Cloud Computing in Capital Markets

by Sreekrishna Sankar,  Bill Fearnley, Jr, September 27, 2012
Industry Trends
Global

Abstract

Demand for cloud computing in capital markets remains strong as firms look to clouds to help them lower IT costs, provide scalable computing capacity, and free up resources to support new technologies and revenue-generating projects. Celent estimates spending for cloud computing in capital markets worldwide will grow to US$2.8 billion in 2013 (versus an estimated $2.3 billion in 2012).

In the report, Cloud Computing in Capital Markets, Celent provides an overview of available cloud options as well as drivers of cloud growth in capital markets, business and technical issues, and recommendations for firms considering cloud computing options.

Scalable capacity is critical for capital market firms because they need to be prepared for the peaks and valleys of demand for computing and data storage capacity. Peaks can be driven by spikes in transaction volumes or business cycle events. When there is low usage, firms don’t want to pay for unused capacity. Celent believes demand for flexible capacity will increase as firms look to shift more IT investments to a pay-as-you-go model and/or support projects such as analysis and historical back-testing of portfolios that require scalable computing capacity.

Demand Drivers for Cloud Computing in Capital Markets

Catalyst

Considerations for Capital Markets

Lower it costs, improve profits

IT expenses can be significant for firms; clouds can help reduce IT costs and improve profitability.

Faster deployment times

Projects can be deployed sooner because they use existing service provider IT capacity.

Reduce IT and capex investments

Improving capacity utilization reduces excess capacity, reducing IT costs and CapEx for IT.

Adding flexible and burst capacity

Clouds help IT manage capacity to address the peaks and valleys of demand for computing.

“There are multiple demand drivers for cloud computing in capital markets. Cloud computing’s capacity to support Big Data projects should gain momentum this year and next as more firms use Big Data for investment and business analysis,” says Bill Fearnley, Jr., Senior Analyst with Celent’s Securities and Investments Group and coauthor of the report.

This report examines the demand drivers for cloud computing in capital markets as well as the multiple service models available: software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS). Celent also reviews multiple technical considerations when implementing clouds in capital markets and analyzes IaaS deployment models including public, private, hybrid, and industry clouds.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Our Observations of Cloud Trends

1

 

Our Conclusions

2

Introduction

3

 

Cloud Momentum in Capital Markets Remains Strong

3

Drivers of Cloud Adoption in Capital Markets

5

 

Demand Drivers for Clouds in Capital Markets

5

 

Adding Flexible and Burst Capacity

5

Four Features of Capital Market Clouds

6

 

Capacity on Demand

6

 

Compliance and Regulation

6

 

Security

6

 

Business Process

6

Cloud Service Models

7

 

SaaS: Software as a Service

7

 

PaaS: Platform as a Service

7

 

IaaS: Infrastructure as a Service

8

 

Private Clouds

9

 

Public Clouds

9

 

Hybrid Clouds

10

 

Industry or Community Clouds

10

Capital Market Clouds: Technical Considerations

11

 

Existing Systems

12

 

Service-Level Agreements

12

 

System Latency

12

Conclusions

13

Leveraging Celent’s Expertise

15

 

Support for Financial Institutions

15

 

Support for Vendors

15

Related Celent Research

16

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