Accelerating cloud adoption: why now and how to do it right
In our first article, we took a look at how the financial services sector has had the cloud available to it for years yet has done very little with it. We wrote about how a lack of strategic partnerships and planning left most financial institutions in a position that was neither truly adding value nor delivering on transformational promises. In this article, we’d like to explore this further and hone in specifically on accelerating cloud adoption. In particular, we’d like to put a case forward for why now is the best time to do it, and how to do it right.
No time like the present
The past twelve months have been a wake-up call for business. Covid-19 has disrupted the normal course of business for financial consumers and institutions alike. Each having a strong focus on how they address their unique concerns.
Financial consumers are focused on access to capital, and time is critical in determining the viability of businesses to enable them to continue to meet their financial commitments. Financial institutions, meanwhile, have been focused on safety, security, resiliency, scalability, and the continued health of their operations.
The regulators of the financial space have also seen disruption, pivoting to focus on economic recovery and making capital accessible to those who need it, ensuring the stability of national and global financial systems.
These heightened concerns and requirements have translated into increased burdens on the financial system, particularly from a technology perspective.
While it’s true that financial firms had been exploring and adopting new technologies such as public cloud, to boost innovation, provide better services to customers, and increase security, the issue was that they’d done so at a rate slow enough to not have had as meaningful an impact as they now know is possible.
Fast forward to today, and most firms are looking to the cloud as the true driver of innovation and transformation, leveraging its ability to increase development and provide near-limitless scale. This newfound cross-industry affinity for the cloud has come as a direct result of a disruptive year that has favoured fast-moving digital players over slower larger enterprise monoliths. For financial institutions, cloud adoption and acceleration are no longer just about minor efficiency improvements and potential revenue increases, the focus now is on surviving and thriving in a world where speed, scale, innovation, and experimentation are the only reward generators.
Pedal to the metal
Everyone agrees: we live in a world where the cloud is the only game in town – so now what?
First things first, those financial firms that have established cloud adoption as a must need to understand exactly how they can accelerate that adoption to start seeing the cloud’s benefits in real time. A good first step is to take stock of what indeed it is your firm has adopted. Many firms have broad adoption of cloud but usages and understanding vary from department to department.
Secondly, capital markets firms face several adoption challenges. Everything from regulators to internal governance and compliance, to the available skills within the organisation, have an impact on how a firm charts its acceleration journey. Understanding these and planning for them is critical to ensuring your cloud acceleration goes off without a hitch.
Finally, new market entrants like Fintechs have successfully adopted and accelerated with cloud, shifting their focus to greater operational excellence, resiliency, and a flexibility that allows them to change rapidly as conditions demand. Incumbent firms need to be aware, not only of what their direct competitors are doing, but also have an eye directed at those new players that are redefining how the game is being played. Getting to a level playing field with these new kids on the block is important, because the longer they have to accelerate the more difficult it is for incumbent firms to catch up.
There’s no one-size-fits-all solution for accelerating cloud adoption; what there is, however, is a framework for understanding what the cloud is and can do for your firm, and marrying that up to your business objectives. It’s time to stop thinking about the business as separate from the IT function, and start thinking about how the cloud can help deliver strategically on cloud-enabled business services and capabilities.
Our recent Cloud Benchmarking study quantified the benefits of Cloud adoption in comprehensive style, with the numbers demonstrating big improvements in staff productivity and business agility. Some of the key benefits reported by correspondents who adopted Amazon Web Services (AWS) included:
- 27.4% reduction in cost per user
- 67.7% increase in terabytes managed per administrator
- 56.7% decrease in application downtime
- 37.1% reduction in the time-to-market for new products and services
Getting it right
Adopting proven best practices and successfully deployed blueprints is the best way to build a successful framework for cloud acceleration. The idea is to learn from the successes of those who have recently gone before.
AWS and DXC have helped many firms accelerate their cloud adoption, and we’ve identified that these six steps are key to getting it right.
