Sometimes, in order to find the most obvious answer to a problem, one must first walk down several paths. Just ask Tony Kerrison.
Last year, the head of infrastructure services of Dutch financial services giant ING Group got approval to pursue an aggressive infrastructure refresh that would see the company consolidate 16 data centers into just two, with state-of-the-art power and cooling systems. ING would build the data centers itself, and bring them online in 2012.
A funny thing happened on the way to those new data centers, though: As Kerrison and his team embarked on an aggressive virtualization and application rationalization program, they decided it made sense to establish a private cloud environment. From there, it wasn’t long before the discussion shifted to which of ING’s applications could actually live in a cloud environment.
And just like that, building data centers didn’t sound so good.
“When you’re sitting there looking at an investment like that, you find yourself wondering, should ING be building two data centers in 2011?” says Kerrison. “We’d be looking at two empty rooms in a few years time.”
Instead, ING plans to be the anchor tenant for two data centers that will be built by a third-party infrastructure provider. One-third of those facilities will serve as ING’s private cloud, and the other two-thirds will be a semi-private cloud in which infrastructure could be shared among multiple companies, but with their applications and data residing on separate servers. ING’s mission-critical applications will be placed in the private cloud environment, while apps that have more spiky computing needs could reside in the semi-private cloud, where capacity can be dialed up and down as business conditions warrant.
Kerrison has a clear goal in transitioning ING from a company that manages its own IT infrastructure to one that is instead focused on managing workloads in a hybrid environment: He wants to convert as much of the company’s fixed IT costs and assets into variable as he possibly can. That way, as cloud services are adopted throughout the company, he’ll minimize the financial drain by giving IT maximum cost flexibility.
“Our businesses will start to see how they can go to cloud providers and get lower cost, better services than we can provide internally,” says Kerrison. “What will happen if we don’t pay attention is that we will sit on a fixed cost base, and the variable cost base will move outside the company. The result will be more IT costs.”
Kerrison estimates that ING is saving “many millions” of Euros by avoiding the costs of building its own data centers. Some of those savings are being used to ensure that ING’s IT employees are ready for the cloud, which will change the skills required of them. Specifically, ING is launching an effort to provide foundation-level training on virtualization and cloud technologies for all IT employees, with more detailed training being provided for those who’ll work most closely with the technologies.
Parallel to this, the company has forged a partnership with some of the biggest IT vendors—including IBM, Microsoft, Cisco, Google and HP—to create a certification program for working with virtualization and cloud technologies. Kerrison believes the combination of training and certification not only will ensure that his staff is able to extract the maximum value from the cloud; he’ll also ensure his employees are as employable as possible for their future careers.
ING’s emerging cloud strategy represents a dramatic change for a company that, only a year ago, had what Kerrison described as a “less mature” attitude toward the cloud. Now, he foresees ING developing an increasing focus on delivering convenient services to its customers via the cloud.
“The time to market is going to be incredible,” says Kerrison. “We’ll have the ability to serve the client faster and react to market conditions better than we’ve ever done before.”
That said, Kerrison remains realistic. He says ING’s most critical in-house applications won’t be placed into the cloud any time in the next few years. Rather, the company will focus initially on its infrastructure-as-a-service plans, as well as placing utility applications into the cloud, before it starts considering turning its banking products into cloud-based services.
ING will take advantage of that gradual transition by making itself comfortable with the cloud. It is clear that regulatory requirements, privacy and security will remain key factors in the adoption to cloud services. As these develop and mature, companies will be able to enjoy the full benefits of cloud computing.
“You’re going to get to the point that you can arbitrage cloud providers based on their prices and the services, and very easily move your workload around,” says Kerrison.
It sounds suspiciously like the IT-as-utility model IT executives have long been waiting for.