This paper describes the research done and its findings with respect to Current Knowledge and background.

1. 2011
IS Issue- Cloud Computing
Girish Subramaniam
Katz Graduate School of Business
1/1/2011

2. This paper highlights the current background and knowledge in Issues in Cloud
Computing and its adoption with respect to the Financial Services Industry. The sources
for the research include:
1) Academic Research
2) Trade Press- Information Week, CIO, Business Week
3) Consulting Firms- Deloitte, IBM
4) Personal Connections
5) Blogs
SNAPSHOT: After all the research, it is clear that there are issues with respect to Cloud
Computing that restricts its adoption by Financial Services Industry. Everybody acknowledges
these issues as in agreement with respect to how it should be approached. For example, a lot of
experts suggest using private clouds instead of public to avoid data security
I. Real-life Examples of Issues with respect to Cloud Computing:
Two major IT disasters for Amazon and Sony

3. Issues that came out of the Academic Research/Studies
Challenge #1: Safeguarding data security
Potential adopters are concerned about the security of data outside the corporate firewall. A
related issue has to do with offshore data housing, which can pose problems of legislative
compliance when data crosses borders. In the short term, most companies can avoid these issues
by using domestic cloud facilities.

4. Because a cloud provider hosts multiple clients, each can be affected by actions taken against
any one of them, as in distributed denial-of-service attacks server requests that inundate a
provider from widely distributed computers. This is what happened, for example, in the wake of
the Wiki Leaks activities: when attacks came into the provider hosting WikiLeaks, all other
clients were affected as well.
Challenge #2: Managing the contractual relationship
Cloud computing contracts are a mix of outsourcing, software and leasing. Some observers have
argued that contracting for cloud is simpler than traditional approaches to IT sourcing because
only one contract is required instead of multiple agreements for software, hardware and systems
integration. In reality, however, few software, platform or infrastructure providers meet all of a
client‟s functional requirements, so contracting for cloud services typically involves ecosystems
of providers that must be integrated to provide complete solutions.
Cloud contracts generally focus on service-level agreement (SLA) guarantees, but the network of
interactions within the overall ecosystem increases the complexity of SLAs. Software-as-a-
service providers, for example, often share a single platform for all users, and so they cannot
provide each client with a differentiated SLA. At present, relatively low compensation is offered
by providers for breaches of SLAs, but competition should improve this situation, as should the
development of cloud standards.
Research also found that cloud providers are currently not adequately focused on providing
enterprise contracting requirements. The problem with cloud services today is that many of the
service providers have not evolved to the point that they are comfortable being custodians of
data. That is, many providers have historical roots in product development, not service provision,
so they often do not adequately understand what it means to have service liability.
Challenge #3: Dealing with lock-in
Exit strategies and lock-in risks are key concerns for companies looking to exploit cloud
computing. There is always a switching cost for any company receiving external services.
However, cloud providers have a significant additional incentive to attempt to exploit lock-in. If
computing were to become a very liquid commodity, and if switching to a lower-cost provider
were too easy, margins would rapidly become razor thin.
When contracting for a cloud service, executives should be aware of two forms of lock-in. The
first form, technology lock-in, concerns the cost of moving a business service from one cloud
platform to another. Once a company is on a particular platform, it is often more cost-effective to
purchase additional services compatible with existing onesthus increasing lock-in. A second
form, institutional lock-in, occurs when technologies become embedded within organizational
routines and users work practices. Particularly for users of software-as-a-service, such
institutionalism can have a serious impact on the ability to switch cloud providers--which
increases the severity of lock-in.
Challenge #4: Managing the cloud

