Interop Report: Future of the Financial Services Data Center

LAS VEGAS – Speed and flexibility are the driving forces behind changes to data centers in the financial services space. This according to participants on a panel titled the “Future of Financial Services Data” which took place on Tuesday at Interop Las Vegas.

“It’s become much harder to predict capacity requirements,” said Gregory McSweeney from Wall Street & Technology, who served as the session moderator. “New technologies, new products are introduced and grow quickly and they require capacity ready to support them.” McSweeney also pointed out that often times these products disappear just as quickly as they rose and companies can be left paying for capacity they no longer need.

As a result, companies are looking for new and alternative solutions to data storage and management. More financial services companies are embracing hosted, managed services and cloud technologies as an alternative to building data centers. Companies that do continue to invest in their own data centers are finding ways to improve utilization to maximize value. McSweeney noted that Citi decreased the number of data centers they operate from 70 in 2009 to 20 today while increasing utilization from about five percent to about 45 percent.

“Convergence across financial services businesses has lead companies to rethink IT and data management,” said panelist Tony Bishop from The 451 Group. “As companies have integrated the functional aspects of their different financial services lines of businesses, the silos of data contained in each of these units has been brought together.”

This examination of IT processes and data management, according to Bishop, has improved the IT organization’s understanding of data, how it’s used, where it’s used and where it needs to be stored to provide access when it’s needed. Bishop also noted that the explosion of data, particularly unstructured data, has put additional strain on data centers and infrastructure. The 451 Group is seeing a 200 percent year-over-year growth in data, with 80 percent of that data being unstructured data.

“Not all of this data is mission critical and therefore doesn’t necessarily need to be stored with the same degree of security and fault tolerance inherent in most company-owned data centers,” said Bishop.

Again the idea here is speed and flexibility. Financial services companies are looking for data centers to handle changing amounts and changing types of data and make it quickly accessible to an increasingly mobile audience. Bishop stated that the average worker is accessing their data and applications on at least three different devices – often a phone, tablet and desktop/laptop.

The other panelists presented two different approaches to data management pertaining to speed and flexibility, and provided a very different view of the future of financial services data centers.

Stacie Swanstrom and Nasdaq OMX made the decision 10 years ago to move nearly all their critical data and applications to the third-party data center.

“We decided we wanted to focus on our core competency as a business – running markets, rather than running a data center,” Swanstrom said during the panel. “Additionally, we have the flexibility to spin up and down servers as we need them to assure fair and equal access for all customers – a requirement by the SEC.”

This is in contrast to Joseph Higgins’ discussion about how Fidelity Investments manages data, yet both solutions address speed and flexibility for the companies and their customers. Fidelity Investments still builds and operates data centers, but they have developed a process that improves efficiency and manages costs. Fidelity’s CenterCore product builds data center modules in 500 kW increments. Like pre-fab houses, these data centers are built off-site and can be put together as modules to create the need data center capability. Additionally, they can be removed 500 kW at a time should demand change.

“We have streamlined the build process, creating an almost ‘just in time’ method for creating data centers,” said Higgins during the panel. “We can have a complete and powerful data center up and running in less than a year.” The costs are kept down; the customer maintains control of their data in their own data center.

Predicting the future is difficult, and can be dangerous. Technology will continue to evolve as the needs of financial services companies evolve. Tomorrow’s financial services data center, like today’s, will need to address the same flexibility and speed requirements that drove the panelists and this discussion.