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Max Bowie, editor, Inside Market Data

Max Bowie: Are Data Clouds Virtual Reality?

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This year’s Sifma show was spared the New York heat and humidity, thanks to thick cloud cover—inside the venue. Cloud was on every exhibitor’s lips as data providers are seeing the benefits of deploying services in virtual environments.

Canny vendors are exploiting the ubiquity of the “cloud” term, using it to refer loosely to any web-based service. But cloud is moving from simply a storage option to a way for firms to access more than just their own databases, and vendors and exchanges can make themselves stickier by using it to provide access to other technologies and services that complement their own. For example, NYSE Euronext announced it is making access to its markets—and other data services within its datacenters—available in a cloud model that allows firms to operate a managed co-location “cloud” in the exchange’s facilities that they can dial up or down.

Cloud has been on the radar for a while. Last year, consultant John Akbari wrote an article for Inside Market Data predicting clouds on the horizon as firms seek to expand services and cut costs. In January, a Gartner survey showed cloud and virtualization rising to CIOs’ first and second priorities for 2011, respectively. And 45 percent of respondents to a recent Bloomberg survey say cloud yielded the greatest return on investment over the past year.

Why? The perfect storm created by the financial crisis led firms to investigate lighter technologies that let them do more without adding costs—particularly smaller, buy-side firms without the resources and budgets of their larger rivals. “Small firms will almost certainly look at things they can take as a service rather than acquiring any technology to install on-premise and manage themselves. And given that they won’t likely have a massive budget for IT, much less the IT staff to support an entire on-premise infrastructure, I expect them to look to get as much as they can as a service,” says Rik Turner, senior analyst at research firm Ovum.

Thomson Reuters is seeing this trend play out, with clients moving data architectures that they previously ran on-site into the vendor’s Elektron hosting centers. This gives them proximity to markets and increased scalability, but also access to a range of other services from Thomson Reuters as well as third parties that see the benefits of being part of Elektron’s community, which the vendor is positioning as a central meeting place for clients and services, such as the over-the-counter markets more suited to peer-to-peer communication, says Jon Robson, president of the vendor’s Enterprise division.

“Once connected to Elektron, clients can use their Enterprise Platform for Real-Time implementation as satellite nodes on the network to become publishers and receivers of services across the cloud. Any service available in the cloud can be run and permissioned using those local installations. This allows an entire ecosystem of connections between trading platforms, service providers, counterparties and intermediaries to cross-connect inside the global market fabric of Elektron,” Robson says. “Over time there will be thousands of points of presence around the world hooking into our Elektron cloud. The financial community will be able to wire itself together through simple connections in the cloud.”

As Stanley Young, CEO of NYSE Technologies, puts it: “If a firm isn’t buying services like this in a year, their shareholders should be asking why not.”

Storm Brewing
One storm is still brewing: When is a cloud not a cloud? Some say many cloud solutions are just hosted services, and that it’s only truly cloud if it’s on-demand. Part of NYSE’s initiative is just that: the ability to configure the servers you want within NYSE’s datacenter, and change as needed. But there’s a difference between on-demand access and on-demand consumption, such as the offerings of web services data provider Xignite, and the exchanges that use its technology to provide access to their historical data. And there’s a difference between on-demand access to historical data and on-demand real-time data—which some in the industry see as offering administration benefits and savings through pay-as-you-go pricing. And if you can switch servers on and off at will, why not data, too?

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