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Eric Tyler September 17, 2013 IS 2000 Schedlbauer Cloud Computing at Welshire Partners As technology advances, we find our businesses faced with new decisions regarding moving business systems into the cloud. There are many new technologies that allow for this to happen. Google, through their chrome internet browser, has created a new type of computer that solely relies on information and applications in the cloud called Chromebooks. Chromebooks run on an operating system called ChromeOS that is based off of the open source Chromium and shares many of the same security features. These machines provide many benefits as well as many drawbacks, especially within the private equity field. What is cloud computing? you may ask. Many people, without even knowing it, use cloud computing systems every day. Gmail, Evernote, ZenDesk, Salesforce and Dropbox are all examples of cloud applications. The goal of cloud computing is to provide all sorts of technologies as a service. These technologies could be a platform, such as Googles app engine, software, like Salesforce, infrastructure, for instance Amazon EC2, or data, such as Xignite which provides market data to financial firms. These are commonly referred to in acronym form as PaaS (platform as a service), SaaS (software as a service), IaaS (infrastructure as a service), and DaaS (data as a service) (Garg). Companies looking to move to the cloud can pay for services like the ones mentioned or they can build their own in house models using their own development tools, web applications, computing power and data. Google puts a lot of stock in cloud computing with their Drive apps, Gmail, Google Calendar, and Chrome browser. Google differentiated Chrome from other internet browsers by making it into a full platform that web apps can be installed on. When the web started, it was

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comprised of all text, with a few images. As the web evolved, internet speeds increased, and technology advanced, applications, similar to those that could be installed on your computer with a CD, have become directly available on webpages. There has been a distinct transition from reading and looking at the web to interacting and using the web. Chrome has taken this to the next level by allowing web applications to be installed directly into the browser (Chrome Web Store). Sometimes this is as simple as putting a link in the Chrome app launcher, providing easy access to the application, similar to a bookmark. Gmail is an example of one such application, known as a packaged app. It also can be a hosted application. For example, Angry Birds, the popular iPhone and Android game, has an application that is available on the Chrome Web Store. It doesnt just link to a webpage; it is actually an application that runs on Chrome. Hosted applications can be installed with enhanced permissions that the user grants on install instead of the page asking the user to grant permissions every time they use the app (Mahemoff). Google then took Chrome to the next level and made it an operating system. ChromeOS leverages the power of cloud computing and does away with standalone applications. Applications no longer need to be installed on the operating system, rather just add an app to the chrome browser for easy access to your favorite web apps (For No More Hassels). ChromeOS is based off of open source software called Chromium. Since Chromium is open source, anybody can take their code, use it, modify it and redistribute it as they please. This is what Google did when they made Chrome. They took the chromium base and added crash reporting, user metrics, and support for many media files. Since Chrome is not open source, Google could add support for closed file formats such as H.264, Flash, and PDFs. In addition, Google tests their code which may not always be done in Chromium depending on which distribution you get (ChromiumBrowservsGoogleChrome).

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One benefit to ChromeOS is security. The model that Chrome follows is defense in depth which provides multiple road blocks so that, should one security feature fail or vulnerability be exploited, there are others to back up and prevent intrusion into the system (For No More Hassels). These include defenses that prevent compromised user accounts from attacking the kernel or root, checks that prevent attackers from adding user accounts, installing services, or continuing to attack they system after it is rebooted, and running its entire collection of user installed software out of the browser. This gives it the unique ability to know exactly what should be running at all times and stop anything unverified from running. This is the important security feature known as sandboxing (Security Overview). Sandboxing only allows code to execute if it does not make persistent changes to the computer or access confidential information. Therefore, the browser cant write to the file system (install malicious software) or access a users files without permission (Sandbox). The OS also updates automatically so, should vulnerability be detected, it can be fixed by the Google developers and pushed to every ChromeOS machine immediately (For No More Hassels). ChromeOS runs specifically on special computers called Chromebooks. These special computers just boot into a browser window with the idea that there is so much cloud software available that programs no longer need to be installed on individual computers but rather can be hosted on servers. This model allows Chromebooks to decrease their onboard storage and computing power which translates to a reduction in cost of these machines. They switch larger hard drives for smaller SSDs combined with storage space in the cloud from providers such as Google Drive and Dropbox. They can also cut down on processing power since applications are running on servers instead of locally. Even though they function quite differently, Chromebooks look like regular laptops. They are even sold by many of the same companies as Windows

