A panel of experts discussing whether the financial services industry should build its own cloud-computing infrastructure said the test case for whether it's possible -- not just in the financial services industry, but for other enterprises as well -- is if companies can first deploy a private cloud network.

"If you can't do it internally, it's tough to take it externally," said Jeff Birnbaum, [cq] the managing director of Merrill Lynch, who along with several other IT professionals discussed the issue at the 2009 High Performance Linux on Wall Street conference. He said before companies decide whether to deploy applications on an AWS or Microsoft's Windows Azure, they should build a cloud network internally and see if they can make that work, then decide what assets they could run on a public cloud.

A private cloud differs from a standard enterprise IT data center in a few ways, he said. In a standard enterprise, an application is allocated to its own server or servers, and does not run outside of that silo. To set up a private cloud, a company must have a number of servers and be able to run any application on those servers, among other differentiating factors, Birnbaum said.

"I want to be able to move that thing around, quickly run that application on 10 or 1,000 computers, workload manage the entire complex," Birnbaum said. "It's the software layer of workload management and smart placement of applications that separates it [from a typical data center]."

David Crosbie, [cq] CTO of virtualization software provider Leostream, agreed that "starting internally is really the only way to get going" on cloud computing, particularly because there currently are no standards in place to govern how cloud-computing networks operate in terms of security, business processes, governance and the like.