Las Vegas-based Switch builds and operates the world’s most powerful data center and technology ecosystems—the Switch SuperNAPs—and provides colocation, connectivity, and cloud services to national and multinational companies conducting mission-critical business. Switch SuperNAP is a CUNA Strategic Services alliance provider.
CU Mag: Does your company currently offer a cloud-based core processing solution?
Mendenhall: Switch has put together one of the most forward-looking cloud concepts in the industry—the U.S. Inter-Cloud Exchange (ICE). The ICE brings all the top cloud providers into the world’s most advanced technology ecosystem—the Switch SuperNAP. Switch customers benefit from having a choice of platforms, providers, infrastructures, applications, and services all within one facility.
SwitchCloud ICE currently provides a wide variety of infrastructure as a service (IaaS) and platform as a service (PaaS) solutions for many types of core processing applications credit unions can use.
CU Mag: What are the advantages and disadvantages of obtaining core processing via the cloud?
Mendenhall: It varies, based on the type of cloud-based services that fit a credit union’s needs. “Cloud” is not an all-encompassing description of services, nor does it properly categorize all types of services. Frankly, this term is misused more often than not.
The software as a service (SaaS) model really requires that core processing providers develop new applications or re-architect their applications to support a “salesforce.com”-like experience for customers. Not every existing provider has undertaken that effort, but new providers are starting to emerge that will provide this type of solution for credit unions.
This is a great approach for credit unions that require little customization, have small or nonexistent IT [information technology] staffs, need little integration, and have properly vetted the vendor. It can speed your time to market, deliver new features and functionality quickly, and offer an all-encompassing solution that should meet at least 80% of the credit union’s needs.
If a provider’s SaaS application will not meet at least 80% of your needs, it’s generally best to pursue another solution.
The IaaS model gives the credit union more flexibility and choice, but requires a little more technical expertise. In this model, credit unions select whichever core processing application that suits their needs, and choose an IaaS provider that can provide flexible infrastructure for that application.
The IaaS model generally works great for organizations that wish to free themselves of the burden and capital cost of managing the hardware (which serves as the foundation for their application), but wish to continue to manage the software, its configurations, integration points, and other items custom to their business.
They can eliminate the need for hardware changes or the special expertise needed to manage the hardware and the data center. By focusing resources on the core processing application and the network that supports it, a credit union can maintain flexibility, control, and security at its discretion.
CU Mag: Some CUs are leery of moving core processing to the cloud based on security concerns. Are these concerns genuine?
Mendenhall: Security for any solution should always be a consideration. I understand their concerns, but they’re based mostly on a lack of knowledge and a misunderstanding of the type of cloud services they’re planning to use.
The most important deciding factor around cloud security is determining which type of cloud service is right for your operation. Each cloud model handles security in a different way. No matter which model you choose, the data center you’re located in becomes the most critical decision to make around securing the cloud.
Many concerns come from the fact that companies “can’t see where it is.” I’ve seen credit unions, however, that have their “secured” data sitting in a closet in a branch or even in their own data center. A fraudster could simply walk into the facility and grab the most critical information.
I would argue that a good and trusted provider could deliver security solutions better than a credit union, itself. Credit unions generally don’t have the manpower, budgets, or highly trained resources to deliver truly secure solutions.
To be comfortable with security in the cloud:
- Fully understand your credit union’s business objectives for cloud-based services;
- Understand the service the credit union needs;
- Identify the security risks associated with that service; and
- Manage those risks with the provider.
As long as you understand these elements, any service can meet the strictest security requirements.
CU Mag: How does business continuity benefit from a cloud-based approach? And what happens when the Internet goes down?
Mendenhall: First, cloud-based services do not have to leverage the Internet. In many cases, customers can use private/point-to-point circuits to connect to their cloud platforms. Again, it depends on the type of service being used.
Generally speaking, you should always have diverse paths to your cloud service. You can achieve diversity with the simple use of a data card provided by a wireless cell phone provider or with the Internet acting as backup to a private circuit. Either way, you can achieve a fault-tolerant network design at a very low cost.
From a business continuity standpoint, again, the data center the infrastructure sits in will be the key to your success. Confirm the data center your cloud services will be located in to ensure it’s capable of providing the uptime you desire.
The benefit of having your infrastructure in a data center vs. in your own building is that it ensures the information and applications will be available regardless of any disasters your building might face.
For instance, if staff must evacuate because of pending disaster, systems could still be available because they won’t be served out of your “brick and mortar” office. Instead, they’ll all reside in a data center located in a less disaster-prone area, and data would still be available.
CU Mag: What other cloud-based services does your company offer CUs?
Mendenhall: Data center colocation, connectivity, and cloud computing.
CU Mag: CUs have the sense that technology vendors are shifting their development efforts to emphasize cloud-based products. Is this your company's approach?
Mendenhall: We’ve been seeing and enabling the same trends for more than two years. The benefits of cloud-based services are too numerous to list here.
If a credit union fails to understand the role of the cloud in its enterprise—and where and how to use it—the credit union ultimately will be slower to market with solutions its customers will be asking for. Companies that embrace the technology will be able to service their customers more quickly, in a more relevant way.
CU Mag: What overall trends do you currently observe or predict regarding moving services to the cloud?
Mendenhall: We’re still in the infancy of this process. However, we’re very close to the curve of the hockey stick. There has been a lot of discussion around the term “cloud” during the past three to five years. The definitions have become clearer.
Service providers are aligning around industry and technology-specific verticals. Vendors are rewriting applications to take advantage of “cloud-based” infrastructure. It’s becoming easier for IT executives to map out cloud strategies that make sense for their businesses. Many have plans in the early stages to execute migration to cloud services.
The cloud won’t make sense for every facet of your business, but it will be a way to consume services now and in the future. Ultimately, the cloud brings faster time to market, more efficient use of resources, and flexibility in the integration of multiple service offerings. Credit unions that leverage cloud-based services will be able to differentiate their position in the marketplace.
For more information, contact CUNA Strategic Services.