Why so many cloud migrations fall short in financial services
A heightened focus on digital banking transformation is driving the accelerated adoption of cloud technologies in financial services. But all too often, problems are being encountered during cloud adoption that are eroding the value proposition and causing CIOs headaches. It’s no surprise then that 70% of digital transformation projects fail, or fall short of their intended objectives, according to McKinsey.
The root cause of these issues is most often found in the assessment, migration and operational planning, not in the core capability of the cloud services themselves.
Cloud’s proven value
The core capability and value proposition are proven, and cloud-based data and infrastructure services have clearly benefited financial services firms through:
- Enabling scalable and cost-effective analytics, AI and machine learning, which have put data science into the hands of the business, yielding unprecedented insight into market behavior, financial performance, portfolio risk and customer journeys.
- Reducing time-to-value from digitalization initiatives through self-service provisioning and dev-ops. Compute infrastructure is being deployed in seconds to power next-generation workplace services and digital banking applications.
- Improving operating margin by reducing capital expenses in infrastructure, eliminating data center real estate and enabling pay-per-use micro services.
The marketplace for cloud services has become increasingly competitive, with providers introducing new capabilities daily. The variety of offerings combined with ease of consumption is resulting in multivendor hybrid-cloud environments being implemented to ensure the business has access to best-of-breed capabilities.
The less exciting details matter
Intent on rapidly capturing the value and benefits of these new services, financial services firms too often take a path of least resistance to cloud assessment and operational planning. This opens the door to a variety of challenges that have a sharp impact on financial services and banking.
- Security: rapidly scalable infrastructure services, combined with self-service provisioning, have made the enforcement of consistent security standards difficult. Highly publicized data breaches in financial services mean vulnerability management is often a board-level priority. This can put the CIO and CSO at odds with each other as the desire to expand cloud-based service capability runs up against the charter to protect sensitive financial data.
- Cost: the ROI for cloud transformation initiatives often fail to meet financial projections due to lack of cost controls around self-service provisioning and unforecasted public cloud costs such as network egress.
- Regulatory controls: as data traverses this diverse ecosystem of cloud services, ensuring that regulatory requirements continue to be met becomes a challenge. Implementing and maintaining consistent data retention policies and reporting capabilities for audit and compliance is a difficult task as cloud services expand.
- Maintaining service: service dependencies are often overlooked or oversimplified during cloud migration planning. The practice of server-based cloud suitability assessments without a clear view of service dependencies can cause service degradation or outright service failure when the migration is executed.
Embrace cloud services… with awareness
Evolving cloud-based technologies will inevitably transform the way financial services firms do business and enable next-generation banking and finance capabilities. Technology executives should embrace this potential, but also be aware of these common issues and understand why they are reoccurring in the industry.
Don’t let new capabilities monopolize the effort
Oversimplified assessments and operational plans are the single most common source of failure during cloud transformation efforts. Too often the new technology and capabilities of cloud providers monopolize the assessment and business case. Service dependencies, cost control mechanisms, ITSM integration and regulatory compliance require the same time and attention as the new capabilities being introduced by cloud technologies.
A business-focused cloud assessment emphasizing end-to-end services and future-state operations will help prevent common issues and enable financial services firms to achieve their digital transformation goals.
Look Out 2020+ for Banking
For more views the business opportunities and key technologies which will shape the future of Banking have a read of the Atos Look Out 2020+ Global Banking report ‘Toward next-generation financial services ecosystems’.