Cloud computing is made of hype. Yet, it’s also the future of computing. Like some spooky quantum mechanics experiment, it is both. Credit unions already are taking advantage of cloud computing apps by offering home banking to their members. There will be other examples of how credit unions can use cloud computing coming soon. It’s important, however, to get some type of definition in place to understand just what the heck we are talking about when we throw around the cloud computing buzz phrase.
Fortunately, there’s a good one out there. TheNational Institute of Standards and Technology (“NIST”), the federal technology agency that has been closely studying cloud computing for the purpose of providing guidance on securing unclassified government systems defines cloud computing as :
“[a] model for enabling convenient on-demand network access to a shared pool of configurable resources, for example, network servers, storage applications and services that can be rapidly provisioned and released with minimal management effort or service provider interaction.” It identifies the five essential characteristics of cloud computing as: On-demand self service; Broad network access; Resource pooling; Rapid elasticity; and Measured service.
We can drill down further and break up cloud computing into Infrastructure as a service, Platform as a service and Software as a Service.
“Infrastructure as a service” uses shared facilities, computer hardware and networks to hold and move data. Customers may use their own operating systems and software, but the provider will determine where the data is stored(including, in some cases, moving data from server to server or data center to data center as computing space, and the
customer, permit) and how to configure networks to allow the fastest and most secure movement of data. Amazon, Rackspace and Vertica are among the providers of infrastructure services.
“Platform as a service” allows customers to share a computing platform and operating system. The provider determines the programming language (such as Java or .Net) and provides a web-based computing environment; customers use that environment to develop and configure applications to suit their individual needs. Platform services
may be combined with infrastructure services to offer all of the elements required for a customer to develop and implement its own applications. Providers include Google App Engine and CollabNet.
“Software as a service” is the type of service traditionally associated with both outsourcing services and web-based consumer services like Yahoo and Google. In software as a service, the vendor provides software designed to perform a specific function, like email or social networks, billing, logistics or financial account management, or law firm matter management. Oracle On Demand and Salesforce.com are among the many providers of software services.
See Contracting in the Cloud: A Primer, Peter M. Lefkowitz, 54 B.B.J.9 (Summer, 2010). I would posit to you that most credit unions will be looking at cloud computing via the software as a service model. Bill pay with its ubiquitous access and account information falls into this category.
Now that we know what we’re talking about, we can begin to speculate where it all is going. Apple has given us a big clue with the release of its iOS 5 and by embracing the cloud with a capital C. This new mobile operating system lets people have that ubiquity of access across all of their apple devices. I never started out being an Apple fan boy; I build computers for fun so I’m more of an omnivore. Yet, I now sport a MacBook Pro, an iPad, an iPod Touch and I still have an old iPod lying around that I use as a back up when recording podcasts. So Apple captured a big part of my computer market share and now with its cloud servers, I can have all my data all the time. So who cares? Your members care. Your members want the same thing. They are using bill pay and it will go further into mobile payments. Mobile payment via smartphone or whatever is a cloud app.
Where does it end? We cannot predict what new invention will reshape our lives because to do so, we would have to conceive of it before its inventor does, thereby potentially becoming its inventor. We can watch where things are going and see possibilities and that’s about it. Does cloud computing mean that credit unions will need to buy or lease their own server farms to provide their members with their own membership-based clouds? I don’t think so because what would the members use it for? We can see why Apple created huge data centers in North Carolina because it sells music and video and the users of its products want to store their data on Apples servers.
Credit unions store vastly smaller amounts of data for their members, but data that is far more important. Yes, it’s bad when your digital music collection gets wiped out. Apple now has you covered on that front. It’s far worse when your credit union account gets hacked. In Cloud computing, security then becomes far more relevant to credit unions than vast amounts of ubiquitous storage. Fortunately, that’s nothing new. There are things to be aware of, though, when a credit union looks at a cloud computing contract. Such things as: services to be provided, service level agreements, transitioning data, location of data, warranties, limitation on liability, indemnification, termination and remedies, ownership of data, disclosure of data to law enforcement and of course data security, privacy and breach notification. For an in-depth discussion of these issues and more, see Brenda Barrett Healey’s most excellent article: Cloud Computing Agreements: How can counsel make certain that every “cloud” really does have a silver lining?
As a final caution or advisory or what have you, this really is like a quantum mechanics experiment. Cloud computing may change the way your credit union does business or it may not, or, it may change the world around you and leave you undisturbed. Like Schrödinger’s cat, it may depend upon you to be the observer as to where it is going and then to act on it accordingly.