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computers. These companies include HP, Acer, Samsung, and Google. Google offers a top of the line model which has a touch screen, LTE capability, and one terabyte of space on Google Drive for three years. The other vendors have cheaper models that dont offer some of these features and offer less space (usually around 100 GB) for two years on Google Drive (Chromebooks). There are even some newly available models that are more similar to desktops that are called Chromeboxes (Chromebox). Benefits of moving to a cloud platform are reducing IT costs through centrally managed software, scalability, pay per use, and flexibility. Centrally managed software provides many benefits both to the IT department and end users. It saves IT time from chasing down users to install or update their software. It keeps people running the most up-to-date, stable version of the software. It also decreases the time it takes for a new employee to get up and running. They can just be given URLs and logins to the applications they need to use and be off and running (Viswanathan). The cloud also provides the benefit that no data is stored locally so if a machine is damaged or stolen, users can be given a new machine and still have the same access to their data and programs (Chromebook at Work). The cloud is also a lot more scalable than individual computers. Instead of paying for each users machine to have space on their hard drive, space can be managed centrally on network drives. Therefore you can pay for just as much space as the entire company is using instead of overpaying for local drives to remain half empty (Viswanathan). Cloud software works in a similar way as space. Instead of paying for bulk software licenses, many web applications follow a pay per user model. This allows the freedom to add or

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removes users as needed. Applications are also sometimes offered as a time based model, where the customer pays per month, quarter, or year (Garg). Flexibility also increases with the adoption of cloud services. Cloud systems allow users to access programs from anywhere on any computer. This allows employees to work remotely, enabling them to stay productive even if they arent in the office. Flexibility also means that new options of globalization become available to your company. With applications available through the internet, people in foreign countries can be granted access, opening doors for outsourcing and expanding to different countries. As good as cloud computing may seem given the benefits of centrally managed software, scalability, pay per use and flexibility, there are also drawbacks to it including availability, security, privacy, vendor lock in, compliance and support (Garg). As your business becomes reliant on other companies and their technology, outages at those service providers can prevent you from accessing your data or the applications that you use to run your business. Whereas, when your own infrastructure goes down, you can ensure your employees are doing everything they can to fix it, with the outside services, you just have to wait patiently while they fix the issue maybe giving you occasional status updates (Ward). Security also becomes a major concern when moving to the cloud. Especially within the financial services industry, security, especially of client information is imperative. The cloud provides more of a target for hackers because service providers hold data for many companies in one place. This makes for bigger gains to be had for a hacker than if data was stored on site at your own company (Viswanathan). Privacy also becomes a big deal when moving to the cloud. You have to trust that the service provider isnt going to sell the information youre storing to a third party and that adequate security exists so that users of the same server cant see your data (Garg). There is also the issue

