March 22, 2011 – The objection on Wall Street to putting customer data into the "cloud" is always a concern about security. After all, Nasdaq OMX Group came close to having its Directors Desk service, where board members exchange sensitive business information, breached. And who knows who else has in fact gone through a breach.
But there is a company focused on serving banks, insurance companies and broker-dealers that has proven to its customers that it can put their customers' data onto its servers in a data center west of the Mississippi River and protect that data religiously.
Every day, Quadron Data Solutions' data warehouse takes in 30 million records. Customer information. Transaction information. Revenue information. All the data with handling 8 million customer accounts for broker-dealers.
Every position. Every transaction. Every bit of personal information. Every night.
"We've really nailed security and I can honestly say we've passed the audits of the biggest firms with flying colors," the firm's chief executive, David Fetter, told Securities Technology Monitor last week.
To keep the center from being the object of undue attention from the malicious hacker set, we're not identifying the company or the data center, at this point.
After all, according to the latest Ponemon Institute survey, companies with good security practices spend $193 per record when a breach happens. Those who do not, spend $232 per record. And those responding to malicious attacks, from automated agents, insiders, social engineering and outside hackers, pay an average of $318 a record.
The center in question here has roots in the communications industry, similar to the way Nasdaq OMX uses a data center run by Verizon.
Physically, there are cameras at every door, 24x7 guards in the lobby and a $10 million command center. And you can't fake a fingerprint or bring in a finger to override the biometric scanning (as is done on TV), you have to use a whole hand. And hands shrink, if they aren't attached. So that's not an option (grisly, but true).
In any case, the point is this: You can put customer information and transaction records into the cloud. Safely.
And why this hasn't achieved note is partly because security companies don't like to talk about security, for obvious reasons.
But in this case, the company involved does not use the term "cloud computing" to describe what it does.
It uses the term "service bureau." It's a part of the lexicon of the '60s, when companies every where had their data "hosted" on mainframe computers. It's nonsexy and old-school.
But if you want the economics and security of having your data hosted on servers you don't have to pay for directly or manage directly, the job can get done.
Just don't call it "cloud computing."
This column originally appeared in Securities Technology Monitor.
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