The Evolution of ‘as-a-Service’
The proliferation of cloud computing, throughout the enterprise landscape, has accelerated the growth of a new generation of businesses and business models. A new way of consuming enterprise software, ‘as a Service’ (aaS), has evolved, allowing the consumption of the entire technology stack from infrastructure through to the application, on a per usage basis.
Whilst the concept of shared access to centralized computing resources is not a new one, having existed since the 1960’s, cloud computing has democratized this kind of technology and allowed this new wave of technology companies to drive innovation.
Across financial services the adoption of consumption-based models, whether self-managed cloud or ‘as-a-Service’, is rising fast. Whilst initially used for non-core and smaller systems used for tasks outside of the banking and capital markets business, such as Human Resources Information Systems, Procurement or Payroll systems, innovation in the core systems required to run a financial services business is pivoting towards ‘as-a-Service’. For mission-critical trading and risk management platforms, cloud is generally recognized as the most reliable method of growing the business whilst keeping a tight rein on costs. Not all organizations have yet begun their journey, but very few are not talking about their aspirations. Luxoft is at the forefront of helping customers and partners with their transformation.
Large, complex systems such as those that underpin financial services organizations, be it core banking, lending or trading and risk, have a significant overhead to run. This can involve stewarding several other players, managing multiple commercial arrangements across the system vendor, infrastructure provider, system integrator, contractors and internal staff. There is a both an administrative and financial burden which can detract from focusing on differentiating business activities and supporting revenue generating functions with their business change agenda.
Continuing to meet regulatory obligations, ensuring technology risk is well managed and that obsolescence is staved off through regular upgrades up and down the technology stack can be a tall order. Shifting to an ‘as-a-Service’ model for these systems can solve many of these challenges whilst bringing further benefits in terms of the ability to scale rapidly and respond to market forces, as well as keeping up to date with the current version.
Under the hood many ‘as-a-Service’ offerings also mutualize certain costs, which can help to bring down the total cost of ownership for these complex systems. Moving fully to ‘as-a-Service’, including your run and small change capacity can potentially lead to TCO reductions of 25-40%. This also provides an opportunity to streamline your organizational structure as well, with less need for operations staff, contractors and vendor professional services. The staff you retain can focus fully on differentiating business change activity.
There’s no danger of falling behind with upgrades and risking falling behind with obsolete technology, either. Built-in evergreening will provide a predictable TCO for the life of the deal, removing the CAPEX spikes associated with upgrades. Luxoft’s ‘as-a-Service’ offering will also provide the option to support not only the central third-party application, but the wider application ecosystem, which we’ll look at later. As a global technology outsourcing organization, Luxoft has an optimized footprint of delivery locations globally, which will allow us to further reduce the TCO by selecting the right regions and locations to support our customers. This global footprint also allows us to scale rapidly, building change capacity into our ‘as-a-Service’ offerings and allowing for flexible increases in capacity to shorten time-to-market.
To step up your agility and compete more effectively and drive transformation, you need to be continually assessing and deploying new technologies and operational models. The ‘as-a-Service’ model releases money, that can be reinvested in this ongoing cycle of innovation.
The simplification and optimization of your existing technology estate addresses many of the tough challenges linked to on-premises platforms:
- Depreciating infrastructure assets
- Long lead times for scaling development and test capabilities for major initiatives
- OPEX spikes to complete costly major application version upgrades
- Inability to scale production environments easily as demand grows
Your business priorities and direction can change as rapidly as the markets you operate in, so remaining firmly in control of your change agenda is critical. With Luxoft’s ‘as-a-Service’ offerings, the roadmap, scope and priority of changes are set by you, in the capacity of Business Product Owner. A clear and transparent process for managing the scope and priority of all changes is in place, as well as regular reporting on the burndown of change days. On-demand delivery can also be scaled with additional change days – for spikes in activity.
Shifting to CAPEX rather than OPEX also reduces the barrier of entry for new players and assists with the introduction of new and innovative technology. Cost transparently also allows for a stronger focus on business value rather than resolving legacy technology issues. ‘as-a-Service’ allows the mutualization of implementation and run costs and shifts large CAPEX spikes into a consistent OPEX spend – which only increases with the volume and size of your business.
Many organizations, including financial organizations, already have a cloud first strategy in place, which can include the move to ‘as-a-Service’ software for non-core and non-differentiating technology.
Finding the right partner for you
Luxoft is uniquely placed to help clients and partners accelerate a transition to ‘as a Service’. As the leading system integrator of third-party trading and risk management systems since 2007, they know how to implement, manage, support and own run and change activity on these platforms in production.
