Cloud computing delivers benefits that can increase revenues, improve business agility and drive competitive advantage
Marshal Correia
Technology is more vital than ever to financial services institutions (FSIs). This is reflected by the investments FSIs?encompassing banking, securities and insurance?are making on technology. Executives expect and demand IT departments to be agile and contribute directly to innovation, cost savings and customer satisfaction.
According to Gartner, this is the largest industry market for IT products and services in Asia Pacific at $71.3 billion and constitutes 20% of the total Asia Pacific IT market in 2012. 1 However, there is a significant imbalance of budget spending around IT initiatives. An inequitable percentage of budgets are spent on maintaining IT systems versus improvement and development initiatives. In addition, evolving regulations like Dodd-Frank are causing firm to take a cautionary strategy when it comes to making technology investments beyond the specifically required implementations.
To address this issue, FSIs are looking to plug budget-related technology gaps or reduce the total cost of ownership by shifting non-business critical functions to outsourced service providers. These providers specialise in infrastructure, platform and software as a service, which reduce the need for large budgets and the complexities of maintaining a modern IT infrastructure. By moving infrastructure and application services initiatives, FSIs can gain technology currency, increase agility in the services they consume and focus on growth and revenue producing initiatives. HP for example, recently worked with the Bank of Canada to lower operational costs associated with managing the bank?s Retail Debt Program (RDP) by outsourcing its contact centre and bond registry, and increase the programme?s flexibility.
IT outsourcing provides the people, platforms, and infrastructure that banks and other financial services firms need to meet part or all of their technology support requirements. One outsourcing solution that is becoming increasingly popular is cloud computing. Cloud computing gives financial institutions the opportunity to off-load compute and storage services and system maintenance in order to focus more of its time and energy on revenue generating initiatives. Organisations in Asia-Pacific and Japan region (APJ) are prioritising cloud investments, with 80% of APJ enterprises expected to invest $100,000 to $1 million annually on cloud computing between now and 2020.
Cloud computing is delivering benefits that can increase revenues, improve business agility and drive competitive advantage. Informed observers believe that as FSIs evolves towards more agile, cost-efficient systems, cloud will be understood as a necessity. In fact, cloud-based solutions are becoming a fundamental requirement for any FSI that hopes to build and sustain a competitive advantage. In order to reap the benefits however, FSIs must first understand how to deploy and manage their cloud computing implementations.
The IT industry is at an inflection point where the delivery, consumption and business model for technology are all being redefined. The way infrastructure is built, applications are developed, and information is delivered, is changing.
Bringing the cloud to FSIs presents important challenges and benefits. In APJ, CIOs and IT executives are concerned about a number of issues, including security, transformation, compliance and vendor lock-in. FSIs can best accomplish this vision through a hybrid delivery such as a converged cloud model. This approach ensures the right method of sourcing and pricing technology-based services. If not implemented properly, cloud silos will create complexity, risk and vendor lock-in.
Converged cloud allows banks, insurance firms and other FSIs to build, manage and secure hybrid environments. That hybrid mix can then be integrated into a FSIs environment without the cost and complexity of managing those resources separately. The vision is to enable the CIO to become a broker of IT services allowing clients to adjust workloads across traditional, managed, private cloud, and public cloud. By leveraging the cloud, organisations can decrease focus on the fundamental nuts and bolts of legacy IT, such as evaluating hardware, installing operating systems, and managing images.
Most FSIs will enter the cloud computing continuum by building private clouds and consuming external non-core services such as email, collaboration tools, and ERP/CRM. In addition, test and development infrastructure and modeling are often candidates for cloud computing. This approach will help organisations accelerate the delivery of new products and services to the market.
A well-executed cloud strategy allows FSIs to build and launch new services as well as applications far more quickly and at substantially lower costs. To stay competitive, FSIs and their counter parts must have the tools to manage costs and risk, in order to comply with stricter regulations, and drive customer satisfaction, productivity and growth. The transition to the cloud is an integral initiative for organisations world wide, including FSIs.
Outsourcing will become a means to accelerate transition to cloud services. FSIs worldwide have begun and will continue to work with technology vendors to accelerate the process in an efficient and safe manner.
The writer is vice-president & general manager, Enterprise Services, HP India
