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BBVA Reaches for the Sky with Its Embrace of Cloud Computing

Spanish Banking giant BBVA and Google enter partnership and sets new trend for cloud and banking services

If 2010 was the year in which cloud computing made its entry in a big way, then 2011 was the year in which companies took to the concept in an equally strong manner. Hitherto confined to start-ups and SMEs that welcomed cloud computing services as a way of reducing their IT spend, the deal between the Spanish banking giant BBVA and Google raises the pitch for the service. The terms of the deal include covering the entire staff of BBVA worldwide (which runs into a little more than a hundred thousand people) to Google's email and shared services platforms like Google Docs and the ever popular video conferencing.

This is expected to give a fillip to both parties to the deal. For BBVA, it is one way of jumping on the innovation bandwagon and addressing the increasing mobility of its employees who are dispersed globally and who use mobile computing and work from home as part of their jobs. For Google, the deal could not have come at a better time as the tech giant can now justifiably claim that its cloud computing services are no longer restricted to startups or SMEs. Further, the big ticket partnership with BBVA is surely going to enhance the positioning of Google vis-à-vis competitors like Amazon in this market niche.

Let's turn to the nuts and bolts of how cloud computing can help BBVA ride the crest of the emerging wave of using cloud services. For starters, BBVA can benefit from reduced costs due to the decrease in spending on IT infrastructure. One needs to remember that email and applications like word processing software and spreadsheet tools consume the lion's share of the IT budget. This is because dedicated servers need to be maintained for email whereas expensive workflow automation tools like those offered by Microsoft have to be purchased on a per-user or enterprise-wide basis. Moreover, the frequent software upgrades and maintenance costs run up to a tidy amount and when apportioned on a company -wide basis, they take a significant share of the IT spend.

With Google offering comprehensive solutions to email and workflow automation with its offering of enterprise email and apps like Google Docs, BBVA no longer has to worry about the large outlays that it usually allocated to these services. Further, the provision of apps like Google Docs would represent a significant reduction of bandwidth and computing power as they are by nature shared services which mean that multiple users can work on a file and can collaborate with each other without having to send the file back and forth. In other words, the real time collaboration cuts down the sharing and transmission iterations that usually hamper workflow automation and consume precious bandwidth. The added sweetener is the provision of video conferencing services by Google by making use of its proprietary Video Chat app which lessens the need for up-linking and hiring of satellite frequencies and bandwidth.

Of course, this does not mean that it is all milk and honey as potential downsides include security concerns, privacy issues, and overreliance on third party services which is akin to putting all the eggs in one basket. Let's examine each of these downsides one by one. First, the security of data for any institution is a major concern and when one considers the fact we are talking about a financial institution like BBVA, which ranks as one of the big boys of banking, the concerns are not misplaced and entirely justified. However, BBVA is playing it safe for the moment by retaining its customer and transactional data on its own servers and deploying only the email and workflow automation to the cloud. The other reason for this circumspection is that there are specific regulatory rules in place for financial institutions that prohibit customer and transactional data to be distributed over public networks. Hence, until either the cloud providers devise ways of storing and transmitting customer and transactional data over networks and servers that are more secure and less public, this aspect stays the way it is now. Next, the privacy issues would include server storage that is not dedicated to BBVA alone and the use of internet to access and transmit data. To address this, BBVA has managed to secure dedicated server farms for its employee data and has added a further layer of security to its internet access.

The concern is valid as there have been instances of data getting stolen when companies like Sony used cloud computing services. Finally, with the recent outages of Amazon cloud services fresh in the public memory, BBVA does not want to risk significant outages and disruption of its activities. So, it has decided to migrate to the cloud in stages.

The recent trends in cloud computing indicate that BFSI or the Banking and Financial Services Institutions remain the holy grail for cloud providers as they are the last ones standing as far as those not yet on the cloud bandwagon are concerned. Hence, this deal represents a landmark and a watershed in the history of cloud computing and raises hopes for small companies in Europe like Workbooks, CloudSigma, CloudMore, etc., to participate in the cloud computing economy. For instance, Workbooks can push for its web based CRM and Business Applications to be provided on a SaaS (Software as a Service) basis for banks and financial institutions which are taking to the cloud services. Since, web-based apps represent the combination of leveraging the power of cloud computing and services that are affordable, this is indeed a double whammy for banks and FIs to do business with companies like Workbooks.

However, these are early days yet for the BFSI sector's cloud computing alliance and the deal between BBVA and Google will be closely watched for performance, security and cost issues. In conclusion, there is a lot riding on the success of this partnership and we sincerely hope that it is free of major glitches as then it would portend well for the future of cloud computing.

More Stories By Preetam Kaushik

Preetam Kaushik is a 'prolific' 'professional' freelance writer who has been writing online for the last 5 years and has gained a significant experience in writing articles, blogs and contents online. Much of his expertise lies in the writing world. He writes articles, web content and blogs on various assigned topics under almost no supervision, for various clients across the globe.

Anything that is related to creative writing and requiring the fashioning of blogs, articles or content to make them well packaged for the world wide web inspires him. He is also an avid researcher and a voracious reader.

He has extensive experience writing articles on a freelance basis on Finance, Business, Management, Entrepreneurship, Writing and Publishing, Technology and E-Commerce topics. He also specializes in academic writing which enhances his analytical and research capabilities.

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