NYSE on Hybrid Cloud Vision and Strategy Behind the Capital Markets Community Platform


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Transcript of a BriefingsDirect podcast from the VMworld 2011 Conference focusing on NYSE Euronext's use of cloud in making a foray into providing customer services in a vertical market.

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NYSE on Hybrid Cloud Vision and Strategy Behind the Capital Markets Community Platform

  1. 1. NYSE on Hybrid Cloud Vision and Strategy Behind theCapital Markets Community PlatformTranscript of a BriefingsDirect podcast from the VMworld 2011 Conference focusing on NYSEEuronexts use of cloud in making a foray into providing customer services in a vertical market.Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Sponsor: VMwareDana Gardner: Hello, and welcome to a special BriefingsDirect podcast series coming to you from the VMworld 2011 Conference in Las Vegas. Were here in the week of August 29 to explore the latest in cloud computing and virtualization infrastructure developments. Im Dana Gardner, Principal Analyst at Interarbor Solutions, and I’ll be your host throughout this series of VMware-sponsored BriefingsDirect discussions. [Disclosure: VMware is a sponsor of BriefingsDirect podcasts.]When we hear about cloud, especially public clouds, we often encounter one-size-fits-allservices. Advanced adapters of cloud delivery models are quickly creating more specializedhybrid clouds for certain industries. And theyre looking to them as both major sources of newbusiness, and the means to bring much higher IT efficiency to their clients.Today, well learn about how the NYSE Euronext recently unveiled one such vertical offering,their Capital Markets Community Platform. We’ll see how they built the cloud, which amountsto a Wall Street IT services destination, what it does, and how it’s different from other cloudofferings.Here to tell us about how specialized clouds are changing the IT game in such vertical industriesas finance is Steve Rubinow, Executive Vice-President and Chief Information Officer at NYSEEuronext. Welcome, Steve.Steve Rubinow: Hello there.Gardner: I’d like to hear more about how you put your cloud together, but before we do that,you are delivering more than compute power on demand. You have some very specializedservices of historical trading data, innovative trading services, and even third-party applications.And youre supporting these both inside your cloud as well as your clients. So maybe you couldhelp us understand how you came about to define this type of offering. Why have you done it thisway?Rubinow: It’s the convergence of a couple of trends and also things that our customer started totell us. Like a lot of companies, we started to use cloud technology within our own company toservice our own internal needs for the reasons that many people do -- lower cost, more flexibility,more rapid spin up, those kinds of things, and we found, of course, that was very useful to us.
  2. 2. At the same time, weve talked to a lot of our customers via our commercial division, which wecall NYSE Technologies. By virtue of all the turbulence thats happened in the world, especially in the financial markets in the last couple of years, a lot of our customers -- big ones, small ones, banks, brokerages, and everyone in between -- said the infrastructure that we traditionally have supported within our own companies, is a new model that we could adapt, given these technologies that are available, and given that we NYSE Technologies wants to provide these services. We asked if we should take a different look at what we are doing and see if we should pursue some of these things. What it comes down right down to is that many of these companies said that maintaining their own infrastructure is not a competitive advantage for them.It’s really a cost of doing business like telephones and office furniture. It would be better ifsomeone else helped them with it, maybe not 100 percent, but like we propose to do, andeveryone wins. They get lower cost and they get to offload a burden that wasn’t particularlystrategic to them.We say we can do it with good service and at a good price, and everybody comes away a winner.So we launched this program this summer, with one offering called Compute on Demand, whichhas a number of attributes that make it different than your run-of-the-mill public cloud.Higher RequirementsIn the capital markets community, we have some attributes of infrastructure, a higher requirement, that most companies wouldn’t care so much about, but in our industry they are very, very critical. We have a higher level of security than an average company would probably pay attention to. And reliability, as you can imagine. The markets need to be up all thetime when they are supposed to be open. A few seconds makes a big difference. So we want tomake sure that we pay extra attention to reliability.Another thing is performance. Our industry is very performance-sensitive. Many of theexecutions are measured in micro-seconds. Any customer of ours, including ourselves, aresensitive to make sure that any infrastructure that we would depend on has the ability to makesure that transactions happen. You don’t find that in the run-of-the-mill public cloud becausethere just isn’t a need for the average company to do that.For that reason, we thought our private offering, our community cloud, was a good idea. By theway, our customers seem to be nodding their heads a lot to the idea as well.Gardner: Could I understand a bit more about the architecture? You do have public cloudservices, those being hosted by you and delivered to your clients, but youre also having someelement of this as your clients choose on-premises. How does that work? Whats the split or whyhave it a hybrid model?
