Cloud computing has been one of the most popular—and misunderstood— terms to arise during the past few years, especially regarding the features and benefits credit unions can realize by using it.
Many articles have referenced SaaS (software as a service), IaaS (infrastructure as a service), and even PaaS (platform as a service). But few credit unions use these services due to security and compliance issues, or the absence of promised benefits.
As a result, community clouds have become increasingly popular for credit unions because they offer all the benefits of the cloud without the information security or compliance concerns that exist on other platforms.
Cloud computing is not a fad. According to research from Aite Group, financial institution spending on cloud services will reach $3.2 billion by 2017, up 28% from the $2.5 billion in cloud-related spending in 2014. It’s a fundamental shift in how companies worldwide deliver and use information technology (IT).
A brief history of the cloud
Weren’t computers supposed to make life easier? Weren’t hardware and software purchases meant for automation and improved productivity? So what happened?
Computers revolutionised financial services just like every other industry. But with the automation and productivity improvements came a cost.
The first was the cost of the hardware and software. Businesses needed to replace hardware every few years, and developers continually released new versions of software.
Each upgrade promised more benefits, enhanced features, and improved functionality designed to improve automation and productivity even more. But each update, upgrade, and hardware refresh had a real cost in terms of capital and operational expense.
Then, computers got more complicated. Individual computers needed local area network (LAN) connections, and individual branch LANs needed connections to other branches using wide area networking. This added element of complication created more expenses in terms of networking equipment and telecommunications.
This is about when credit unions needed trained IT personnel to manage their growing infrastructure. And over time, IT staff would become some of the most expensive talent a credit union would hire.
Slowly, what started as a low-cost, high-benefit technology became high-cost and high-benefit. Then, federal regulation would demand that credit unions maintain a certain level of best practices around their IT.
This meant credit unions needed certain technology and services to maintain the confidentiality, integrity, and availability of these IT systems. This made monitoring, vulnerability assessments, firewalls, intrusion detection and prevention systems, risk assessments, and business continuity mandatory to operate in this new world of IT.
A high-cost, high-benefit system also means high stress and even higher cost. Is it worth it? Of course it is.
No one can imagine returning to life without computers. But let’s not pretend that the technology that granted us automation and productivity doesn’t come at a high cost in terms of both dollars and stress.
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