Luxoft’s position of integrating and running complex banking applications, across the banking and capital markets landscape, gives them both the partnerships with Independent Software Vendors (ISV’s) and the expert knowledge required to run their systems in production. Something many ISVs have never had to do.
Taking a client driven approach, working with clients and vendor partners across banking and capital markets, in order to offer their application installations to clients ‘as a Service’. They will take on the operational, system integration and run complexity – lowering the overall TCO. Partners will also get to secure license revenue, without transforming their own business and workforce. Whilst Luxoft will continue do what they do best – integrate and run complex applications for clients.
Utilizing Luxoft’s depth of expertise across system integration and bespoke development across financial services, the ‘as-a-Service’ offerings have been developed from the ground up using agile principles, with flexibility being central to the operations. These fully cloud-hosted, managed services are underpinned by automated testing, configuration management and deployments, with all parts of the stack defined as code using cutting-edge tooling and methodologies.
To facilitate Luxoft’s move to offering ‘as a Service’ applications, they’ve set up the Common Enablement Services (CES) group. CES is responsible for the foundations and frameworks required to support multiple offerings, whilst sharing as much capability, expertise, automation and resourcing as possible.
CES will focus on four key areas:
- The ITSM tools, process and interface for client interactions
- Shared foundations, security design, regulatory and compliance approach to hyperscaler hosting
- Global helpdesk across covering all offering, with deep expertise to support from infrastructure through to the end customer application experience
- Transition offering for onboarding new clients, factoring in global regulatory and compliance obligations for new and existing customers
Luxoft and AWS
Luxoft is partnering with Amazon Web Services (AWS) to anchor its ‘as-a-Service’ strategy, taking advantage of AWS’ partner network, and best in class security and compliance infrastructure and support.
As AWS told us in a recent whitepaper:
‘The cloud offers tremendous opportunity for increased agility, faster innovation, and lower total cost of ownership. The organizations that are the most successful in moving from on-premises environments to the cloud are those that establish a well-defined strategy for approaching this new IT operating model early in their journey. Moving from a model of large upfront investment in data centers to the consumption-based model of AWS requires changes to tools, processes, and mindsets to ensure that costs are effectively managed.’
‘The most important practice for effectively optimizing costs with AWS is to start early. Although many cost optimization practices are relatively easy to implement in small environments, you need new operational best practices, automation, and organizational incentives to be successful at scale across large environments and enterprises. Establishing these best practices early in your journey can help you establish the right processes and behaviors to ensure success when you hit scale.’
AWS has been at the forefront of helping transform the financial services industry – by enabling firms to modernise disparate legacy systems for improved agility and scale. By meeting rapidly changing consumer behaviours and expectations. By driving the business growth of harnessing data and innovation. And building with confidence on the most secure and resilient cloud.
AWS does this by providing financial institutions and partners the secure, resilient global infrastructure, services, and expertise they need to accelerate release cycles, improve decision making, reduce costs, and streamline operations. The infrastructure delivers the highest level of security and resilience, to meet local and global compliance regulations, while supporting innovation at scale and speed.
Through readily available services in high-performance computing, data and analytics, and machine learning, AWS makes it easy and cost effective for financial services to realise the benefits of digital transformation. These ideas could involve new products and services, or they could involve creative new risk management solutions.
The ecosystem
Luxoft’s strategy is to build an ‘as-a-Service’ ecosystem for financial services. This is not aimed at running individual applications as SaaS but solving the end-to-end business and technology challenges of our customers. Our ecosystem will facilitate the hosting of multiple applications together, which cover business functions end-to-end and are integrated, using best of breed frameworks and components. This will allow us to work with clients to pick and choose the platforms that make sense for them and their business needs. Luxoft’s platform and services will then stitch them together, into a single offering, that underpins their business and allows them to focus on their differentiating value proposition to customers.
Luxoft can do this as a system integrator, in partnership with AWS as a hosting platform, in a way that individual ISVs cannot. This ecosystem blueprint can also then be used as the basis for industry utilities – for non-differentiating technology, further lowering the cost for banking and capital markets institutions. Increased competitiveness, lower costs and a removal of legacy and out of support technology will allow Luxoft’s clients to improve their operating margin. And target new customers and business.
Who are Luxoft?
Luxoft, a DXC Technology Company (NYSE: DXC,) provides bespoke technology solutions that drive business change for customers the world over. Luxoft has forged global partnerships with leading open source and software vendors that, coupled with our cloud and as-a-Service capabilities, provide a valuable ecosystem for clients to scale their businesses and increase profitability. For more information, visit www.luxoft.com.
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