  3. 3. Rubinow: In the spirit of trying to accommodate all the needs that people will have, for many ofthe cloud services, you get the most leverage out of them, if you as a customer are situated in thedata center with us.Many customers choose to do that for the simple reason of speed-of-light issues. The longer thenetwork is between Point A and Point B, the longer it takes a message to get across it. In anindustry where latency is so important, people want to minimize that distance, and so they co-locate there. Then, they have high-speed access to everything thats available in the data center.Of course, customers outside the data center certainly can have access to those services as well.We have a dedicated network that we call SFTI, Secure Financial Transaction Infrastructure.That was designed to support high speed, high reliability, and high resiliency, things that youwould expect from a prominent financial services network. Our customers come to our datacenters over that network, and they can avail themselves of the services that we have there too.Earlier in the conversation I talked about the attributes of the infrastructure, but theres somethingthat we also have in our data center that our customers make use of. They have for a while, andnow even more so, in a more flexible manner via some of these cloud services.Were a very rich source of market data, as one might imagine. We generate a lot of market dataourselves because of the large marketplace we are. We take data from other marketplaces,consolidate them, and provide feeds of those data to our customers. We want to make sure we dothat in a fast, cost-effective, flexible way.Historical dataWe have historical data that lot of our customers would like to take a look at and analyze, ratherthan having to store the data themselves. We have it all here for them. We have applications likerisk management and other services that we intend to offer in the future that customers would behard-pressed to find somewhere else, or if they could find it somewhere else, they probably wontfind it in as efficient a manner. So it makes sense for them to come to us to take a look at it andsee how they can take advantage of it here.Gardner: And so it certainly seems that,with the mission-critical nature of the issues and therequirements that you mentioned that applying a cloud model here, if you can do it there youcould probably do it anywhere. Lets learn a little bit more about NYSE for those folks on thepodcast that arent familiar with you. Tell us about your organization, your global nature, andwhere you expect to deliver these cloud services over time?Rubinow: The full name of the company is NYSE Euronext, and that reflects the fact that we area collection of markets not only in the United States but also in Europe. We operate a number ofcash and derivative exchanges in Europe as well. So we talk about the whole family being part ofNYSE Euronext.
  4. 4. We segment our business into three segments. There is the cash business, which is global. Thereis the derivatives business, which is global, and those are the things that people would havenormally associated our company with, because the thing weve been doing for many years.The newest piece of our business is the piece that Ive referred to earlier and thats ourcommercial technology business, which we call NYSE Technologies. Through that segment ofthe business, we offer all these services, whether it be software products we might develop thatour customers take advantage of or services as weve already referenced.The genesis of that is that we did a lot of good things for ourselves in terms of high speed, highperformance, high transaction volumes, reliability, security, functionality, low cost -- all thesethings that are necessary to be a major competitor in todays market.In a small way, over the years, weve been offering these services to our customers, and then acouple of years ago we decided to do it in a much bigger way, because we realized the need wasthere. Our customers told us that they would take advantage of these services. So we made abigger effort in that regard. Right now, the commercial part of our business is several hundredmillion dollars a year in terms of revenue.We have great expectations to grow that significantly over the next few years, and its throughthat that we offer it. Now, our two major hubs, our data centers that we just built. are almostbrand spanking new. They are full production facilities. We finished them last year.One is in northern New Jersey and the other one is outside of London. Most of the space in thosedata centers are for our customers, not for us. We certainly have a piece of those data centers thatwe run our core operations from, because they were designed to do that, but we also had in mindall the products and services that we can offer our customers that choose to be in the data centerwith us. So youll find that a good number of our customers have taken us up on that, and are co-located with us.We plan to have additional centers not identical to our prime data centers that we have in Londonand New Jersey, but in Asia, Europe, and North America, where customers can come, takeadvantage of services that we offer there and then can connect to the other data centers as needbe.Question of latencyI have to add one note in terms of latency. For people who arent familiar with our obsessionwith latency, the true textbook cloud profile means that one could execute cloud-like services. Ifwe had 20 data centers across the world, they could be executed across any of those data centersand transparent to the customer as long as they get done.In ours latency-sensitive world, we are a little bit constrained with some of the services that weoffer. We cant afford to be moving things around from data center to data center, because thosenetwork differences, when youre measuring things in micro-seconds, are very noticeable to our