1. Build Landing Zones
A landing zone is a well-architected, multi-account environment that is scalable and secure. It’s a starting point from which your firm can quickly launch and deploy workloads and applications with confidence in its security and infrastructure environment. Building a landing zone involves technical and business decisions to be made across account structure, networking, security, and access management in accordance with your organisation’s growth and business goals for the future.
To explore AWS’s landing zone, click here.
2. Acknowledge the importance of sandboxes to allow for experimentation
Sandboxing builds resilience against malicious code in an organisation’s critical infrastructure code by running the code in a separate system. This creates an isolated environment in which to experiment through different scenarios and determine which services, tools, and resources you need to deliver for the business. Working in an isolated environment means you can safely test malicious code, understand how it works within a system, and more rapidly detect similar malware attacks.
For more on AWS’s sandbox, click here.
3. Set up a Cloud Business Office
The role of a Cloud Business Office is to ensure alignment of cloud goals between the business’s goals and the strategic and tactical execution of them across elements of people, process, and technology in a well-governed and inclusive way. As the AWS Enterprise Strategy Team state, “The Cloud Business Office ensures the effective governance of the organisation to adopt and accelerate public cloud use across the business. It does this through the holistic representation of key stakeholders from across the business who form a quorum, who commit to being broadly educated on key cloud differentiators across security, reliability, availability, cost, and time to market. It will establish and agree on bold objectives and principles to the same, and act positively to encourage the enablement of the workforce to adopt cloud at scale, and address and remediate any risks or blockers that arise in its course.”
To find out more on setting up a Cloud Business Office, click here.
4. Ready the framework
Within many financial institutions, the cloud is accepted as a platform from which systems can be run. The best way to achieve the benefits of the cloud is to align them to clear business outcomes and adopt cloud-native business capabilities.
A lack of clear business outcomes is the most common cause of why many cloud journeys fall short of expectations or fail. Hopefully, the message is clear: define your goals for your cloud journey, adoption and acceleration in business terms, not IT ones. The key to achieving this is to think big. Rather than focusing on what you want to achieve right this moment, think, “where do I want to be in five years? Which markets do we want to be playing in?”
By looking at your cloud strategy from this perspective, you can start to more easily identify where you most need agility to speed up releases of new features and products and what new business models it might be possible to create.
Important, too, is the fact the cloud offers value in different areas. Identifying which cloud objective you want to meet for each business area helps you chart a path that manages expectations more accurately. There are nominally three core areas where the cloud creates value, these are cost: agility,
and innovation. Understanding which is being depended upon when, helps to drive clarity and precision.
For example, for cost, you’re looking to move from Capex to Opex and from fixed to variable. With agility, you might be looking for shorter release cycles for product features, or developing resilience owing to flexibility in response to changes in the environment. Finally, for innovation, you could be combining cloud services in innovative ways for new markets and products, in addition to wanting low cost to play, and rapid experimentation based on market feedback.
Whatever ‘value’ you’re trying to achieve, knowing that it falls into one of these three buckets helps you ready a framework that’s mapped back to clear objectives and deliverables.
Knowing which type of cloud you’re using is also invaluable in developing a framework. Combining the right mix of cloud strategies is the only way to meet complex business goals.
There are three core service types for the cloud and an additional two that are leveraged in a cloud-native environment. The core ones are grouped as follows: there are the underlying IT infrastructure servers (Infrastructure as a Service, or IaaS); platforms, such as operations systems or databases (Platform as a Service, or PaaS); and end-user software and applications (Software as a Service, or SaaS).
Then we have the cloud-native applications, that are built by developers in the cloud, and cloud-native business capabilities, which are focused on business functionality, and rely on the latest industry and technology trends. The main differentiator here is that you need to combine different cloud strategies that stop IT from being builders of systems and turn them into being assemblers of business capabilities.
For more on how to ready your framework, check out AWS’s Cloud Adoption Framework
5. Ready the organisation
Transforming a large financial enterprise requires a cultural shift. Organisations need to find ways to make deep changes scale broadly until they reach critical mass. Pockets of innovation here or there don’t have what it takes to create truly transformational change.