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of vendor lock in. Due to a lack of standardization across many systems, moving data from one service provider to another can often times be very difficult. Many times, vendors will lock in users due to the use of their own applications and file formats. For example, Google docs spreadsheet application cant read spreadsheets made in other applications like Microsofts Excel or Apples Numbers. Users have to be very wary that when they sign up, the service provider has all of the features that they want or it may be very hard and costly to switch later (Garg). Lastly, and especially in the financial services market, compliance is a big issue. Companies have to ensure that the service providers they are using are safe and secure and that they wont have any issues aligning to legislations like SarbanesOxley. Bring this all together and the last issue is support. If any of the aforementioned issues arise, support is now offsite at another company. Service providers often promise a 48 hour response window which, is many times, not quick enough for the pace that business moves today (Ward). Without proper research of service providers, some of these drawbacks could be very costly and detrimental to the organization. Along with the overall drawbacks of moving to the cloud, Welshire Partners is in the unique situation where standalone applications are critical to their business functionality. They have a trading platform that was built on C++, is not a web app, and has no plans on being changed or updated within the near future due to the complicated nature of the application. Welshire also is faced with compliance with SarbanesOxley further complicating matters. The securities traders at Welshire have a right to be concerned with the fact that their trading system is so complex. Nonetheless, the company could prioritize updating the system into a web application. However, this will be costly, risky, and will no doubt take a lot of time considering the current system took three years to build. The timeliness along with the costs of updating the trade system will most likely not align with the CEOs requested timeline on cost reductions.

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However, there are programs such as Citrix Receiver or Ericom AccessNow that can virtualize Windows applications running on a desktop or server and allow users of Chromebooks to access and run them as if they were running on their local machine (Lai). Welshire Partners has many options when it comes to how to reduce IT costs over the next one to three years. There first option is to adopt Chromebooks throughout the entire company and move all of their computing to the cloud. This option would inevitably require a lot of research into service providers for their infrastructure, storage, and applications. It would also require the switch of their current applications to those in the cloud, or rewriting the applications they currently use into web apps. This is also very risky though because the company has to comply with SarbanesOxley. They also have very complex software such as the securities trading application, which to rewrite would be both time consuming, costly, and risky. Luckily, there are applications such as Citrix Receiver and Ericom AccessNow that can virtualize applications such as the trading platform and make them available on the Chromebooks without having to be rewritten. Welshire could also find a service provider for their trading platform as they will have to with a lot of their other software. Platforms such as REDIPlus (REDIPlus) and Bloombergs Private Equity Solutions might be worthwhile to look at (Private Equity). There are also companies such as Cloud Sherpas that aim to help companies like Welshire with their transition into the cloud by helping to set up hardware, software and pick out service providers (Financial Services). Many companies including Logitech and Intercontinental Hotels Group have adopted Chromebooks for their business (Chromebooks at work). Welshire could also decide to forgo this whole idea of moving into the cloud. If they decide that it is too risky or costly, they could find other ways to cut costs. They could downsize their department although this could have major repercussions on delivery timelines and support

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to business users. They could also start going through their operating costs and find savings on their current software license agreements and hardware contracts. They could target areas where they are overpaying or paying for things that they dont need, try to find different vendors or renegotiate contracts with their current vendors. My recommendation to Welshire is to try a more middle of the road approach. One of the beauties of cloud computing is that it does not matter what platform it is running on, be it Windows, Mac, Linux or ChromeOS. They could start deploying cloud solutions using the hardware that they currently have. This way, Welshire doesnt get overwhelmed trying to move all of their systems to the cloud at once, rewriting applications and picking out service providers. This would also save them from making an immediate decision about the trading platform. They could try the Citrix and Ericom solutions on software that carries less risk, look more into possible service providers for the trading platform, and, if the decide to rewrite the software into a web application, they will have more time to take their time and do it right so they dont make a mistake, and stay SarbanesOxley compliant. Welshire could also take this opportunity to begin downgrading users hardware and create small test groups for Chromebooks. This would verify that software and services work on the Chromebooks while starting the IT department cost reduction. There is no need to go fully to Chromebooks or to stay completely away from them for Welshire. As Nick Carr points out in IT Doesnt Matter, in IT it is better to follow, not lead. Let others be on the bleeding edge so they can find all of the bugs and work out the kinks in the new systems (Carr). Welshire could benefit from not immediately jumping to Chromebooks only to realize that some of their applications dont work, or a service provider doesnt do everything it had promised. ZapThink also published an article, Dont Budget for the Cloud that focused

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on finding a good solution rather than just using a service because it is in the cloud. This also reinforces the point that if there isnt a service provider out there that does exactly what you want, its not worth it to use their service (Bloomberg). With vendor lock in, if something better comes out, it could be very costly to switch. Slowly switching to the cloud while keeping most of their existing infrastructure will help Welshire make the best decisions in switching to cloud based solutions.

