Cloud: Banks won’t benefit until they embrace Agile
2019 sees the trend towards Cloud adoption continuing unabated across the Financial Services industry. Working with our clients to refresh and extend their IT portfolios, we at BCS Consulting are finding IT decision-makers more prepared than ever to consider public Cloud solutions, and increasingly holding a conscious preference toward them.
Despite this, we often need to counsel our clients against buying Cloud products simply because ‘everyone is doing it’. The business case underpinning Cloud adoption is nuanced: beyond reducing costs, Cloud can be an agility enabler of fundamental relevance to the digital agenda. However, without equally embracing Agile ways of working at the grassroots level, many firms stand to miss out on the real opportunities Cloud technology presents.
Not always the cheaper option
Cost reduction remains front of mind for many of our clients, and appropriate Cloud usage has a clear role to play. Particularly for back-office workloads, we’ve seen increasing adoption of managed Software-as-a-Service (SaaS) solutions. For business functions which are non-differentiating in the marketplace, there are clear cost incentives for outsourcing infrastructure and software maintenance in this way to third parties who can be shown to operate in a compliant manner. Over time, we expect to see SaaS usage continue to expand into areas such as Finance and Risk Management where re-platforming onto the Cloud would once have been discounted as simply ‘too hard’.
Firms’ more bespoke applications, particularly customer-facing services, seem unlikely to progress far down a SaaS route, but remain open to Infrastructure-as-a-Service (IaaS) Cloud propositions. For these, however, the financial benefits are less clear-cut. Skilled DevOps engineers must be recruited and retained, and Cloud infrastructure costs paid – despite their far greater economies of scale and efficiency (many firms’ on-premise servers still run at <15% utilisation), Cloud providers still price their services with an eye on profitability. In fact, running Cloud hardware for non-trivial workloads on a 24/7 basis can work out to be as expensive, if not more so, than equivalent on-premise deployments.
It’s all about agility
Beyond cost efficiency, therefore, we see firms looking to agility as their main motivation for moving to the Cloud. The ability to provision computing hardware near-instantly can, if employed correctly, massively empower teams to generate business value for their firms. Currently, it seems to be IT-aligned functions such as Digital Innovation teams who benefit most, with instant access to computing resources allowing rapid development of new digital products and services. Looking forward, however, we anticipate these capabilities being increasingly relevant to business users. In particular, self-service access to Big Data analytics, including machine learning, is proving massively powerful. Under a traditional IT model, such capabilities would be beyond the reach of business users due to the cost and complexity of procurement. Now, cutting-edge tools can be made available at the click of a button.
Of course, the agility and cost arguments remain linked: cost management benefits enormously from IT managers’ ability to review utilisation and rein in wastage across their Cloud estate. And beyond this, our most sophisticated clients are looking to leverage containerisation technologies to pivot workloads across multiple public Cloud providers, allowing not only for just-in-time cost optimisation but operational resilience through diversification.
Getting comfortable with agile Cloud usage
While compelling, these prospects are not without challenges – foremost being firms’ own ability to support agile ways of working. For organisations employing public Cloud services for the first time, it is common to see the provisioning of Cloud resources wrapped in a traditional centralised IT procurement process, in which access to Cloud technology is gated behind bureaucratic application processes which – whilst justifiable on a myriad of risk and control grounds – quickly become a source of friction that can critically undermine the agility end-benefits.
We see a solution in the form of more Agile-oriented ‘digital’ organisational models, under which cross-functional product teams are empowered to self-serve their IT – deploying Cloud resources as needed to accomplish their specific business needs. Implementing this with the right level of top-down control is a delicate process. Such an approach runs counter to historic thinking in many firms with an established practice of centralised IT control and implies potential for changes to be difficult.
Without such change, however, firms may fail to capitalize effectively on the agility advantages that public Cloud offers – and ultimately struggle to adapt to the digital demands of tomorrow.