This is why we recommend the use of our Cloud Centre of Excellence (CCoE) as essential to financial firms’ transformational strategy.
A CCOE’s mission is to figure out the right tooling and practices that empower development teams to deliver the right digital experiences for customers with agility and confidence. It gives the necessary autonomy to make design and processes choices rather than being forced to operate within the boundaries of what an organisation already knows or is comfortable with. The first step to setting up a successful CCoE is forming the right team. Following that you need to:
- Deliver some quick wins
- Acquire leadership support
- Build reusable patterns and reference architectures
- Engage and evangelise
- Scale and reorganise
For more on using a Cloud Centre of Excellence, click here.
Step six is more a mantra than an actual step, but it can prove extremely useful.
6. Set bold goals to accelerate apps and build repeatable blueprints
Remember that you’re creating for the future, not trying to fix the problems of the past.
The cloud has proven successful for many Fintech and challenger institutions and this
is all due to them adopting technical practices that align to the well-architected approach.
Businesses now operate iteratively – learning constantly and creating small yet frequent releases that use data to understand the impact of new features and create new experiences for customers and employees alike.
The cloud brings agility and freedom to experiment, but it still requires discipline. To move fast you need to have standards, templates and blueprints otherwise you’ll be directionless and miss out on critical opportunities.
From an organisational perspective, focus on empowerment instead of hierarchy and govern through automation rather than approvals. You want to be breaking down siloes not creating them. Integrating a model that takes on multiple perspectives and looks at multiple deliverables like costs, resilience, security, and regulation is paramount.
Finally, have accountability. Establish frameworks, offices, and departments that are responsible for delivering – otherwise, ownership of your cloud acceleration will get lost in the day-to-day morass of daily life.
Rehosting apps on legacy platforms to cloud
DXC and AWS collaborated to great effect for insurance company John Hancock Financial, facilitating the rehosting of DXC Life Insurance Products to AWS, and unlocking cloud efficiencies and innovation.
The ask from John Hancock was to transform Life Insurance Products to be more competitive and cost efficient; there was a high TCO due to Life Ins and products being located in-house. They needed to be able to become more competitive by increasing flexibility to add new enhancements and services faster. There were additional requirements to improve scalability and reliability, minimise risk and downtime through clustering and high availability, and last but not least to improve the customer experience.
The solution was to migrate DXC Life Insurance Products to AWS using automated provisioning and deployment and leveraging container-based orchestration. Reusable blueprints would enable automated provisioning and deployment and reusable code helped in the conversion processes to migrate data from DXC DC to AWS. A remediated architecture made the applications scalable and highly available, all incorporated within a Dev-Ops ready framework.
The results were impressive: improved services and customer experience while reducing TCO and downtime, up to 40% reduction in operating costs with an ROI of 12–18 months, and an improved speed-to-market.
These modernised apps now meet industrial standards and the demands of business growth in 9–12 months of transformation. The client has achieved greater flexibility to meet seasonal customer demands, a scalable operating environment with the ability to rapidly provision new environments to drive ‘new’ innovation, and provide new ‘digital capabilities’ by API-enablement and integration with DXC Assure.
Some of the results and benefits are drawn from this particular engagement with John Hancock can also serve to highlight some of the general benefits that banking and capital markets companies can expect to see from embracing Containerisation. These include:
Cost-Effective: Dramatically reducing infrastructure resources; fewer resources are necessary to run the same apps and environment.
Highly Scalable: Scale-up/down service levels via code; adaptive scaling at the cluster level
Highly available: In-built service-health checks, smart load balancing, disposable containers
Rapid Provisioning & Deployment: Requirements of the infrastructure are no longer linked with the environment of the application
Standardisation: Docker containers ensure consistency across multiple developments and release cycles and standardise the environment.
Continuous deployment & testing: Consistent environments from development to production; build, test and release images that can be deployed across multiple servers.
Security: Apps running on containers are completely segregated and isolated from each other, offering complete control over traffic flow and management.
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