A fundamental transformation is occurring in the gaming industry as we witness a transition from on-premise technology infrastructure to leading data centers. This evolution in our industry is essential for its survival and organizations who embrace it will continue to be competitive. In this four-part article series, we will dive into aspects of this transformation.  

This article seeks to educate our readers on the history of cloud services and its benefits to risk management software –  and to our industry in general.  

History of “the Cloud”

The evolution towards cloud computing fundamentally changes the way we consume and interact with software. Pre-cloud, we all waited for the next version of software (like our Windows operating system) to be released via CD-ROM or other physical media. We then rushed out to the store, bought it, then downloaded it to our personal computer. We enjoyed the new software until the next version was released, when we did it all over again.  

This was a very expensive way to consume software that involved saving the software to millions of CDs, marketing the CDs, distributing the CDs, relying on the consumer to install the software program, and hoping a major bug wasn’t discovered that could cost millions of dollars to redistribute new CDs before the next scheduled release cycle.  

The additional downside was that iterations were typically limited to annual versions because of the distribution expense of the CDs. The software company had no direct digital link to gather feedback from consumers or monitor software performance, and the result was the pace of innovation was often limited to annual updates.  

The world is a different place today due to cloud services. Now our computers can be automatically updated in real-time based on our annual subscription to software and we buy any app we want at any time with millions of options to choose from. We take advantage of distributed computing across thousands of machines to produce results that we expect instantaneously.  Bugs are fixed in near real-time, and software seamlessly improves week after week and month after month.

This fundamental change is a direct result of cloud services primarily housed at services like Microsoft Azure, AWS (Amazon Web Services), and Google Cloud.  

1960 – 1980: The concept of the cloud, along with the concept of artificial intelligence, dates back to the 1960s with IBM creating the first prototype of “distributed computing.” The internet expansion of the 1980s and 1990s also provided the infrastructure for leveraging centralized data centers. Throughout the early 2000s, software matured and emerged to provide for interacting with machines physically further away from the user and better managing distributed computer across numerous machines like VMware, virtual machines, load balancers, etc.  

2006: AWS (Amazon Web Services) and Google launch the first data centers. Google also launches the first online software (aka applications or “apps”) delivered over the web, marking a shift in how software is delivered and maintained.

2008: The Apple App Store launched with an initial 500 applications solidifying the new standard in how software is delivered and maintained. Instead of distributing CDs to retail stores, software (apps) could be developed and enhanced in real-time, defects addressed immediately, and iteratively improved based on real-time feedback. Consumers could immediately purchase apps and no longer have to wait for future versions to be distributed to a retail store. The adoption of purchasing software digitally accelerated the pace of technology development, and is one of the most significant milestones in the evolution of technology. The consumption and maintenance of online software is wholly reliant on the internet and data centers connecting the consumer directly with the software supplier.

2010s: Cloud transformation occurs. AWS solidified its dominance in cloud services followed by Microsoft Azure, and Google Cloud. Businesses began cloud migrations that enabled them to take advantage of mega-companies like Azure and AWS, with a dedicated focus on maintaining modern infrastructure and developing state-of-the-art security and performance software to support the infrastructure. The leading cloud providers spent hundreds of billions of dollars on building data centers, security capabilities, and a suite of software to enable businesses to remotely manage infrastructure.

2020s: Cloud providers integrated Artificial Intelligence (AI) and machine learning services, democratizing advanced analytics capabilities. This includes Microsoft’s alliance with OpenAI and and investment of $13B to obtain usage rights to the technology. The big technology companies (Google, Amazon, Microsoft, Apple, etc.) are all retooling their infrastructure and software to integrate AI throughout their offerings, with OpenAI leading the pack as the clear leader in AI technology. AWS remains the current market leader in cloud services with 31% of the market, Microsoft Azure with 24%, and Google Cloud with 10%. However, given Microsoft Azure’s unique alliance with OpenAI, some analysts are predicting Microsoft Azure might overtake AWS as the leader by 2026 –  leading to a range of powerful analytic, business intelligence, and productivity capabilities for businesses like Azure AI, Fabric, and Co-Pilot.¹ NVIDIA, a chip manufacturer, has quickly become one of the most valuable companies in the world since their chips are uniquely optimized for AI data processing and companies are investing billions of dollars in infrastructure updates.

Benefits of the Cloud

On-premises infrastructure has gone the way of the dinosaurs. Organizations that think they are better suited to manage their own physical technology infrastructure are starting to learn they don’t have the resources or focus for infrastructure management to be their core competency, and they are falling further behind the technology curve.

The following are specific benefits of cloud services:

Hyper-Scalability: Azure and AWS have millions of servers. This provides virtually unlimited ability to process any data request. Modern software, especially AI and analytics, need vast computing resources, which is impossible for a single company to purchase and maintain.

Cost-Efficiency: Organizations using the cloud are essentially renting powerful computing resources in a pay-for-use model. This is often much more affordable than buying and maintaining their own infrastructure in terms of hardware expense and the human resources needed to manage it.  

