NYSE Euronext on Hybrid Cloud Vision and Strategy Behind the Capital Markets Community Platform Vertical Cloud
By Dana Gardner, VMWorld
29 August 2011
Dana Gardner: Hello, and welcome to a special BriefingsDirect podcast series coming to you from the VMworld 2011 Conference in Las Vegas. We're here in the week of August 29 to explore the latest in cloud computing and virtualization infrastructure developments. I'm 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-all services. Advanced adapters of cloud delivery models are quickly creating more specialized hybrid clouds for certain industries. And they're looking to them as both major sources of new business, and the means to bring much higher IT efficiency to their clients. Today, we'll 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 amounts to a Wall Street IT services destination, what it does, and how it’s different from other cloud offerings. Here to tell us about how specialized clouds are changing the IT game in such vertical industries as finance is Steve Rubinow, Executive Vice-President and Chief Information Officer at NYSE Euronext. 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 specialized services of historical trading data, innovative trading services, and even third-party applications. And you're supporting these both inside your cloud as well as your clients'. So maybe you could help us understand how you came about to define this type of offering. Why have you done it this way?
Rubinow: It’s the convergence of a couple of trends and also things that our customer started to tell us. Like a lot of companies, we started to use cloud technology within our own company to service 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. At the same time, we've talked to a lot of our customers via our commercial division, which we call NYSE Technologies. By virtue of all the turbulence that's 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 if someone else helped them with it, maybe not 100 percent, but like we propose to do, and everyone wins. They get lower cost and they get to offload a burden that wasn’t particularly strategic 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, which has a number of attributes that make it different than your run-of-the-mill public cloud. In 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 the time when they are supposed to be open. A few seconds makes a big difference. So we want to make sure that we pay extra attention to reliability Another thing is performance. Our industry is very performance-sensitive. Many of the executions are measured in micro-seconds. Any customer of ours, including ourselves, are sensitive to make sure that any infrastructure that we would depend on has the ability to make sure that transactions happen. You don’t find that in the run-of-the-mill public cloud because there 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 the way, 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 cloud services, those being hosted by you and delivered to your clients, but you're also having some element of this as your clients choose on-premises. How does that work? What's the split or why have it a hybrid model?We're a very rich source of market data, as one might imagine. We generate a lot of market data ourselves because of the large marketplace we are.
Rubinow: In the spirit of trying to accommodate all the needs that people will have, for many of the cloud services, you get the most leverage out of them, if you as a customer are situated in the data center with us. Many customers choose to do that for the simple reason of speed-of-light issues. The longer the network is between Point A and Point B, the longer it takes a message to get across it. In an industry 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 that's 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 you would expect from a prominent financial services network. Our customers come to our data centers 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 there's something that we also have in our data center that our customers make use of. They have for a while, and now even more so, in a more flexible manner via some of these cloud services. We're a very rich source of market data, as one might imagine. We generate a lot of market data ourselves 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 do that in a fast, cost-effective, flexible way. We have historical data that lot of our customers would like to take a look at and analyze, rather than having to store the data themselves. We have it all here for them. We have applications like risk management and other services that we intend to offer in the future that customers would be hard-pressed to find somewhere else, or if they could find it somewhere else, they probably won't find it in as efficient a manner. So it makes sense for them to come to us to take a look at it and see how they can take advantage of it here.
Gardner: And so it certainly seems that,with the mission-critical nature of the issues and the requirements that you mentioned that applying a cloud model here, if you can do it there you could probably do it anywhere. Let's learn a little bit more about NYSE for those folks on the podcast that aren't familiar with you. Tell us about your organization, your global nature, and where 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 are a collection of markets not only in the United States but also in Europe. We operate a number of cash and derivative exchanges in Europe as well. So we talk about the whole family being part of NYSE Euronext. We segment our business into three segments. There is the cash business, which is global. There is the derivatives business, which is global, and those are the things that people would have normally associated our company with, because the thing we've been doing for many years. The newest piece of our business is the piece that I've referred to earlier and that's our commercial technology business, which we call NYSE Technologies. Through that segment of the business, we offer all these services, whether it be software products we might develop that our customers take advantage of or services as we've already referenced. Over the years, we've been offering these services to our customers, and then a couple of years ago we decided to do it in a much bigger way, because we realized the need was there. The genesis of that is that we did a lot of good things for ourselves in terms of high speed, high performance, high transaction volumes, reliability, security, functionality, low cost -- all these things that are necessary to be a major competitor in today's market. In a small way, over the years, we've been offering these services to our customers, and then a couple of years ago we decided to do it in a much bigger way, because we realized the need was there. Our customers told us that they would take advantage of these services. So we made a bigger effort in that regard. Right now, the commercial part of our business is several hundred million dollars a year in terms of revenue. We have great expectations to grow that significantly over the next few years, and it's through that that we offer it. Now, our two major hubs, our data centers that we just built. are almost brand 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 those data centers are for our customers, not for us. We certainly have a piece of those data centers that we run our core operations from, because they were designed to do that, but we also had in mind all the products and services that we can offer our customers that choose to be in the data center with us. So you'll 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 London and New Jersey, but in Asia, Europe, and North America, where customers can come, take advantage of services that we offer there and then can connect to the other data centers as need be. I have to add one note in terms of latency. For people who aren't familiar with our obsession with latency, the true textbook cloud profile means that one could execute cloud-like services. If we had 20 data centers across the world, they could be executed across any of those data centers and 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 we offer. We can't afford to be moving things around from data center to data center, because those network differences, when you're measuring things in micro-seconds, are very noticeable to our customers. So some of our services could be distributed across the world, but some of our services 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 is virtualization. That gives you a lot of flexibility to make sure that you get maximum utilization of your compute resources. Some of the services we offer can't use virtualization. They have to be tied to a physical device. It doesn't mean that we can't use a lot of other offerings that VMware provides to help manage that process, but some are tied to physical devices, because virtualization in some cases introduces an overhead. Again, when you're measuring in micro-seconds, it's noticeable. Many other of our services where virtualization is key to what we do to offer the flexibility in cost to our customers. So we have kind of a mixed bag of unique provisioning that's designed for the low-latency portion of our business, and then more general cloud technologies that we use for everything else in our business. You put the two of them together and we have a unique offering that no one else that we know of in the world offers, because we think we're the first, it’s not among the first, to do this. You put the two of them together and we have a unique offering that no one else that we know of in the world offers. Also, we have a very focused target customer base here. It's not for the average company. It's for those customers that demand these kinds of things, and we're determined to make sure they get what they want.