  5. 5. customers. So some of our services could be distributed across the world, but some of ourservices are very tied to a physical location to make sure we get the maximum performance.To add further to that, one of the cornerstone technologies, as we all know, of cloud computing isvirtualization. That gives you a lot of flexibility to make sure that you get maximum utilizationof your compute resources.Some of the services we offer cant use virtualization. They have to be tied to a physical device.It doesnt mean that we cant use a lot of other offerings that VMware provides to help managethat process, but some are tied to physical devices, because virtualization in some casesintroduces an overhead. Again, when youre measuring in micro-seconds, its noticeable. Manyother of our services where virtualization is key to what we do to offer the flexibility in cost toour customers.So we have kind of a mixed bag of unique provisioning thats designed for the low-latencyportion of our business, and then more general cloud technologies that we use for everything elsein our business. You put the two of them together and we have a unique offering that no one elsethat we know of in the world offers, because we think were the first, it’s not among the first, todo this.Also, we have a very focused target customer base here. Its not for the average company. Its forthose customers that demand these kinds of things, and were determined to make sure they getwhat they want.Gardner: Okay, Steve, youve certainly outlined a very impressive capability set and becauseyoure involved with cloud services, whether theyre built on virtualization infrastructure or not,it seems to me that youre going to be able to add more services and really judge closely whatyour customers want and demand, gather their trust, demonstrate your value, and then perhaps bein a position to add even more services over the coming year. So this is a rather big businessundertaking for you. This cloud is really an instrument for your business in a major way.Rubinow: Thats right. Sometimes we think the core of our business is trading. That is the core.Thats our legacy Thats the core of what we do. Its a very important source of our business, andit generates a lot of the things that weve been talking about. Without our core business wewouldn’t have the market data to offer to our customers in a variety of formats.The technologies that we used to make sure that we were the leader in the marketplace in termsof trading technology and all the infrastructure to support that, thats also what were offering ourcustomers. What were trying to do is cover all the bases in the capital markets community, andnot only trading services, which of course is the center of what we do and its core to everythingthat we do.All the things that surround that our customers can use to support their traditional tradingactivities and then other things that they didnt used to look to us to do. These are things likeextensive calculations that they would not have asked the NYSE to do, but today they do it,because we provide the infrastructure there for them.
  6. 6. Fulfilling a needIt’s the inner layer of trading technology plus everything on the periphery that we can imagineand offer to our customers that our customers can imagine themselves as fulfilling a need oftheirs. Were intent on doing that. If you think of this as a supply-chain approach, we’re trying tocover every base we can in the supply chain to make sure that we can be a primary provider forall of our customers’ needs in the space.Gardner: It’s a little bit soon, I suppose, to develop metrics of success. As you pointed out,youve been doing this now just for the summer in a full general availability mode. But do youhave any sense from your customers? Are they witnessing removal of redundancy? Are they ableto remove costs. And do they have some ability to compare and contrast the way they didbusiness as usual and the way that they’re starting to employ more of your services? What aresome of the underlying numbers perhaps of how this works economically?Rubinow: From a metrics standpoint, its probably too early to provide metrics, but I can tellyou, qualitatively speaking, the few customers that we have that were early adopters are happy toget on stage with us and give great testimonials about their experience so far. So that’s a reallygood leading indicator.Again, without offering numbers, our pipeline of people wanting these services globally has beenfilling very nicely. So we know weve hit a responsive chord. We expect that we will fulfill thepromises that we’re offering and that our customers will be happy. It’s too early, though, to say,"Heres three case studies that show, our customers are saying how it’s gone, because theyhaven’t been in it long enough to deliver those metrics.Gardner: Speaking of being on stage, you yourself have been on stage here at VMworld in LasVegas and told your story. Maybe you could reiterate a bit or summarize what it is that you’vedone vis-à-vis VMware to enable this capability.Rubinow: When we were putting together our cloud architecture and thinking about the specialneeds that we had -- and I keep on saying it’s not run-of-the-mill cloud architecture -- we we’retrying to make sure that we did it in a way that would give us the flexibility, facilities, and costthat we needed. Many of the things needed to be done from scratch, because we didn’t havemodels to look for that we could copy in a marketplace.And we also realized that we couldn’t do it ourselves; we have a lot of smart people here, but wedon’t have all the smart people we need. So we had to turn to vendors. We were talking toeveryone that had a cloud solution. Lots of vendors have lots of solutions. Some are robust, andsome are not so robust.When it came down to it, there were only a couple of vendors that we felt were smart enough,able enough, and real enough to deliver the things to us that we felt we needed to get started. Imsure we will progress over time, and there will be other people who will include the picture.
