The firm’s chief technology architect, Jeff Birnbaum, explains its cloud strategy

Jeff Birnbaum, managing director, chief technology architect and global head of architecture and engineering at Merrill Lynch (who will continue in this role after the merger with BofA goes through), says that the enterprise cloud he's been building at Merrill is in part a preparation for participating in a public cloud at some point in the future. Birnbaum recently spoke at the High Performance Linux on Wall Street show.

"One of the reasons we're creating an internal, enterprise cloud first is so that we can figure out how we'll move some of that to the external cloud," he says. The primary reason to do any cloud computing at all is cost, he explains. "When you look at the economics of Google, Amazon or IBM as cloud providers, then you look at your internal IT structures, there's a little bit of a problem here. In IT, we should be embarrassed for the cost structure we have. For every dollar I spend on compute I want to get a dollar back, but generally IT only gets about 20 cents on the dollar. If you look at how people use Amazon, they will say they get a lot more than the dollar they put in, and they can quickly scale up or down."

Birnbaum won't say when Merrill Lynch will start using a public cloud, “The timescales are more elongated than we'd like," he says. The firm is working on internal and public cloud initiatives in parallel. “The problem with the public cloud is some services aren't there,” he says.  "In Google's cloud offering, they have it right and wrong," says Birnbaum. The part that's right is the low-cost compute services. The part that is wrong, according to Birnbaum, is that firms like Merrill Lynch already have thousands of applications that they're unwilling to redesign to be Google app services.

Public clouds also lack guaranteed uptime. "Today organizations like Amazon can't give you that guarantee, it's too cost prohibitive for them," he says. Wall Street might be willing to pay for that service. "If all our financial institutions are in a cloud and it fails, everybody's out," he says, joking that, "maybe that's good because then nobody can trade."

The types of Wall Street applications that make sense to run in a public cloud, Birnbaum says, are related to market data. "Every Wall Street firm tries to build its own market data infrastructures," he notes. "A common facility could offer those services and provide open source components in an accessible way." He envisions market data giants such as Bloomberg and Thomson Reuters becoming cloud providers.

What about the competitive barriers to sharing? Larry Tabb, founder of consultancy Tabb Group, asked Birnbaum about the difficulty of getting different parts of a Wall Street firm to share information and services. Although Birnbaum acknowledges that it always is, "We're rational people," he says. "Especially in this environment, if you can bring a value proposition in which you provide users a high quality of service at a lower cost structure, they'll be interested; you're not going to have people blatantly turn you away. This is an interesting time in that more people are willing to take a look, even if they still want to run their own IT infrastructure. The worst position you can be in is to have someone say to you, I can go to Best Buy and get this for $100. They're doing the same thing with compute now. They can say, I can go to Amazon and get computing for this much, why are you charging me hundreds of thousands of dollars?"