State Street Private Cloud: $600 Million Savings Goal - InformationWeek
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Charles Babcock
Charles Babcock
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State Street Private Cloud: $600 Million Savings Goal

If everyone writes software for the same cloud-based development platform, code sharing becomes easier, and State Street has to write dramatically less code, saving big on software development. Take a look at the plan.

Perretta's goals, like cutting the amount of code that State Street writes by 30%, are longer-term metrics, not to be achieved in a day. But State Street has set targets to be achieved this year that put the bank on a path to reach those goals. It has set Java as a primary language, but Microsoft .Net languages will also be used in the future. Connections between systems will be simplified and standardized, an overall security framework imposed, and standard Web technologies and languages used where appropriate, all to simplify and speed development.

In the past, a 7,000-member IT organization like State Street's could produce applications of great complexity, some with best-of-breed technologies that only their development teams could understand. The State Street private cloud imposes fewer choices, standardized components, selected open source code, and re-useable components. It leads to fewer unique systems, greater ease of maintenance, and more rapid modification of a trading system, said Perretta.

It's not just a matter of weeding out complexity. A simplified architecture also allows development teams to more directly make use of the cloud's strengths. Big data can be collected and accessed in this cloud architecture, and that encourages designers to incorporate analytics into their systems to make use of it. With its clusters of x86 servers and disks, the cloud readily lends itself to distributed processing and parallel operations. State Street tells its developers to make use of that parallelism in the way they use databases.

In other words the State Street private cloud is not just meant to take cost out of the former way of doing things. It's enabling a new way to do things, while throwing a body check on the tendency of each new application to cost more than the last.

"We can't continue to just automate what we already do today. The cloud offers up a whole new opportunity for us" to implement more advanced applications to run in a cloud setting, said Perretta.

As financial services gain greater digital content, they also rely on more automated processes, a movement that leads to greater ease of compliance because automated systems create event logs that can be audited. The State Street private cloud is a springboard to the types of systems the company needs in the future.

The cloud's standardized x86 server environment has a hidden advantage in this regard over the complex, legacy data center. Standardize your runtime environment and you've simplified many of the choices for future development. You've narrowed down the set of development skills needed to build future systems and you can capitalize on those skills more frequently.

So State Street concentrates on Java, key open source code pieces, standard ways of integrating application components, and making use of parallel processing to access database services.

By requiring a reorganized development effort, cloud computing imposes a new order and yields ongoing development dividends. The fact that it's also taking expense out of the IT budget is the silver lining on the State Street cloud.

Expertise, automation, and silo busting are all required, say early adopters of private clouds. Also in the new, all-digital Private Clouds: Vision Vs. Reality issue of InformationWeek: How to choose between OpenStack and CloudStack for your private cloud. (Free with registration.)

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User Rank: Apprentice
7/3/2012 | 3:44:46 AM
re: State Street Private Cloud: $600 Million Savings Goal
Everybody thinks that "cloud" (i.e. Hadoop or some other form of global file system with balanced IO) is the wave of the future. I remain unconvinced, but interested. The problems are that writing applications for a global cluster is really complex and, if you don't do it perfectly, you can create some real latencies. The other issue I have is that when you are working with a series of different, often open source, technologies in the OS stack, there is very little coordination of patch/upgrade release schedules or testing for your specific config. I have seen several clusters get taken down because someone patched a hypervisor, for instance, and it had some unknown inconsistency with firmware that was running on a switch that knocked a good portion of the cluster off-line. The complexity goes way up with this model. You are essentially building your own supercomputing operating system with some help from open source. I don't see anyone reducing on-going operational costs by standardizing on this model vs. some flavor of Unix. Hardware costs, yes, but I don't see how there will be less to manage with this model.
User Rank: Apprentice
6/26/2012 | 7:30:21 PM
re: State Street Private Cloud: $600 Million Savings Goal
Great article here. So many concentrate on hardware savings and the cloud, but the real, continuing savings can be found in faster, more efficient, less costly software development
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