  7. 7. Top of the listBut VMware was at the top of that list of technologies that we have been using internally forseveral years, been very happy with. Based on our historical relationship with VMware and theofferings that VMware have in the traditional VMware space, plus the cloud offerings, thingslike Cloud Director and other things, that we felt that those were good cornerstone technologiesto make sure we have the greatest chance of success with few surprises.And we needed partners to push the envelope, because we view ourselves as being innovativeand groundbreaking, and we want to do things that are first in the industry. In order to do thosewith better certainty of outcome, you have to have good partners, and I think that’s what wefound at VMware.Gardner: We’re almost out of time but now that youve had this experience with building outthis cloud in a fashion where, if you could do it your way, you can probably apply this to manyother industries in terms of performance and security.What did you learn? Is there any 20-20 hindsight or Monday morning quarterback types ofinsights that you could offer to others who are considering such cloud and/or vertical specialtycloud implementations?Rubinow: It goes back to the comments I just made in terms of choosing your partners carefully.You can’t afford to have a whole host of partners, dozens of them, because it would get veryconfusing. Theres a lot of hype in the marketplace in terms of what can be done. You needpeople that have abilities, can deliver them, can service them, and can back them up.Every one of us who’s trying to do something a little bit different than the mainstream, becausewe have a specific need that we’re trying to service, has to go into it with a careful eye towardswho we’re working with.So I would say to make sure that you ask the right questions. Make sure you kick the tires quite abit. Make sure that you can count on what you’re going to implement and acquire. It’s likeimplementing any new technology It’s not unique to cloud.If youre leading the charge, you still want to be aggressive but it’s a risk management issue Youhave to be careful what you’re doing internally. You have to be careful who you’re working with.Make sure that you dot your I’s and cross your T’s. Do it as quickly as you can to get to market,but just make sure that you keep your wits about you.Gardner: Excellent. We’ve been talking about advanced adoption of specialized cloud deliverymodels and how they’re changing the game for IT in such vertical industries as finance. Also, Iimagine that this is really going to be changing your business model So congratulations on that.Rubinow: Thanks.
  8. 8. Gardner: We’ve been talking with Steve Rubinow, the Executive Vice President and ChiefInformation Officer at NYSE Euronext. I appreciate your time, Steve.Rubinow: Thank you.Gardner: And thanks to our audience for joining this special podcast, coming to you from the2011 VMworld Conference in Las Vegas.Im Dana Gardner, Principal Analyst at Interarbor Solutions, your host throughout this series ofpodcast discussions. Thanks again for listening, and come back next time.Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Sponsor: VMwareTranscript of a BriefingsDirect podcast from the VMworld 2011 Conference focusing on NYSEEuronexts use of cloud in making a foray into providing customer services in a vertical market.Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.You may also be interested in: • VMwares vSphere 5 Hits the Streets • VMware Launches a Developer Edition for Cloud Service • Webinar: Analysts Plumb Desktop as a Service as the Catalyst for Cloud Computing Value for Enterprises and Telcos • IT Financial Management Provides Required Visibility into Operations to Reduce Total IT Costs • Want Client Virtualization? Time Then to Get your Back-End Infrastructure Act Together