Gardner: Okay, Steve, you've certainly outlined a very impressive capability set and because you're involved with cloud services, whether they're built on virtualization infrastructure or not, it seems to me that you're going to be able to add more services and really judge closely what your customers want and demand, gather their trust, demonstrate your value, and then perhaps be in a position to add even more services over the coming year. So this is a rather big business undertaking for you. This cloud is really an instrument for your business in a major way.
Rubinow: That's right. Sometimes we think the core of our business is trading. That is the core. That's our legacy That's the core of what we do. It's a very important source of our business, and it generates a lot of the things that we've been talking about. Without our core business we wouldn’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 terms of trading technology and all the infrastructure to support that, that's also what we're offering our customers. What we're trying to do is cover all the bases in the capital markets community, and not only trading services, which of course is the center of what we do and it's core to everything that we do. All the things that surround that our customers can use to support their traditional trading activities and then other things that they didn't used to look to us to do. These are things like extensive calculations that they would not have asked the NYSE to do, but today they do it, because we provide the infrastructure there for them. It’s the inner layer of trading technology plus everything on the periphery that we can imagine and offer to our customers that our customers can imagine themselves as fulfilling a need of theirs. We're intent on doing that. If you think of this as a supply-chain approach, we’re trying to cover every base we can in the supply chain to make sure that we can be a primary provider for all 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, you've been doing this now just for the summer in a full general availability mode. But do you have any sense from your customers? Are they witnessing removal of redundancy? Are they able to remove costs. And do they have some ability to compare and contrast the way they did business as usual and the way that they’re starting to employ more of your services? What are some of the underlying numbers perhaps of how this works economically?
Rubinow: From a metrics standpoint, it's probably too early to provide metrics, but I can tell you, qualitatively speaking, the few customers that we have that were early adopters are happy to get on stage with us and give great testimonials about their experience so far. So that’s a really good leading indicator. Again, without offering numbers, our pipeline of people wanting these services globally has been filling very nicely. So we know we've hit a responsive chord. We expect that we will fulfill the promises that we’re offering and that our customers will be happy. It’s too early, though, to say, "Here's three case studies that show, our customers are saying how it’s gone, because they haven’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 Las Vegas and told your story. Maybe you could reiterate a bit or summarize what it is that you’ve done vis-à-vis VMware to enable this capability.Many of the things needed to be done from scratch, because we didn’t have models to look for that we could copy in a marketplace.
Rubinow: When we were putting together our cloud architecture and thinking about the special needs that we had -- and I keep on saying it’s not run-of-the-mill cloud architecture -- we we’re trying to make sure that we did it in a way that would give us the flexibility, facilities, and cost that we needed. Many of the things needed to be done from scratch, because we didn’t have models 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 we don’t have all the smart people we need. So we had to turn to vendors. We were talking to everyone that had a cloud solution. Lots of vendors have lots of solutions. Some are robust, and some 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. I'm sure we will progress over time, and there will be other people who will include the picture. But VMware was at the top of that list of technologies that we have been using internally for several years, been very happy with. Based on our historical relationship with VMware and the offerings that VMware have in the traditional VMware space, plus the cloud offerings, things like Cloud Director and other things, that we felt that those were good cornerstone technologies to 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 innovative and groundbreaking, and we want to do things that are first in the industry. In order to do those with better certainty of outcome, you have to have good partners, and I think that’s what we found at VMware.
Gardner: We’re almost out of time but now that you've had this experience with building out this cloud in a fashion where, if you could do it your way, you can probably apply this to many other industries in terms of performance and security. What did you learn? Is there any 20-20 hindsight or Monday morning quarterback types of insights that you could offer to others who are considering such cloud and/or vertical specialty cloud 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 very confusing. There's a lot of hype in the marketplace in terms of what can be done. You need people that have abilities, can deliver them, can service them, and can back them up.You can’t afford to have a whole host of partners, dozens of them, because it would get very confusing Every one of us who’s trying to do something a little bit different than the mainstream, because we have a specific need that we’re trying to service, has to go into it with a careful eye towards who we’re working with. So I would say to make sure that you ask the right questions. Make sure you kick the tires quite a bit. Make sure that you can count on what you’re going to implement and acquire. It’s like implementing any new technology It’s not unique to cloud. If you're leading the charge, you still want to be aggressive but it’s a risk management issue You have 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 delivery models and how they’re changing the game for IT in such vertical industries as finance. Also, I imagine that this is really going to be changing your business model So congratulations on that.
Gardner: We’ve been talking with Steve Rubinow, the Executive Vice President and Chief Information 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 the 2011 VMworld Conference in Las Vegas. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host throughout this series of podcast discussions. Thanks again for listening, and come back next time.
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. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.