It has offered greater flexibility, more agility and new opportunities for innovation. No surprise, then, that more than 90 percent of today’s banks and capital markets have adopted cloud in some form.
Many banking efforts to adopt and scale to cloud have slowed or stalled. Some organizations got stuck in an experimental mindset without a sense of where their cloud journey was headed. Others struggled to make a clear business case for scaling up their use of cloud.
Most banks have, on average, only about 20-40 percent of their workloads in the cloud, most of which are the easier, less complex ones. And nearly two-thirds have said they haven’t achieved the results expected of their cloud initiatives to date.
On top of these concerns, COVID-19 has created an unprecedented wake-up call. Organizations everywhere have had a very powerful and direct reminder of the importance of systems resilience, agility, adaptability and scalability.
Recent disruptions have only reinforced the prevailing notion that cloud isn’t some future aspiration—it’s an urgent mandate at the heart of the business. But a rushed migration without a clear strategy can end up costing the business more, leaving existing legacy applications racking up consumption—and costs—at an alarming rate.
An intelligent cloud journey needs to balance speed and value. While there is no one-size-fits-all approach, each should start with defining the value, mapping out the journey and determining how cloud will enable the overall business strategy and ambition. There are five essential elements to capturing the full value of cloud:\> Migrate and Scale up
To maximize the cloud’s benefit to the business, you’ll need all five elements. Let’s consider each one in turn.
Cloud is not new. Yet most enterprises have still only dabbled in it. For a range of different reasons—technology, security, complexity, legacy, data sovereignty, human psychology—many workloads remain in on-premise data centers. Unless you migrate the majority of your workloads to the cloud, you will not be able to realize the full business value, including making your business more efficient, resilient, and customer focused.
First, you need to align the whole enterprise. Migration cannot be a purely IT-driven exercise. Those in other parts of the business need to be part of the solution, understanding that cloud is a critical enabler to business initiatives driving efficiency, innovation and growth. You also need strong leadership from the top to provide direction.
Second, to avoid getting stuck in a pattern of aimless experimentation, you should focus relentlessly on realizing value throughout migration and beyond. Treat cloud as a means, not an end. It’s not enough to say you migrated X number of workloads and think the job is done. A cloud strategy needs a systematic framework for delivering and measuring the value to the business now and in the future—covering technology, operations and financials. That, in turn, helps you make the business case for each workload and define the cloud target state (including architecture, infrastructure and operating model). This is vital because, from a business perspective, migration can look like a lot of effort for little return. You need to spell out the future value and transformation potential for each application, clearly justifying how the business will benefit from the migration.
Lastly, it also pays to be smart about prioritizing the “low hanging fruit.” This is a more sophisticated task than simply asking, “What takes out the most cost?”. You have to weigh cost savings against a range of other factors: application complexity, legacy needs, data-location and compliance requirements, “long-tail” interdependencies, and the potential value and innovation that can be unlocked via cloud native optimization. Thoughtful sequencing and prioritization of low hanging fruit can then help fund more complex migrations.
Most entities will choose to work with at least one of the public cloud hyperscalers, such as Microsoft Azure, Amazon Web Services (AWS), Alibaba or Google Cloud. They’ll look to leverage these providers’ global scale, deep expertise, and numerous cloud services.
Getting the most out of a hyperscaler is about committing to a partnership. Enterprises are investing in a relationship that will last years into the future. What’s more, hyperscalers will often be willing to put their own money on the table to kick-start that relationship. This can be a critical boost to a digital transformation, especially where financing is an issue. But it’s important not to fixate on cost alone. The enterprise also needs to carefully consider the support it will get from the hyperscaler around innovation, digital transformation and engineering.
The hyperscalers are on their own journeys of innovation, investing heavily in areas like streamlining migration, adapting services for private clouds and pushing out to the edge. In addition, they are investing in a variety of industry-specific cloud solutions to augment those provided by service providers and third-parties (e.g. HIPAA, PCI). For example, GE Healthcare is running its Health Cloud on Amazon AWS. Johnson Controls is employing Microsoft Azure’s IoT solution accelerators with its GLAS smart thermostat to give building owners remote access through web and mobile apps so that they can monitor and control features of the heating and cooling system. Also, Stanford Center for Genomics and Personalized Medicine is leveraging Google Genomics to analyze hundreds of entire genomes in days and return query results in seconds while providing reliable security for DNA data.
The hyperscalars’ innovation also extends to sustainability. Here, they are incorporating innovative techniques to bring down energy consumption at data centers. The shift to hyperscale centers—massive cloud-based data centers run by large cloud providers in infrastructure-efficient spaces—has made sharing hardware resources and computing more energy-efficient. Increasing the use of renewable energy, such as deploying cooling servers with outside air and reusing residual heat, is also helping reduce emissions.
