Five Things to Consider Before Moving to the Cloud

What does moving to the cloud really mean for CUs?

September 23, 2011

By James Whitemore

The cloud. It seems like everyone from technology pundits to mothers in TV commercials are is talking about how computing is moving to the cloud—the delivery of applications to distributed users from a central location rather than putting software on individual PCs or local servers.

There’s certainly an element of truth to that. Gartner estimates the cloud market will reach $150 billion by 2013. Among the reasons for this sudden interest in cloud-based computing and communications are:

  • The need for collaboration among the increasing number of remote and mobile workers;
  • The addition of new branches;
  • A desire to improve customer service; and
  • The need to improve operational excellence while reducing technology equipment and management costs.

But what does that really mean for credit unions? Do you now need to abandon your current technology investment and move it to the cloud?

If you don’t perform a complete rip-and-replace right now, do you risk being left behind and losing market share to more cloud-savvy competitors?

That’s certainly how some so-called experts make it sound. Yet many of those with their heads firmly entrenched in the cloud are ignoring the realities of business in general and financial institutions in particular.

To help you decide whether you’re ready to move to the cloud, here are five important elements to consider.

1. Distributed vs. centralized enterprise

The first consideration should be whether your credit union operates out of a single location or has multiple branches (like most mid- to large-size credit unions).

If all of the staff work out of one facility, and that’s all you plan to have, you may not need a cloud-based solution. But if you have multiple locations or a significant number of mobile employees who need full, instant access to your network, moving to the cloud simplifies management of communications and applications—which, in turn, improves collaboration between employees.

With cloud-based unified communications, for example, the technology is hosted in a single branch, and services are then delivered to the others. This method eliminates the need to have information technology (IT) staff in each location, or have them travel between locations to provide support.

It also makes it easier to keep software and services up-to-date since the central host is being updated rather than each individual user’s equipment. Users can work together more efficiently through features such as Web conferencing and manage their individual communication needs in a way that fits the work they perform.

2. IT staff size and capabilities

The next consideration is the size of your IT staff. In the past few years, many financial institutions have pared their IT staffs, particularly in maintenance functions.

Additionally, while technology has continued to advance at an ever-accelerating pace, little has been spent on training or upgrading skill sets.

As a result, as we come out of the economic downturn, your IT staff may not be prepared to help you take advantage of new technologies internally—especially with the complexities and robust security requirements of today’s communications technologies.

Cloud-based computing solves that issue because the burden of keeping up with technology advances shifts to the service provider. Your staff can continue to focus on clients and difference-making projects while outside specialists manage commodity services, such as voice and video.

You maintain overall control, but don’t have to expend staff time (and budget) to keep commodity services at peak levels.

Next: Ditch the public Internet

3. Prepare the infrastructure—ditch the public Internet

Once you’ve determined that the cloud is right for your credit union, it’s important to look at your network infrastructure.

Networks at financial institutions with multiple branches are often a hodgepodge of carriers and equipment that were built over a period of years. Many times they were based more on expediency than an enterprise-level plan.

With cloud computing, an inadequate infrastructure can quickly become overwhelmed by the sudden uptick in voice, video, and data traffic. When that occurs, you’ll become frustrated and will experience a level of service from your cloud-based applications that doesn’t meet your expectations.

But there’s more to it than bumping up bandwidth. Using the public Internet as the basis for your cloud is leaving a lot to chance. Despite improvements in recent years, it’s still not reliable enough, in large part because no one is actually managing it end-to-end.

All it takes is one failure somewhere along a very long chain to bring your business to a crashing halt.

A fully managed, multiprotocol label switching (MPLS) network provides a better alternative for both reliability and network performance.

When configured correctly, an MPLS network will have multiple connections and redundancies built in. If the primary carrier’s network goes down for any reason, it will automatically switch over to another that is still operating, providing the high-level business continuity and disaster recovery that many financial institutions still lack today.

Moving to an MPLS doesn’t necessarily mean replacing all of your old carriers right away. But it does mean layering in tools to help you manage them more efficiently.

4. Prioritize network traffic

With the Internet, all traffic looks the same. That means if client loan documents and other paperwork arrive at the same time as last night’s highlights from ESPN, the latter may win out.

A fully managed MPLS network provides one quality of service and routing capability over the entire network. It allows you to prioritize traffic by business case rather than simply on the type of traffic (video, voice, data, etc.) to ensure business-related data always goes ahead of nonbusiness data.

It also provides the ability to accommodate changes in enterprise use, expanding at peak times and contracting at lower times so you’re paying for what you actually use rather than having to over-provision to handle the highest volume.

5. Controlled migration or rip-and-replace?

Once the infrastructure is in place, it’s time to start moving applications to the cloud. One of the prevailing myths is that this is an all-or-nothing proposition.

In reality, migration to the cloud is a complex proposition, so performing a complete rip-and-replace is a bad business decision fraught with risk.

A better approach is to start with smaller, lower-risk environments such as a branch office, and implement less complex applications such as a cloud-based communications platform.

Typically you won’t be housing the software at a branch, so it provides an ideal “lab” with which to work. You can work slowly, test the procedures, refine them, and ensure that they are fully integrated into your business processes.

From there, you can migrate as business needs dictate.

The financial industry is highly competitive, so you can be sure if you’re not looking at cloud solutions and how to speed adoption of the latest technologies, your competitors are.

But there’s no need to go it alone. The right partner, particularly one that offers an MPLS network, can help you migrate to the cloud intelligently and successfully, allowing you to achieve the operational excellence you demand while delivering superior customer service.

JAMES WHITEMORE is executive vice president of Smoothstone IP Communications, a provider of cloud-based communications for enterprise-level companies.