The cloud in 2022: the rise of hybrid model.

The COVID-19 pandemic made clear the importance of the cloud for businesses across the globe.

First, we had on-premise, then we added some cloud-based applications – and now, as businesses seek to get the best of both worlds, we have hybrid IT. A hybrid model can mean different things to different people, but in general, it refers to when a business utilizes a mix of on-premise servers with the cloud, whether that be public or private. More specifically, applications are either using both platforms to deliver their workload, or a cloud-based application is connected to an on-premise application for further processing. This means that application support teams need to be able to monitor both platforms and see the effect of the combined hybrid estate. This is where the problems start.

Hybrid IT is quickly becoming businesses’ preferred IT infrastructure. In fact, research has shown that 61% of businesses globally have a hybrid cloud model in place. However, managing a hybrid IT estate does not come without its challenges. The complex nature of managing multiple systems means that financial institutions need to have a comprehensive strategy in place to ensure they maximize the benefits of both platforms.

Cloud versus on-premise

At its initial conception, the main driver behind firms choosing to adopt a hybrid model was practicality. As they migrated from on-premise servers to the cloud or deployed new applications in the cloud, operating a hybrid model allowed them to manage this transition carefully and gradually – it’s simply not possible to migrate to the cloud overnight. The flexibility of renting in the cloud helped with faster provisioning of new servers and helped with short-term peak loads. However, the cost of the cloud is not always appreciated at the outset. It is often more expensive than the fixed on-premise estate.

Nevertheless, operating such a model has offered businesses benefits that can’t be matched by opting for either a full cloud or on-premise solution. The unparalleled flexibility and scalability of hybrid IT means that it has become more than just a stepping stone.

Due to each platform’s unique benefits and capabilities, certain applications are better suited to the cloud whilst others are better run on-premise. For example, financial exchanges require low latency networks for trading due to microsecond delays impacting profitability per transaction, meaning it’s better for this type of business-critical infrastructure to be managed on-premise.

Whereas the cloud is far more scalable, meaning that if financial institutions are expecting a surge in demand – such as at the start of the COVID-19 pandemic when there was a significant increase in users of online banking services as in-person branches shut down in the face of global lockdowns – firms can easily scale up to meet this service level. Having both systems in place means that businesses can adapt their IT systems to levels never previously experienced.

One size does not fit all

The distinct nature and competencies of both platforms mean that a one size fits all approach is simply not an option when it comes to managing and monitoring them. Dynamic cloud environments can be a challenge for older tools which don’t like changes to the configuration on a regular or short-

term basis. To combat this, many firms have invested in multiple monitoring tools, each focused on a particular technology and platform.

However, this means that each system is operating in silo, leaving IT managers without a complete overview of their IT estate. Not only does this make ongoing system monitoring difficult for IT teams, but their ability to mitigate and plan for outages risks is severely hampered.

Outages can have serious implications for a firm’s bottom line, in an exchange, for example, even a millisecond outage can result in customers losing millions due to information being outdated. Ensuring operational resilience is therefore paramount, not least due to the financial impact but also as a result of the Financial Conduct Authority’s (FCA) bid to crack down on firms for lack of system resilience.

The FCA’s operational resilience regulations – CP19/32 – which come into force at the end of March, have significantly raised the stakes when it comes to preventing outages. Whilst the regulator won’t be knocking on the door every time one occurs, firms need to show that they have the right monitoring systems in place to protect consumers. For those firms who have complex hybrid estates, no exception will be made when it comes to not having the right systems in place.

Unified monitoring

To counteract this difficulty, firms need to invest in unified monitoring systems. Having one for storage, one for application performance and one for networks prevents IT, teams, from being able to fully understand what is happening at a high level at any point in time. A single bird’s eye view will not only help firms understand the capacity of their estates; but should a problem occur, getting to the source of it will be far easier when all operations can be viewed in one place. Few tools can monitor all the necessary elements well, so integration between tools is key.

As long as hybrid IT dominates, firms must invest in the right monitoring tools to ensure that they manage them effectively. Constant monitoring and adaption is the only way to ensure always-on systems remain resilient and consumers are always protected in today’s fast-paced financial landscape.

By: Guy Warren, CEO at ITRS Group.