Interview: Inside the Commonwealth Bank's cloud

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Interview: Inside the Commonwealth Bank's cloud
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Keeping [suppliers] honest

The bank expects to use cloud computing to negotiate better deals with its outsourced suppliers.

The CBA has several "major contracts coming up for review in the next year or two," Holdsworth said.

Among them - an enterprise processing services tender (mainframe and mid-range computing) last handed to EDS in a US$573 million deal, which comes up for renewal in June 2012.

"We're looking really hard at how we take the opportunity as we re-source those [contracts] to create more flexible commercial arrangements which line up with the cloud business model," he said.

"We are looking at shorter term contracts and looking at how we create more flexibility to source from a number of providers, so that there is more contestability in the model.

"Contestability is enabled in some degree by portability of underlying workloads," he said.

But technology aside, the CBA must use its formidable buying power to convince suppliers to build out the necessary scale for the bank's needs and consider more flexible contractual arrangements.

Holdsworth said the CBA is working with IT suppliers to create "more flexible models on the back of some of the technology that we're now experimenting with."

Traditionally, suppliers have "wanted to put contracts together over longer terms, so they have some committed payback around the investments they make," he said.

"We're looking to change that paradigm."

He expects telcos to be faster off the mark with cloud computing models than traditional IT outsourcers as "telcos are used to investing a lot of capital upfront and then selling it back into the market a dollar at a time.

"I think a lot of the other IT service providers are starting to catch up to some of that thinking," he said.

"I think it does create some considerable challenges for some of these companies from a business model perspective. They've been used to locking in medium to long term annuity revenues, which are pretty much guaranteed.

"They're [now] looking at moving toward a model where there is a lot more contestability or uncertainty in their revenue streams and that certainly creates some challenges for them."

He has a simple message for suppliers.

"I'd like to think we can continue to buy services from them because they're providing a very attractive service on any day - both in terms of service levels and price - and if they continue to do that then why would we want to move our service?"

The cloud business model is far more preferable, he said, than "being locked into a five or ten year contract where we have no option or can't afford to buy our way of it."

Five and ten year long outsourcing deals are likely to become a thing of the past, he said.

Security and compliance

Holdsworth said that industry regulators in Australia are only now starting to realise the need to adjust to cloud computing models.

The industry "clearly has a lot of work to do in terms of security," he said.

He doesn't expect the public cloud model will appeal for that very reason.

"When we think about the cloud model, it's a continuum that runs from running private clouds running within our own data centres all the way through to public cloud," he said.

"The work we're doing today is focused a lot more on private cloud within our own data centres or certainly within data centres of key providers on-shore within Australia. Today, it's really about "right placing" those workloads."

There may be development environments or applications that don't hold customer data, he said, which might be more applicable to the public cloud for price and service reasons. But most of the bank's production systems require "high availability, high levels of security and much tighter controlled management around what's happening in those environments."

Better customer service

Holdsworth said that "at the end of the day", the cloud computing project is "primarily about customer service.

"We live in a world that is expecting things to change and happen a lot faster," he said. "Today, if the business comes to me and says, 'hey look, we're looking at standing up a new application' or 'we'd like to do some experimentation around a new service or new application we'd like to provide to our customers', we often have to go through quite a long exercise to get that up and running.

"We'd have to do some design work, we'd have to procure some equipment, we might have to put that equipment into a data centre and get it cabled up. We'd have to do the testing around that and there might be some network components that are required."

The cloud, by contrast, would ideally allow the IT department to give a much more positive response:

"We can have that for you in an hour and you can test as much as you like at whatever scale you want and then we can just shut that down and you don't need pay for it anymore," Holdsworth said.

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