One of the first items on the modernization agenda was the SEC’s datacenter footprint. The SEC had 30,000 square feet of datacenter space in two facilities near Washington, D.C. “Our datacenters were both 10 years old,” Bayer says. The SEC estimates the move to hosted datacenters will save $18 million a year.
By 2013, the SEC had condensed its datacenters to 3,500 square feet by increasing the use of virtualization and the cloud. The agency now has two facilities, one near Washington and another in New Jersey, which are run by Akamai and IO Data Centers. “We have reduced our own datacenter space by 85% and have cut our electricity costs,” as well as real estate costs, substantially.
“It was coincidental that both datacenters were migrated in one year,” Bayer says with a laugh. “And I don’t recommend anyone move two datacenters in the same year,” adding that it was a massive undertaking.
Bayer hopes to further reduce the agency’s datacenter requirements by moving even more functionality to the cloud during the next three to five years. “This will further reduce our footprint in the datacenter” as the SEC allows cloud providers to handle more functionality.
For instance, having Akamai run the SEC website gives the agency flexibility that it couldn’t build on its own. “When there is a market event such as the Facebook IPO, we may see 100 million page views in an hour,” Bayer says. Building that type of capacity is prohibitively expensive for the SEC. “Having Akamai run the site eliminated the cost of having to build the bandwidth ourselves.”
Bayer has also moved MIDAS and EDGAR, two of its larger offerings, to the cloud. MIDAS, the Market Information Data Analytics System, which is run by Tradeworx, is a tool that provides deeper insight into market data and how the financial markets operate. EDGAR, the Electronic Data Gathering and Retrieval system, is a massive database of corporate filings.
Deep dive on data
While the SEC has been a world-class collector of data for the past few years, it has had little ability to do complex analytics on the information in its databases. That is changing, however, as the SEC is looking to improve the way it monitors the markets. One big data project, the Risk Analysis Examination, identifies problematic behavior by using quantitative analytics to examine clearing firms and large broker-dealers by downloading all transactions cleared by the firm. Another big-data tool is the National Exam Analytics Tool, which allows examiners to analyze massive amounts of data on financial firm transactions.
In order to gain insight into all of the data, the SEC didn’t build out the tools from scratch. Instead, it brought in a variety of software packages from SAS, Palantir, IBM Netezza, Microsoft, and Oracle, to name a few.
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Still, Bayer and his small team of 175 workers have made big strides in the past few years improving the SEC’s capabilities. Although there are fewer than 200 full-time technologists on the SEC’s staff, they manage 1,115 outside contractors. In all, 86% of the SEC’s IT projects are outsourced, Bayer says.
Bayer says attracting talent is always difficult for the agency, as well as other regulators. “It is difficult because we don’t pay as much, obviously. We do find people are drawn to public service because they want to make a difference. We have a good cadre of people we have hired.”
To find good workers, Bayer spends a good deal of time working directly with universities. “I personally deal with MIT Sloan [School of Management], and I speak frequently at the University of Virginia,” specifically the UVA McIntire school of commerce.
In fact, the people Bayer works with are one of the biggest reasons he enjoys his job. “The SEC staff is the most talented group of people I have ever worked with. This is the best job I’ve ever had.”
Editor’s note: The SEC has announced that Bayer will be leaving the agency in October.Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio