About a-team Marketing Services

A-Team Insight Blogs

Obstacles to Cloud Adoption

Subscribe to our newsletter

By Mike Powell, CEO, Rapid Addition.

We’ve already talked about what’s driving capital markets’ growing interest in cloud technologies, and discussed what the real world currently looks like, in earlier blogs (here, here and here).

But practitioners accept that the journey to cloud isn’t entirely an easy one. Even for committed capital markets protagonists, cloud represents its own set of challenges. According to a survey of 20 capital markets organisations commissioned by Rapid Addition, respondents identified a number of obstacles to adoption that ranged from performance-related and practical issues to more strategic or political barriers. Here’s a scan of some of the key barriers to success:

Latency / determinism of performance. Across the board, latency and performance was identified as a potential deal-breaker when it came to deciding whether to adopt a cloud-based strategy. A common view was that cloud is not yet capable of supporting low-latency or latency-sensitive demands. But with latency trading accounting for a small proportion of workflows, a hybrid model is possible, survey respondents suggested.

Data security / privacy concerns. Notwithstanding cloud operators’ state-of-the-art stance on data security, respondents were reluctant to place sensitive data into cloud environments. Many said their organizations were happy to designate their data as ‘hot’ and ‘cold’, the former of which would be kept in house where security could be controlled by the owner.

Need for control. Organizations feel compelled to maintain control over their trading infrastructure, and feel that cloud infrastructure hurts their autonomy. “We want to have more visibility down to the tin with regards to bursts and determinism,” said one respondent.

Complexity of migration. The trading firm may simply be unable to make the jump. Respondents cited the complexity of their own organizations and lack of requisite skills as potential barriers to migration. The culture change needed to execute such a transition was also cited as a handicap. “Adopting DevSecOps and the requisite people, skills, processes, tools and cultural change needed to fully gain the advantages of cloud, together represent a significant barrier,” opined one participant.

Cloud operators’ lack of clarity. Cloud operators have been criticized for providing too little clarity about the own technology and business plans, and that has been a hindrance to respondents’ efforts to assess the applicability of cloud environments.

Potentially higher operating costs. Cost and scalability are among the most common reasons cited for companies adopting a cloud-based strategy. But observers noted that once target levels of scale had been reached, cloud ceased to offer value. Having helped to start up lines of business or to enter new markets, the elasticity offered by cloud has become no longer necessary for some respondents and from then on has represented an unnecessary cost.

Concentration risk. When data is concentrated in a single or a small handful of locations, it becomes potentially vulnerable to power outages and the loss of business that could entail. “Concentration risk is the killer – the more we load in, the bigger the impact of an outage,” said one respondent. “If we have 20 apps in the cloud, it feels like a data center outage if it goes down. Fundamentally, the model is flawed. It’s like having everyone working on the same mainframe.”

The ‘why bother?’ factor. For some respondents, cloud felt like a solution looking for a problem. Yes, it was possible to use cloud for certain trading-related functions, but what was the purpose when there was already an acceptable solution in place? One example of this was order confirmations: “Why bother? You already have a connection for the original order message so why not use it for confirms? Handling them separately seems like an unnecessary complication.”

We’ll be exploring which trading functions are best suited to cloud, and what the future looks like in upcoming blogs, so stay tuned. Or else you can register your interest in the full report here and we will contact you to let you know when it is available later this month.

Subscribe to our newsletter

Related content


Upcoming Webinar: Trade South Africa: Considerations for Connecting to and Trading the Johannesburg Markets

Date: 28 November 2023 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Interest among the international institutional community in trading South African markets is on the rise. With connectivity, data and analytics options for trading on the Johannesburg Stock Exchange growing more sophisticated, and the emergence of A2X as a credible...


Drilling Down on the IPC and Kaiko Partnership – Perspectives from the CEOs

Communications and connectivity solutions provider IPC recently announced a partnership with Kaiko, the cryptocurrency market data provider, to deliver enterprise-grade data to IPC’s Connexus Crypto ecosystem. Launched last year, Connexus Crypto is IPC’s flagship solution for cryptocurrency trading, designed to support complex trading strategies. The solution enables users to implement cryptocurrency arbitrage, providing low latency...


TradingTech Summit London

Now in its 13th year the TradingTech Summit London brings together the European trading technology capital markets industry, to explore how trading firms are innovating in today’s cloud and digital based environment to create flexible, scalable trading platforms to support speed to market and business agility.


ESG Handbook 2023

The ESG Handbook 2023 edition is the essential guide to everything you need to know about ESG and how to manage requirements if you work in financial data and technology. Download your free copy to understand: What ESG Covers: The scope and definition of ESG Regulations: The evolution of global regulations, especially in the UK...