To maximize value and accelerate savings, organizations need a more coordinated approach. … [+]
For most financial services companies, the migration to the cloud is far from over. Four out of five Banking industry executives said they intend to increase the share of core workloads migrated to the cloud from 7% to more than 50% over the next two to five years, according to research from ‘Accenture published in January. Yet the toughest challenges lie ahead as barriers to existing infrastructure, security and compliance risks, and a lack of up-to-date technical skills continue to hinder business efforts.
Although banks, insurers and financial market participants remain committed to migrating key workloads and applications to the cloud, the process is complex and requires a coordinated strategy to succeed. To achieve the desired results, these organizations must first overcome the major issues hindering their progress.
In my experience working with financial institutions, there are three reasons why many struggle to migrate their core system:
- Executives fear that cloud providers won’t be able to match the superb resilience their mainframes offer;
- Applications running on existing infrastructure tend to be old and need to be modernized as part of the migration process; And
- It’s hard to get any short-term financial benefit until you’ve removed everything from the mainframe and decommissioned it.
As an organization’s cloud migration progresses, the challenges become greater. Despite the experience gained through piecemeal efforts, the complexity and scale of migrating core workloads amplifies most, if not all, of the obstacles listed above.
One reason to be optimistic is that the more an organization engages with the cloud, the more likely it is to achieve the desired results. Across industries, the Accenture study found that 47% of companies that are high adopters of cloud fully achieve expected results, compared to 36% of companies that are moderate adopters and 21% of those that are low adopters. As a growing number of financial services companies accelerate their cloud adoption, they can reasonably expect their satisfaction to increase in tandem.
Another encouraging result is that the outcome achieved by most organizations is business empowerment. This covers capabilities such as data, analytics, AI and innovation, and promises the greatest value potential: improving customer engagement through digital capabilities and increasing revenue as a result.
At the other end of the scale are cost savings, which are the cause of most cloud enthusiasts’ greatest disappointment. Returns are taking longer than expected to come through, in part because the transitions were isolated events but, more importantly, because incomplete migration results in avoidable redundancy.
Ultimately, to maximize value and accelerate savings, organizations need a more coordinated migration strategy across the enterprise. Here are five steps they can take:
1. Use the full power of the cloud to gain business advantage. Prioritize use cases based on time to value and align investments with emerging business strategies.
2. Unlock new value from data and AI. Data excellence is the new competitive frontier, for financial services as well as most other industries. Success will depend on the ability to learn lessons across the business that enable employees to work smarter and more efficiently, customers to interact more meaningfully, and operations to become more automated. AI can also play a role in accelerating migration to the cloud.
3. Design and orchestrate across the cloud continuum, which encompasses a powerful range of capabilities from public to edge and everything in between. This continuum allows the cloud to be viewed not as a single static destination but as an operating model and strategic enabler. Success depends on the ability to adopt the right mix of capabilities and services offered across the continuum.
4. Discover new opportunities. Technology alone will not be enough to maintain the value of the cloud. To thrive in the cloud, businesses need their employees to reinvent their operating model, processes and products. They must explore and seize the new possibilities offered by freeing themselves from the constraints of the existing system. This ranges from ways of working and engaging customers to modernizing organizational culture.
5. Strive to master the cloud economics. In an environment of increasing cloud complexity, businesses can gain a lot by controlling their cloud spending. This requires not only transparency and oversight, but also shifting the debate from cost to value of the cloud. Both perspectives are necessary to get a complete and balanced picture.
None of these solutions are easy, and the bad news is that they are all necessary if businesses want to close the gap between their expectations of the cloud and the results they get. There is an understandable impatience on the part of leaders with the desired results, but ultimately the results are hard-won.
However, many financial services companies take great steps. One example is Capital One, which has been one of the leaders in cloud migration for the industry. The bank abandoned its data centers and turned to the public cloud to help create superior, more personalized customer experiences.
The cloud has demonstrated time and time again that it can produce powerful results: certainly in terms of efficiency, but above all in better customer engagement, innovation and greater agility. The trick is to identify why it sometimes fails or takes too long and take preventative measures to ensure these obstacles are removed or worked around.
Ultimately, it takes commitment from leadership to align the business with its cloud goals and demonstrate strong determination to achieve them.