State-of-the-Art Hardware: Azure and AWS’s core competency is cloud computing, making investment in infrastructure a mission-critical focus. This includes investing in the latest hardware, chips, load balancers, and related hardware. These companies invest billions of dollars annually to provide the latest hardware, including designing industry-leading proprietary capabilities.

State-of-the-Art Software: Azure and AWS go beyond hardware and provide the software to interact and remotely manage the hardware. This affords critical benefits unique to major cloud providers, which include: automated software deployments, instantaneous scaling, load balancing across machines, automated monitoring of infrastructure, anytime click-of-button additional hardware options, deploying to other geographic regions, and the list goes on. The software provided by Azure and AWS go beyond infrastructure management and extends to databases, business intelligence tools, and artificial intelligence capabilities through partnerships and proprietary software that make fully integrated solutions easy to manage.

Security and Availability: Azure and AWS provide for nearly 100% software availability to users. For example, if a server issue arises, processing jobs are instantaneously transferred to other machines. These leading data centers also process over 70+ trillion cyber security threat signals per day, giving them unique insight into cyber security issues to better protect the data in their systems. They employ the top minds in security and invest billions into the latest technology and capabilities, since securing client data is mission-critical.  When breaches do occur, the affected machines are scaled down and clients can stand up new instances of their applications quickly and seamlessly. The advantage to cloud computing is that it can avoid system outages that last for weeks or months, as we saw with last years’ incidents at MGM and Gateway Casinos.  

Containerization: Savvy cloud-based companies will containerize their services. This partitions areas of their technology within containers. This allows for scaling resources within individual containers so if there is  heavy website traffic, for example, only the website container consumes more compute resources and associated costs. This also enables  security breaches to be isolated, so if one service is affected, that single service is scaled as opposed to it affecting the entire company’s operations.  

Architecture support: Leading data centers are incentivized to build and maintain performant software. The more compute resources consumed, the more infrastructure they need to build – and that is expensive for them. Azure and AWS have senior software architects and engineers on-staff, providing complimentary architecture reviews and support to businesses to enable them to reduce their compute needs and maintain highly performant software. This is  incredibly beneficial to businesses in terms of both cost management and optimizing performance.

Benefits of Cloud-Native Risk Management Software

The benefits of cloud services to risk management software companies like Kinectify are immense.  

Let’s dig into a number of them.  

Hyper-scalability: The ability to ingest and compute vast amounts of data against complex models and computations in near real-time, to the tune of billions of records per day. This allows for effective  monitoring of fraud, money laundering, and other risks. In short, data centers provide nearly unlimited compute capabilities.  

Cost-efficiency: Scaling up and down servers and computing resources instantaneously. This pay-for-use model is more cost-effective since organizations only pay for usage and not the costs associated to buying and maintaining infrastructure. The software and automations provided by Azure and AWS to remotely manage infrastructure greatly reduces the need for large IT administration expense and personnel.  

Continuously state-of-the-art: When NVIDIA creates an exciting new processing chip that improves compute and enables new valuable features, you can bet Azure and AWS will be one of the first purchasers. Cloud-native companies will therefore have immediate access to it, allowing them to remain on the cutting edge of technology.

Automate deployments: Software updates can be deployed near instantaneously and most cloud-native companies will deploy new software on a regular bi-weekly cadence with important bug fixes being implemented faster.  

Availability: It is common for cloud-based software to be 100% available to clients with zero unscheduled downtime. Because infrastructure is housed in data centers with thousands of servers and redundancies, organizations can achieve extremely high availability –  meaning clients never have to worry about outages.

Security: Cloud-native companies have no infrastructure in-house, so they leverage the full security capabilities of Azure, AWS, or whatever cloud provider they use. The major cloud providers process trillions of threat signals globally per day, which greatly enhances their ability to secure their infrastructure. Containerization further allows cloud-native companies to divide software capabilities in order to isolate them from threats. If one container is breached, that single services goes down instead of the entire system. Additionally, the affected container can be spun up again quickly on fresh machines. Clients may wait minutes, hours, or days for the impacted service to be restored instead of having the entire software system offline for days, weeks, or months after a breach.  

Managing risk management software outside of the cloud is simply untenable in today’s complex and constantly evolving threat environment. Organizations with regulatory obligations in a fast-moving industry like gaming cannot wait a year to update their risk models or enhance their product. Outdated risk models and analytical tools can put an organization in jeopardy, especially in the areas of anti-money laundering (AML) and fraud. In addition, the most valuable software features for AML, responsible gaming (RG), and fraud are only available in the cloud, which allows for big data analytics, large language models, and other AI and machine learning solutions. In today’s world, attempting to deploy AML, RG, or fraud software using on-premises technology severely limits the feature sets and puts organizations at risk of regulatory findings, sanctions, or even prosecution.

This fundamental shift in how we consume and manage software has occurred. The evolution of cloud services has enabled this shift and will continue to transform the technology landscape for the foreseeable future.

Stay tuned for the next article in this series: Impacts of the Cloud Transformation for the Gaming Industry

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