Colt/Celent Report: Cloud Data Use to Balloon by 2020

By 2020, adoption of cloud models is expected to more than quadruple from 10 percent in 2016 to 45 percent by 2020, while outsourced infrastructure models will grow from 20 percent to 25 percent, and in-house IT infrastructure will halve from 60 percent to 30 percent. Of those cloud adoption figures, use of private cloud is expected to drop from 16 percent to 14 percent, while public cloud will increase from one percent to 11 percent, and hybrid cloud solutions will increase from three percent to 20 percent.

"Attitudes are starting to change towards the cloud, and that's not surprising. We've already been receiving queries about how to connect to the cloud. We aren't─and won't be─a cloud provider, but we do provide connectivity to the cloud.... Because of you're looking for a managed solution, you wouldn't expect to have to manage your own connectivity to that," says Ralph Achkar, director of strategic alliances for capital markets at Colt. "Before 2008, people used cloud for flexibility. But after the downturn, people really have been looking for ways to reduce their budgets and capital investment... and with cloud, you can grow your spend as your need grows, rather than spending a lot upfront."

However, changing spending models won't automatically deliver instant cost savings, Achkar warns. "We thought moving to the cloud would recognize savings right away... but firms shouldn't expect an immediate drop in budget. They're transforming from capital expenditure to operational expenditure, but there are other skills that IT teams need to have to operate in and arbitrate between clouds─they need to interact with multiple clouds," he says.

Also by 2020, the functions that firms feel comfortable using the cloud to perform will also see changes: cloud use for data ingestion will increase from around one-third to around two-thirds; data distribution will increase from less than a quarter to around one-third; data storage will almost entirely be performed in the cloud, compared to around half today; analytics performed in the cloud will rise from about one-third to almost three-quarters; risk analytics will rise from just over a quarter to around half; and trading systems running in the cloud will increase from less than a quarter today to almost three-quarters by 2020.

Achkar says the predicted growth in data storage and analytics is being driven by firms storing more historical data to perform theoretical analysis or to meet regulatory requirements, and to create new analytics by correlating seemingly unrelated items.

"Generally, the market data that has moved to the cloud has been historical data.... But we've seen some players diverting Level 2 data to cloud environments─not for trading, but for modeling and testing algorithms," he says.

When it came to how firms access cloud services, 19 percent of those surveyed said they use the public internet; 30 percent said they use fixed or dedicated bandwidth; 18 percent use on-demand or virtualized flexible connectivity options; 32 percent said they use all of the above; and one percent said they will not access cloud services at all.

"Over time, technology has improved, and so the security of cloud services and transport into the cloud has improved. Originally, the only way to reach the cloud was over the internet, which was unpopular [among capital markets firms]," Achkar says. "Most of the data breaches we've seen are not really anything to do with the cloud; most are breaches of communications services. We've heard of government security agencies running applications in the cloud─and if they can trust the cloud, I'm sure we can."