Cloud-based technologies are spreading rapidly through the business world: research firm IDC expects the cloud software market to be worth more than $100 billion by 2018, implying compound annual growth of more than 21 per cent, roughly five times faster than traditional packaged software. So it is clear that cloud computing is on course to become an everyday part of the way that companies operate in the digital economy.
The benefits that this model brings are well known: an enhanced customer experience, higher availability of critical systems, reduced up-front investment in IT systems and resources, and the potential for lower running costs.
In a world where, as my colleague John Schlesinger argues, servers are about to stop getting cheaper, the advantages of cloud computing in terms of cost and customer experience look more compelling than ever. In the banking market, however, the spread of cloud systems has been slower than elsewhere due to factors including concern about data security, uncertainty about the position regulators will take on cloud technologies and the challenge of managing migration from the in-house, legacy IT systems that currently run banks' critical functions. According to a study by NTT Communications 1 in 2013, 71 per cent of chief information officers in financial services companies said they would adopt cloud if their legacy IT were less complex.
Cloud software vendors like Temenos, along with our platform partners and industry organisations, are working closely to address industry concerns. Coordinated efforts such as the Cloud Security Alliance and its Cloud Controls Matrix have set out industry principles for cloud vendors and assist prospective customers in assessing security risk at individual cloud providers. Cloud providers themselves are investing heavily in compliance and security expertise to the extent that many observers argue that a well-implemented migration to the cloud can result in higher levels of security than an in-house system, as well as access to real-time reporting mechanisms that are often superior.