5. Although many dramatic predictions are being made about the impact of cloud computingamong
them, the claim that traditional IT departments will become obsoleteour research supports the
conclusion that cloud impacts are likely to be more gradual and less linear. Nevertheless, the
cloud does carry with it significant disruption to business as usual, leading to two particular
management challenges.
First, once introduced into the enterprise, cloud services can be easily updated or changed by
business users without the direct involvement of the IT department. And it is in the providers
interests to develop functionality that expands usage and spreads it across the organization. So
maintaining overall, strategic control of services can be difficult. This independence of the
business when it comes to IT services also means that IT must work harder to gain the ongoing
attention of the C-suite and to extend its strategic role.
Second, organizations are still slow in developing management capabilities and principles for
operating with cloud services. Such strategies should focus on the multiple contracts needed for a
cloud ecosystem. Effective supervision of usage, SLAs, performance, robustness and business
dependency is vital. Monitoring the external providers services must be done, but internal cloud
monitoring should also be introduced. Support provided by cloud providers can be variable, and
organizations should develop their own support services, either internally or with third parties.
Issues addressed by Consulting Firms/Vendors
IT leaders need to develop and practicethe means to understand the threatsand levels of
assurance that affect agiven application or capability so theycan establish a”risk baseline“ for
theiradoption of cloud computing.- Accenture
To realize the benefits of cloud computing while overcoming the inherent challenges,
organizations must take a holistic approach.-IBM
Issues addressed in Blogs
With Google returning more than 12 million search result on the term „cloud computing‟ the
hype cannot be ignored.-Blog
Cloud computing technologies and business models have not yet reached maturity. Therefore all
major CSP‟sare still working on research and development to give customers the level of
services and quality required for crucial business processes. The processes needed within CSP‟s
and the IT technology used by CSP is growing towards a landscape of extreme complexity.-Blog
Issues addressed in Trade Press
Sources Issue Recognition Comments
BBC Amazon and Sony disasters
led to the panic amongst other
industries
Business Week Articles such as “Security Explore the use of private

6. threats make private clouds clouds for industries wherein
better” indicates that Business data is sensitive
week does recognize the issue
Information Week/CIO Financial Services Industry
has been the slowest in
adopting cloud computing due
to the fear of Data Security.
Information security is the
primary concern of this
industry.
Annotated Bibliography (Sources)
By Professor Leslie Willcocks, Dr. Will Venters and Dr. Edgar A. Whitley from the London School of Economics and
Accenturehttp://www.accountingnet.ie/business_finance/Meeting_the_Challenges_of_Cloud_Computing_printer.php
Cloud Computing for Financial Institutions http://hcltech.com/pdf/Financial-Services/Cloud_Computing_for_Financial_Institutions.pdf
BM Support-MaikelMardjanhttp://www.slideshare.net/maikelm/disadvantages-of-cloud-computing
Jeff Reich http://www.bankinfosecurity.com/articles.php?art_id=2960
Business Week- Busting Cloud Computing Myths http://www.businessweek.com/technology/content/jun2009/tc20090622_355135.htm
Imperva Data Security Blog http://blog.imperva.com/2010/11/trend-7-.html
CIO- http://www.cio.com/white-
paper/692017/Cloud_Security_Myths_and_Strategies_Uncovered?idglg=ciosite_na_Technology%20Topics%3ATechnology%20Topics%3AClo
ud%20Computing_White%20Paper_na_na_na_na_wpl
Information Week http://www.informationweek.com/whitepaper/Security/Application-Security/security-considerations-for-client-and-cloud-
appl-wp1295385314064?articleID=178100003&cid=iwk_search_wp_issues%2Bin%2Bcloud%2Bcomputing
Bank Systems and Technology http://www.banktech.com/whitepaper/Storage/Virtualization/strategies-for-assessing-cloud-security-
wp1309271028?articleID=191702432
Saavis IT infrastructure http://www.savvis.com/en-US/Info_Center/Documents/FIN-UseCase-US-CloudSolutionsforFinancialIndustry.pdf
Deloitte http://www.deloitte.com/view/en_GX/global/industries/technology-media-telecommunications/tmt-predictions-
2010/technology/d5635cfc9fec5210VgnVCM200000bb42f00aRCRD.htm
Cloud Computing Security Issues http://www.slideshare.net/DiscoverCloud/cloud-computing-security-issues
Wikipedia http://en.wikipedia.org/wiki/Cloud_computing
Accenture http://www.accenture.com/us-en/technology/technology-labs/Pages/insight-technology-cloud-computing-enterprise-security-concerns-
summary.aspx
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