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Works Cited Bloomberg, Jason. "Don't Budget for Cloud." ZapThink. 14 Sept. 2013. Web. 14 Sept. 2013. <http://www.zapthink.com/2013/09/14/dont-budget-for-cloud/>. Carr, Nicholas G. "IT Doesn't Matter." Harvard Business Review (2003). University of Buenos Aires. Web. 11 Sept. 2013. <http://www.econ.uba.ar/www/departamentos/sistemas/plan97/tecn_informac/rota/Zimerman/IT %20Doesnt%20matter%20Carr.pdf>. Chrome Web Store - What's a Web App? Youtube.com. Google Chrome, Jan. 2011. Web. 14 Sept. 2013. "Chromebooks at Work." Chrome.com. Web. 14 Sept. 2013. <https://www.google.com/intl/en/chrome/business/devices/casestudies.html>. "Chromebooks." Chrome.com. Google. Web. 14 Sept. 2013. <https://www.google.com/intl/en/chrome/devices/chromebooks.html>. "Chromebox." Chrome.com. Google. Web. 14 Sept. 2013. <https://www.google.com/intl/en/chrome/devices/chromebox.html>. "ChromiumBrowserVsGoogleChrome." Chromium Wiki. Google, 20 Nov. 2012. Web. 14 Sept. 2013. <http://code.google.com/p/chromium/wiki/ChromiumBrowserVsGoogleChrome>. "Financial Services." Cloud Sherpas. Web. 14 Sept. 2013. <http://www.cloudsherpas.com/industries/financial-services/>. "For No More Hassles." Chrome.com. Google. Web. 14 Sept. 2013. <https://www.google.com/intl/en/chrome/devices/features-different.html>. Garg, Abhinav. "Cloud Computing for the Financial Services Industry." Sapient.com. Sapient Global Markets, 2011. Web. 14 Sept. 2013. "Introducing Chromebook." Chrome.com. Google. Web. 14 Sept. 2013. <http://www.google.com/intl/en/chrome/education/devices/features-different.html>. Lai, Eric. "The Google Chromebook, Suddenly, Is An Enterprise Contender." ZDNet. 21 Oct. 2012. Web. 14 Sept. 2013. <http://www.zdnet.com/the-google-chromebook-suddenly-is-an-enterprisecontender-7000006018/>.

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Mahemoff, Michael. "Extensions, Packaged Apps, and Hosted Apps in the Chrome Web Store." Extensions, Packaged Apps, and Hosted Apps in the. Sept. 2010. Web. 14 Sept. 2013. "Private Equity." Bloomberg.com. Bloomberg. Web. 14 Sept. 2013. <http://www.bloomberg.com/professional/solutions/private-equity/>. "REDIPlus." REDI. Web. 14 Sept. 2013. <http://www.redi.com/index.aspx>. "Sandbox." The Chromium Projects. Chromium. Web. 14 Sept. 2013. <http://www.chromium.org/developers/design-documents/sandbox>. "Security Overview." The Chromium Projects. Chromium. Web. 14 Sept. 2013. <http://www.chromium.org/chromium-os/chromiumos-design-docs/security-overview>. Viswanathan, Priya. "Cloud Computing Is It Really All That Beneficial?" About.com. Web. 14 Sept. 2013. <http://mobiledevices.about.com/od/additionalresources/a/Cloud-Computing-Is-It-ReallyAll-That-Beneficial.htm>. Ward, Susan. "5 Disadvantages of Cloud Computing." About.com. Web. 14 Sept. 2013. <http://sbinfocanada.about.com/od/itmanagement/a/Cloud-Computing-Disadvantages.htm>.