With cloud technologies promising shorter time to market, more agile delivery and lower total cost of ownership (TCO), most banks are well underway with their journey to the cloud. As a result, most have some part of their technology estate in the cloud already and are working actively to expand this footprint further still.
As banks’ maturity in delivering cloud-based solutions continues to increase, I’m increasingly being asked how organisations can optimise enterprise cloud adoption. To date, this has often been less of a focus than the initial cloud deployment, however, in my view, operational optimisation is key to realising the full business benefits cloud offers. It’s encouraging, therefore, that we are now starting to see this shift in focus.
In order to realise the full benefits of cloud, it’s vital that banks balance quick-win deployments at pace, with a holistic and enterprise-wide approach to adoption.
There are many factors to consider when thinking about enterprise cloud adoption, but if we focus on maximising value, I would recommend focusing on three areas:
1. Cloud strategy
It is essential to have a clear cloud adoption strategy. This is a crucial factor in both the initial success of the deployment and in effective cloud management going forward. One way of approaching this is to outline the vision for the ‘bank of the future’, defining the business and technology areas best suited to cloud. This helps to ensure a common view of priorities at leadership levels and supports informed decisions on the types of cloud services to pursue by business function or area—SaaS, PaaS, IaaS and so on.
Despite the pressure to keep pace with cloud-native challenger banks, taking time to develop a clear strategy remains vital for avoiding a fragmented cloud landscape, and, in my view, is key to an effective operational model for banks already in the cloud.
2. Cloud operating model
Banks must change the way that they work, and defining a clear cloud operating model is central to this. Many banks operate with multiple cloud-service providers and when you add in the need to maintain legacy banking platforms in parallel, it is clear why the overarching operating model can become confused, cumbersome or both. This can create a temptation to retro-fit new technologies onto old ways of doing things, often limiting the value.
To address this risk, banks need to ensure that their target cloud operating model considers not only the validity of current processes and procedures, but also the additional activities required in a cloud context – policy enforcement, provisioning, billing & chargeback and monitoring for example. The ability to deliver effective operating models to underpin these activities is central to realising the benefits of cloud.
3. Cloud economics
The third area I spend a lot of time discussing is cost management. It is a common perception that adopting cloud will save you money—but this is not necessarily the case. The ability to optimise and control spend in line with peaks and troughs in demand is a major reason banks choose to implement cloud technologies. However, getting cost management right in a cloud-based architecture requires a clear approach and diligent controls. In many cases, cloud resources are not managed in a way that ensures they are released or ramped down once they’re no longer needed. In other cases, a clear workload strategy hasn’t been defined up front resulting in legacy hardware still needing to be kept on. The result of both is unnecessary expenditure.
As such, accurate allocation is key, yet frequently overlooked. While the underlying concept is simple—‘tagging’ cloud resources to a specific area of the business for apportionment of cost and accountability for financial control—this is often not carried out in a uniform manner. When done properly and consistently, it drives ownership, increases transparency on expenditure and enables relevant questions to be asked if spend diverges from expectations.
Navigating the pivot
So as cloud adoption in banking continues to gain momentum, my view is that simply focusing on how to deliver the technology will only get you so far. The real benefits—financial and otherwise—will come from pivoting the people, processes and tooling to harness what cloud can offer.
Focusing on these three areas—strategy, operating model and cost management—will help banks not only operate effectively in a cloud environment, but also maximise the business benefits of their cloud investment.
My thanks to Vanessa Harding, Orla Baker, James Cooper and Michael Coates for sharing their expertise on this topic.
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