An enterprise needs to be ready and willing to leverage all this innovation. That’s where a Cloud Center of Excellence (see inset) can be critical, ensuring the organization keeps on top of the huge range of hyperscaler services and solutions released each year, understanding which will help the business (and which won’t) and working with application owners to facilitate adoption.
For example, Microsoft Azure has recently launched a number of edge and IoT services, acquiring Telco-related capabilities. Where a year ago little to no capability existed, it is now able to address some fairly complex edge-computing use cases.
For most organizations, the optimal way forward will be to select a primary hyperscaler for the majority of mission-critical workloads, and then work with one or more secondary providers dictated by the specific needs of the business (regulatory, industry, concentration risk, specialized workloads, commercial, etc.). This enables the organization to build core skills and experience on one platform. While it might seem tempting to work equally with several hyperscalers, arbitraging between them can be challenging. Arbitrage can't be the principal driver since whatever savings may be gained is offset by increased complexity and substantially greater skills requirements for multiple platforms. However, specialized functionality may justify the added investment.
Just getting to cloud doesn’t make you a cloud-native enterprise. To do that, you need to modernize, building applications and services specifically for a cloud environment.
Your business needs an IT capability with speed and agility, that can support accelerated cycles of product release. You need faster, more efficient and cost effective applications refactored (recoded) for the cloud. You need to be able to swap different components in and out with zero disruption, by abstracting the underlying infrastructure and platform. You need to think holistically about the flow of data across your systems. And you need to adopt new technologies as customer need dictates.
Becoming cloud native is like learning a new language for enterprise IT. If you want to speak cloud, you need to immerse yourself in it. Doing this for greenfield development is relatively straightforward. But there’s no escaping the fact that this can be a substantial undertaking for global organizations with large legacy estates.
The reality is, for complex mission-critical applications with many interdependencies, modernization can’t happen overnight. It requires a strong architecture upfront. Failing to design one can render services from the hyperscalers ineffective and undermine the expected value.
That’s why modernization needs to be a carefully considered, long-term process that’s based on a solid application discovery assessment. The strategy needs to take into account where the organization is headed—and why—while building in enough flexibility to adapt over time.
Operating your IT estate is fundamentally different in the cloud. The traditional model of managing capacity by purchasing and running physical hardware doesn’t work. Instead, you must continuously manage consumption, capacity, performance, and crucially—cost. It requires a very different skillset as well as new operational functions.
This is where many cloud journeys falter. If you’re not constantly monitoring and optimizing capacity, especially with legacy applications, as well as leveraging the right or latest services from the cloud providers to maximize the performance/value ratio and sustainability, you quickly find costs and waste escalating. You’ve got to be proactive. You need people who don’t just react to spikes in consumption, but understand and anticipate why they’re happening and how they impact IT’s carbon footprint. Further, they need to know what business processes are involved, how critical they are and how they all fit together.
The skills issue goes wider still. Management in the cloud is largely a software exercise in which teams write code to monitor and fix the estate. What’s more, most enterprises today will be managing a multi-cloud environment, and including a mix of SaaS, PaaS, private cloud and on-premises solutions. This undoubtedly brings extra complexity to management and optimization, requiring both a holistic understanding of the estate and deep skills in the various platforms being used.
Cloud is the mother of business reinvention. It enables experimentation at speed. It lets you spin up new environments instantly, try out several ideas at once, and see what’s working quickly and securely. It’s about iterating faster, testing out prototypes on demand and getting real-time information on which to base your business decisions.
Cloud is also a catalyst for business reinvention with the strategic use of data, advanced analytics and AI. It’s about leveraging data at scale and unlocking its value with applied intelligence. It’s about improving data quality and its more efficient use which in turn conserves energy. It’s about the combinatory potential of advanced technologies like machine learning and the vast numbers of future edge devices connected to the Internet of Things. It’s about scalable compute power to support increasingly sophisticated AI models. And it’s about working more closely with suppliers and partners, sharing data securely to streamline and accelerate supply chains or enabling new business models.
Access to an ecosystem of partners can be an innovation game-changer. Through collaboration with partners, you can gain access to cutting-edge technology.
With the speed provided by the cloud, and by working with cloud hyperscalers and other service providers, enterprises can shift their focus away from the “keep the lights on” operations that currently take up so much of their teams’ attention. People and funds can be freed up to focus on how systems can adapt to what the business and its customers will need next. When it all comes together, the results can be significant.
Get ready to maximize the value of cloud investments by partnering with experts who understand the heart of your business.
The time to scale cloud adoption is now—maximizing cloud’s value can be realized leveraging five essential elements: migration, hyperscaler integration, modernization, management and innovation.
Cloud has proven its centrality to resilient, sustainable enterprise operations and future competitive advantage. If you’re not substantially on the cloud, you can’t hope to unlock the capabilities a modern business requires—greater flexibility, more agility and new opportunities for innovation. Enterprises that continue to delay a shift to cloud at scale aren’t just incurring an opportunity cost, they’re risking their very survival.