Lenders invest a lot of money to get the benefits of cloud technology, which include reducing operational costs, increasing efficiency and achieving greater reliability.
But results differ.
This causes many businesses to pay for cloud benefits that they never receive due to the limitations in the business software.
Some lenders, for example, will take an application they have been using for many years and host it through Amazon, Microsoft or Google—assuming that all cloud solutions are the same and they are getting the full advantage of the technology when in reality, they are not.
Fully leveraging the cloud’s power requires using applications built specifically for the cloud.
Older applications deliver partial results that do not measure up because they utilize technology that predates the cloud and cannot take advantage of the utility nature of cloud computing.
Unfortunately, the majority of organizations in the mortgage industry use older, less compatible cloud applications. As a result, they do not receive the full benefits of the cloud. To use all of the cloud’s potential, you have to invest in a newer or custom-built application that was designed to function with the cloud. These cloud-friendly applications are elastic, fault tolerant and enable businesses to pay less.
The key hallmark of cloud-friendly applications is that they are flexible in their usage of computing power. It adapts to workload changes, automatically adjusting resources to match the current demand. Computing power increases during peak times and decreases during slow times.
A cloud-friendly application can run on a single server during slow times and still sufficiently serve all of its customers. The moment web traffic increases and a single server is no longer enough, it can automatically seek additional computing power elsewhere. This is done seamlessly so customers access the application as usual without ever being impacted. The moment website traffic slows down to its previous level, the solution detects this in real-time and pulls back so it only uses as much computing power as is needed.
A less compatible cloud application runs at the same level regardless of an organization’s computing needs. As a result, these applications crash when computing demand increases and use too much power during low periods.
Pay for What You Use
Cloud-friendly applications enable lenders to only pay for what they use. It is very similar to how a utility company only charges a person for the electricity they use. This enables users to avoid overpaying for computing power that they do not utilize. These applications also allow businesses to predict operational expenses and adjust what is being used with the click of a mouse.
Less compatible applications force lenders to pay a flat fee. This means they pay for much more computing power than they use. This is similar to how most cell phone companies charge customers the same amount of money whether they use all their minutes or half of them. Many lenders with less compatible applications end up paying flat fees for computing power. This forces them to massively overpay or risk having their systems collapse when times are busy.
Another characteristic of the dynamic nature of cloud-friendly applications is that they have systems in place to keep them running at full speed in the event of an incident which threatens to suspend business operations. If one server goes down, cloud-friendly applications automatically pull power from a second server; this second server could be located on a different continent if needed. Businesses are able to use one, hundreds or even thousands of servers simultaneously to ensure that they and their customers can access information whenever they need it.
Less compatible applications, however, run on one server or a single cluster of servers. If that one server or datacenter goes down, the entire system fails. The business stops and is unable to serve customers until that server comes back up.
To realize the full benefits of the cloud, lenders need to be more aware of the difference between cloud-friendly and less compatible cloud solutions and know what they are using now. Only newer or custom-built applications that are cloud-friendly can achieve the results most users expect. The proper use of cloud technology can make the difference between profitable and unprofitable companies. Investing in more modern, cloud-friendly applications is the first step to getting the results that a true cloud solution delivers.
Steve Wiser is CEO of Cleveland-based Specialized Business Software, a provider of custom software solutions for insurance, mortgage and financial services companies. For more information, visit www.specializedbusinesssoftware.com.