware and deploy it in the enterprise.

Work also still has to be done to change corporate mindsets that only "tier one" vendors belong in a data center. However, progress is being made. "Several years ago if you asked me if I would accept a non tier 1 solution, I would have said no, given our conditions and culture, and our circumstances," said Eric Wells, vice president of data center services at Fidelity Investments. "Slowly we've started to change the culture in our organization."

Lastly, more enterprise users still need to formally join the OCP community in 2014, where they can share ideas, add input on specifications, and also begin to work directly with technology providers who can build technology based off of the standards.

Industry Leaders: Facebook, as the founder of OCP, is still the leading driver of the group. Goldman Sachs and Fidelity Investments have not only been active in the group, but have also helped contribute specifications for the community.

Technology: Intel, AMD, Arista Networks, Rackspace and others are members of OCP, but any technology vendor can join to find out exactly what enterprise users want when it comes to technology.

Price Tag: According to OCP members, hardware built with the specifications is significantly cheaper to run and maintain. In addition, the specifications also aim to remove unneeded components from data center hardware, which will also reduce cost for technology manufacturers.

ABOUT THE AUTHOR
Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology.