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Author, Amy Hadley, Consultant at Leathwaite.

From boutique private equity and hedge fund clients to large banking groups, CIOs and CTOs continue to evaluate the capability of their infrastructure, with many looking to virtualize all elements, thus enabling them to manage a more flexible – and commercially viable – environment.

Much is made about the private, hybrid and public cloud debate, but is there really an optimal solution for financial services organizations? And what does it mean for the nuts and bolts of infrastructure – the core elements of network, storage, computing and security?

In much the same way that key infrastructure leadership positions are evolving to support a rapidly changing environment (where the line between software and hardware has blurred), the subsequent progression towards software defined networking (SDN), and evolution from manually managing networks to one where their provision is ensured through software development, is increasing.

Although in itself not a concept in its infancy – and widely regarded as being the optimal future solution – SDN technology has remained in the early stages of adoption.  This is now changing, with large banking organizations working towards using SDN in their data centers, particularly amongst those attempting to manage huge volumes of traffic.

Although a straight forward debate for smaller businesses, the issue of scale sees larger firms large competing with the likes of Amazon and Google.

Given this capability is a critical component of their business, they can utilize billions of dollars building technology which is seemingly able to scale at exponential rates. This is something with which few can compete, from either a speed to market or resources perspective.

Previously, regulatory concerns may have prevented many financial services firms from partnering with Amazon Web Services (AWS) and its competitors; but with these mitigated, the issue seems to be rather more representative of a hesitancy towards new technology and process.

Who are the threats to the likes of Amazon and Google?

AWS and Rackspace are aggressively trying to improve their hybrid cloud capability, as newer contenders in the market like Windstream are truly able to integrate into their customer’s environment in a hybrid fashion. In doing so, they can operate as a partner enabling them to understand their customers’ measures of success and respond by creating greater flexibility in their operating model, allowing customers to leverage additional capacity at peak times.

What are the implications from a talent perspective?

Leathwaite’s Global CIO practice has seen a change in the demands of individuals managing this type of environment, with the ability to oversee large scale systems  and understand software design, becoming more critical than deep network domain expertise.

Although we are searching further afield for the most appropriate talent, it is imperative to maintain a balance; our financial services clients – whether large banking groups, asset managers or hedge funds – acknowledge that a pragmatic approach to hiring talent must be sought.

As an example, senior individuals working in cloud providers, coupled with those who have proven SDN experience may be deemed optimal, but there is also a risk of tissue rejection given there are scale and complexity challenges, from both a technology and people perspective. Many also have hybrid skill-sets across product management and technology, often with business reporting lines, meaning that “success” can either be measured as the rate of growth – determined by expansion, increased utilization or turnaround to market – or increased revenue across a company’s broader product portfolio. Although valuable skills, the question is whether they have actually delivered something scalable and robust (not just a concept), which can generate cumulative savings over multiple years.

As a point of interest, New York University has taken a long term view on the criticality of this area of technology and are investing in the next generation of talent, creating a specialized high speed networking lab and practice, focused specifically on Software Defined Networking.

Whilst that is a longer term play, the need for senior, commercial leaders continues. From wherever talent is to emanate, the understanding that innovation needs to equate to both increased profits and a reduced risk profile, is absolutely essential.