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Thought Leaders In Cloud Computing: Dan Raju, CIO Of TradeKing (Part 3)

Posted on Saturday, Aug 27th 2011

By Sramana Mitra and guest author Rajdeep Ramsay

Sramana Mitra: Before we talk about budgeting capabilities and such, I think it would help readers to understand better if you gave a use case of a particular instance?

Dan Raju: Absolutely! So, for example, most of us in technology do two things. We say, I am going to spend X amount of dollars today, and based upon these criteria, this is what my expense is going to be over the next three to five years depending on how budgeting is done in a particular company. So there are two factors to this, right? There is saying, I am spending this amount of capital, and then there are what my operational expenses for the next couple of years are going to be.

SM: I guess the question is, what variables are you extracting from the data that is being generated in your transaction infrastructure that gives you the keys to understand that?

DR: You have a much clearer idea of what a unit of consumption is, unlike with an in-house procure and provision model. Because of the way the cloud has been created and the way the framework works, you have a much clearer definition of what your unit of consumption is and you can forecast in a much more granular way what your costs are going to be over the next couple of years.

SM: And you are talking about infrastructure costs, yes?

DR: It could be infrastructure costs, it could be because if you are doing cloud as an infrastructure service or as a software service or even as platform as a service. Even with these three criteria, you have a much more pre-defined unit of consumption than you would in a procure and provision model.

SM: OK, so let me understand – infrastructure itself is straightforward since you are building solutions that need to be scaled and need to support increasingly larger data transaction volumes and an increasing number of customers. Obviously, there needs to be an infrastructure to support that from your known perspectives. What software as a service application kicks in here where you have to make such a decision?

DR: Very good question! Because of federal regulations, we are prevented from endorsing or not endorsing any company or putting out the name of the platform provider. As a very good example, we use a particular provider to manage [our business], and we use software as a service provider that basically handles our collaborative social media platform.

SM: I see.

DR: Our relationship with these vendors is based upon the combination of two things: It is a combination of how many messages we consume at a given moment, so it is purely based upon the volume of activity. We now say, based upon our marketing spend, this is what our volume is going to be. Based upon that, I know this is what my cost assumption on software as a service is when it is complete. I hope that makes sense?

SM: What are you doing with platform as a service?

DR: I am talking purely from a consumption site about how we consume that.

SM: Yes, I mean where does platform as a service, as an architecture, fit into you technology infrastructure?

DR: When we started off as a company, we wanted to focus primarily on customer service and purely on what we bring. Supporting our customers was important, and we wanted to make sure we had the right access and that they had the right access to the tool, so we were always looking  at  finding the best tool that we could provide for our customers. For example, with many of our training tools, we provide our customers with a platform. We go ahead in many cases with white label and provide to our customers the right security, the right mitigation control, and the transaction model. That model we have and the arrangement we have with customers are based purely upon consumption. In some cases it is based on the number of accounts, and as we focus on how these parameters change and these volumes decrease, we know what our platform cost is going to be. So, talking solely from the first point, which is the budgeting side platform, we are always looking for two things: We are looking for defining what the unit of consumption is, and we are mapping that against what our forecast are so that our financial forecast is accurate and customers can get it at the time of budgeting.

This segment is part 3 in the series : Thought Leaders In Cloud Computing: Dan Raju, CIO Of TradeKing
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