When CDO2, a provider of pricing and risk technologies and partner of the Sun Grid since its inception, recently made its CDOSheet application available via the application catalog on Sun Microsystems’ Network.com site, the company became the first financial industry ISV to do so. However, if things go well, CDOSheet could be just the tip of the iceberg.

According to Gary Kendall, director of CDO2, the company’s previous Sun Grid-powered solution required customers to book time in advance, a model where they basically were paying for clock time rather than compute cycles. By going live on Network.com, however, customers can now access the application, as well as Sun’s backend resources, whenever and however they want.

In fact, said Kendall, AC Capital Partners Ltd., CDO2’s first user of the new on-demand application, all but demanded this type of access and ease-of-use before it would sign on. He added that applications on Network.com are perfect for customers like AC Capital that need consistent access to the software even though they only use it every few weeks. And although AC Capital is the first, Kendall believes more of his company’s mid-sized banking and investment firms, many of whom already are utilizing the legacy Sun Grid application, will make the switch.

Over the course of time, Kendall thinks a number of financial services applications definitely will have a place on utility computing platforms like Sun’s, primarily because mid-tier banks are starting to realize the benefits of running applications over a grid, but because they don’t have the resources of their larger brethren, they cannot always afford major in-house HPC deployments. Specifically, Kendall cites risk simulations as ideal for this type of platform because they are relatively simple and don’t involve sensitive customer data. “[For] the people running risk simulations and calculations, to produce internal figures for the bank, I think it’s a very good place for it,” he said. However, he added, “I think it will be a long time before banks are processing their customer data there.”

Of course, as Kendall acknowledges, security always will be an issue when it comes to sending data outside of the corporate firewall, but he believes working with a company like Sun goes a long way in helping ease the leeriness of potential users. “If we were going to any corner hosting firm and telling our customers that we were putting out their data with them, they might have an issue,” commented Kendall. “The fact that we’re working with Sun Microsystems, who has a very good reputation in this area … enables our customers to have that degree of trust in us and in Sun.” He added that he has “interrogated” Sun about its security measures, and his customers have interrogated him, and everyone seems to agree that everything is in place and very secure.

So happy has CDO2 been with its partnership with Sun that it actually is working toward a long-term goal of leveraging its grid experience to expand its service offerings. For this three-year project, the London-based company is working with England’s University of Surrey to strengthen CDO2’s ability to utilize grid technologies with its pricing and risk analysis solutions. However, said Kendall, while the initial aim is to bring more financial applications online, there is the possibility of CDO2 trying to expand its reach horizontally. “We discovered that what we were doing, using software as a service on a compute utility, is novel,” he explained. “We started doing it to solve a particular business problem, but we realized that there is a lot of business potential in this.”

And what does Sun have to say about all of this? Well, it seems a safe bet that Sun is hoping other financial industry ISVs notice CDO2’s positive experiences and decide to give Network.com a shot. In fact, Network.com Director of Marketing Mark Herring acknowledges that although Sun expected a “huge demand” for financial services applications, there actually has been a lag in demand for banking applications on the grid — something he believes will be remedied as the partner community, and the application catalog along with it, continues to grow. “If you look at where Network.com [has come since] a year ago,” he commented, “[it was] ‘Hey, there’s this great grid; run anything you like on it,’ and what we’re finding is there are a lot more customers interested in ‘What apps have you got running there?’, so the app catalog was absolutely critical,” adding that there already are a couple of more banking applications in the Network.com pipeline.

It also is important to realize, Herring noted, that Network.com has only been available to users outside of the United States since May, so worldwide adoption could take a while to heat up. CDO2, for example (and as mentioned earlier), is based in London, and customer AC Capital is headquartered in Ireland.