Sorting through the terminology of CTRM deployment
Buyers of CTRM systems are clearly, and increasingly, interested in adopting web-delivered solutions and as such, the marketing terminology being used in this market has changed. CTRM vendors now commonly say their software is “web-enabled”, “web-delivered”, “runs in the cloud”, “cloud capable” or “built for the cloud.” Unfortunately, the lexicon of web-delivered CTRM can be confusing and it is important to understand some of the nuances of these terms in order to make informed buying decision when seeking out a new CTRM system.
Almost any software can be delivered via the web using a product like Citrix, and so the first two statements can be perfectly true for almost any CTRM product, though some will run better in a Citirx environment than others. The real differentiators start to arise when discussing “cloud”. Being able to run in the cloud is usually taken to mean the system can access, and run across, additional servers when necessary, providing additional computational resources when running processor heavy tasks, such a calculating positions or VAR. Unfortunately, many of the legacy CTRM systems that have been around for a decade or more have had problems with scaling in a cloud environment. So, while some can run in a cloud environment, they may not be able to deliver on the key advantage of the cloud.
Clouds can be either public or private. If the product runs in a private cloud, it generally means it’s installed on, and runs within, a fixed number of servers in a data center (either the client’s or a commercial center with dedicated space for that fixed group of servers). Though well-designed and properly sized private clouds should be able to supply the necessary processing power for the most challenging CTRM related tasks, this is something buyers should be aware of if using a private cloud. If the system is in a pubic cloud like Azure or Amazon, and if its properly configured, the system and users should never bump up against processing limitations.
Within the category of “web-delivered” CTRM systems, the term Software as a Service (SaaS) is used often and is generally considered a “pay as you go” rental-type commercial agreement that provides users access to the software via the internet. With this type of agreement, the vendor makes the software (the service) available to the customer for a monthly, quarterly or annual fee based on the number of users that login. Commonly, the software would be truly internet delivered, though it could conceivably be made available via a private network. However, SaaS by itself doesn’t really tell the whole story of how and where the software is running – is it a multi-tenanted cloud solution or is it a single customer installation (aka “hosted” solution) running on fixed servers or in a public or private cloud?
Web-delivered software is usually thought of as the software that runs in a web browser, but that’s not always the case. It could mean that it is accessed from the web by a thin-client application sitting on a user’s computer, very much alike an “app” on an iPhone (this could even be a Citrix client as noted above).
Back to the terms “cloud-native” and/or “built for the cloud” …vendors will use these descriptive terms to mean they’ve engineered their products to instantaneously scale by bringing on additional servers on demand to improve computational speed. “Cloud native” or “built for the cloud” solutions can be either hosted-in-the-cloud (single tenant) solutions or they may be multitenant.
Multitenancy means that there is more than one client using the same code. These systems will usually provide the customer a seamless upgrade process (though some upgrades may require updating of interfaces to/from that system) as the vendor does all the work behind the scenes. Multitenant solutions almost always run in a cloud environment, but there are a few exceptions that are still running on dedicated servers. From the vendor perspective, it cheaper/easier to maintain a single multitenant application than multiple single tenants…allowing them to reduce the cost of their solution. As such, multitenant systems can be cheaper to use as they require minimal customer tech support and their costs are all-in, meaning you pay a single amount per user with no maintenance fees (though those fees are implicit in the cost).
Hosted solutions can be made available via the internet or a private network. This type of arrangement releases the customer from the burden of buying and maintaining servers. It could also mean that the vendor provides support and maintenance behind the scenes, but not always…it depends on what the vendor is selling. If it’s sold as a “managed services” solution, that will almost always include software access and vendor provided maintenance of the software/databases.
As previously noted, hosted solutions may also be installed in a private or public cloud in a “hosted in the cloud” arrangement…aka single tenant. If this is the case, and if the system isn’t capable of scaling in the cloud environment, there may not be much advantage over a hosted-on-a-dedicated-server-type of arrangement.
So, what does this all mean? For one, it means that the terminology that has arisen over the last few years can be confounding. More importantly, it means that CTRM buyers should ask specific questions about the deployment methods and capabilities early in the buying process. If you want a “true” cloud solution (either single or multitenant) – meaning one that scales as processing demands increase – you need to be sure that is what the vendor is actually selling. Unfortunately, terms like “web-delivered” or “runs in the cloud”, or “cloud capable” only really mean that you don’t have to install servers in your shop. Beyond that, there is still much of the devil left in the details.
Some would argue that a multitenant, fully cloud capable SaaS solution is the way to go…providing scalability at a lower cost and with seamless upgrades. If your business is a fit for one of these products, meaning the product’s features and functionality are sufficient to meet your needs both now in the foreseeable future, then that’s likely true. However, some of the products that fit within this deployment model have been designed for specific markets and commodities and may not be a good fit for firms that operate complex, multi-asset, multi-commodity portfolios…for these businesses that are looking for one singular solution to manage the entirety of their commodity trading and/or commodity management operations, the available choices may not include a multitenant cloud SaaS solution.
