AAdekanye
From Information Systems at Pitt Business
TECHNOLOGY ANALYSIS
GRID COMPUTING
Grid computing is an emerging technology that provides access to computing power and data storage capacity distributed around the globe. It enables group of networked computers to be pooled and provisioned on demand to meet the changing needs of businesses. Although grid computing can be applied for many different purposes, it is particularly useful when several computers work on a single issue simultaneously, in order to meet the requirements of a significant number of processing cycles or access to large amounts of data.
The idea of grid computing originated with Ian Foster, Carl Kesselman and Steve Tuecke. Together they developed a toolkit to handle computation management, data movement, storage management and other infrastructures that could handle large grids without restricting themselves to specific hardware requirements. Tasks that can be performed on a grid can range from data storage to complex calculations and can be spread over large geographical distances. In some cases, computers within a grid are used normally and only act as part of the grid when they are in use. These grids scavenge unused cycles on any computer that they can access, to complete given projects. These computers join together to create a virtual super computer.
A key objective of grid computing is to exploit underutilized resources in order to increase productivity and decrease overall costs. Similarly it provides business value to those who use it to leverage existing hardware investments and resources, reduce operational expenses, creating scalable and flexible enterprise IT infrastructures, accelerating product development, improving time to market and raising customer satisfaction and increase overall productivity.
The two identifying features of grid computing are scalability and flexibility. The scalability of the technology is demonstrated by the allowance of a system to run across any type of networked computers, desktops and file servers at the same time; furthermore, across any operating system. The ability to remove or add computers from the network without impacting activity under way in the system speaks to the technologies flexibility.
The key players in the industry are Oracle, IBM and HP&SAS. All three companies offer a variety of grid computing products in a fairly new industry. The complexity of the grid architecture has been some sort of reason for avoiding grid computing but the potential rewards are extraordinary. Some of the early adopters of the technology are the pharmaceutical companies for example GlaxoSmithKline, GSK faces a high pressure challenge to discover fast the few molecular compounds that can be used to make new drugs. But to do that, tens of thousands of compounds must be screened, mixed and matched in order to find the few dozen suitable for development. Drug development is a marathon that can lasts years, so if makers can cut even one week from time it takes to get a new drug to market, it can save millions of dollars. So GSK uses Grid computing to boost computing power enough to significantly hasten the drug recovery process, it could beat more rivals in the race to market. Additional sources of information on grid computing, the protocols, mechanisms and types of grids can be found on the grid computing website www.gridcomputing.com.
GRID COMPUTING AND THE FINANCIAL SERVICES INDUSTRY
Adopting of grid technology in the financial services industry is in direct response to challenges that financial organizations face with rapidly changing and unpredictable businesses cycles especially in the recent decade where the industry has experienced two recessions.
Grid computing is particularly beneficial to this industry because it saves costs in a recession or in an economic boom, In an industry that works closely with the computation of numbers, a large amount of processing power is needed to stay ahead of competition without having to invest millions of dollars in additional hardware when you can pool on the resources that are not being used currently.
Different types of companies exist in the financial industry ranging from Investment Banks to Insurance companies and they use grid computing in different ways. As an industry example Hartford Life insurance, for Hartford life using grid has its strategic, tactical and operational impacts on the company. It uses grid computing to help manage the risk for income protection benefits associated with its variable annuities. One of the features of a variable annuity is called a living benefit and basically what it allows a policy holder do is to guarantee that they will be able to at least get their principal back after investing in the annuity, assuming that they withdraw their principal over time, that guarantee is essentially a guarantee on the stock market. So a Hartford customer could invest in an annuity and no matter what the stock market does if a $100k was invested they’ll get a $100k back over time. What the company does is to hedge that risk, in other words, make sure that no matter what happens in the stock market they have invested in such a way that they’ll earn enough money to pay back that principal. That business problem requires a lot of computation because essentially they are simulating market behavior and policyholder by creating marketing scenarios and policyholder behavior scenarios, which require a huge amount of computing horsepower and
Grid computing allows Hartford to access servers and desktops simultaneously so they can harness the power in a way that makes it easy and doesn’t force them to engineer something so complex that it could be unstable or invest millions of dollars in hardware or software.
GRID COMPUTING AND BRIDGEWATER ASSOCIATES
Bridgewater is a global investment management company, essentially a hedge fund founded by Ray Dalio in 1975 that employs approximately 800 employees and its located in Westport Connecticut. My attraction to the company its based on the fact that its globally diversified and its invests in a lot of global mark
The benefits of Grid computing to Bridgewater is enormous, it would allow Bridgewater associated to be able to process batch jobs, options pricing models over a network to many computers so the work can be done faster on any machine that’s available this can be an advantage over competition as it can help on being first to market in an extremely homogenous industry.
The industry has a good history of doing most of its operations in overnight batch cycles, so I would assume the same for Bridgewater associates. Most of what would drive the need for distributed computing for Bridgewater would be whatever the company needs to do on an ad hoc basis. For example it might be pricing or scenario analysis -- these types of activities that help traders/investment managers like those at Bridgewater monitor whether they should be buying or selling, Here Bridgewater can use grid in areas like risk management or middle-office kinds of functions, where even an eight-hour batch cycle would not be enough to run re-evaluations on a whole portfolio of investments. So by the time you got that report 48 hours later, it would already be outdated. And like we all know the difference between $0 and $1m dollars in a secondary financial market could be as little as a couple hours. As the instruments and the methodology for looking at risk scenarios become more complex, it becomes clear that companies need to do a better job of keeping up. This is where GRID COMPUTING would add value to Bridgewater because it can help them run such simulations like Monte Carlo which most investment firms seem to run these days and they can more efficiently predict what stock prices would say in x time.
I believe grid computing would be largely adopted by the industry going into the future as it increases productivity and client relationships, as grid allows potential to manage money better.
Bridgewater should most definitely involve strategic partners such as KPMG as they are significantly moving into that space where they help organizations in the select of vendors and through the implementation process, secondly a successful implementation could potentially be a marketing tool for KPMG
Finally I’ll suggest the Oracle Grid solutions for Bridgewater because Oracle offers the most complete and field-proven portfolio of industry leading grid-computing solutions, from the Web tier all the way down to middleware, database, servers and storage. These would make sure Bridgewater gets the support it needs from a reputable vendor.
