Vanguard talks about its cautious approach to public cloud services, and the steps it's taking to build an internal cloud.Vanguard is a financial management company with a trillion dollars in managed assets. It's also a cloud conservative. It hasn't dismissed the cloud out of hand, but it won't risk customer data on the cloud or with SaaS.

"You read a lot about the providers and their security, but given the nature of our business and the criticality of our client data, we aren't comfortable that providers bring the same rigor around data protection as we do," says Bob Yale, who runs technology operations for the company. "We aren't ready to give up control of our data."

Vanguard isn't alone. Security was the top cloud concern among InformationWeek readers, ahead of other key issues including performance and control. Check out the full article in our InformationWeek Report on cloud security here.

However, Yale says the company is examining whether it can use a public cloud computing service to test and evaluate new products. Rather than provision hardware and software to test a new product in its own labs, they believe a cloud platform will suffice. "The application group can go out to the cloud and spin up a virtual image of the product faster and at a lower cost," says Yale. "It would give us the flexibility to evaluate products and research new technologies quicker."

That said, he's quick to note that these would be non-mission-critical applications. Anything that might require the use of customer data to test will stay inside the organization.

Privacy, Please The company also is evaluating whether it makes sense to build a private cloud. Yale already runs a grid computing platform built for a research unit, which relies on a data modeling application that runs market simulations. Yale says the application has unpredictable CPU needs, and IT often found itself provisioning new hardware when the application needed to scale. So the company built a blade-server-based grid that could spin up capacity on demand.

At present, this grid is dedicated solely to a single application, and Yale thinks Vanguard can get more out of it. "When that business unit isn't using the CPUs, we'd like to have someone else use them," he says.

To that end, he's examining what it would take to transform the grid into a private cloud. Aside from the technical challenges, which include properly provisioning infrastructure and managing the loads of concurrent applications, Yale says the first criteria is to ask if there are applications that are appropriate for a cloud model.

"It's not a situation where if we build a cloud, they will come. We need to find the right applications."

Yale's conservative approach to the cloud isn't a surprise. A recent Gartner report predicts a fairly slow adoption curve of cloud services, saying it will take six years before cloud computing becomes "mainstream."