CIO Strategies in 2013 - Cloud Computing for Financial Services
1. Savvis IT Infrastructure
2013 Global IT Leadership Report
CIO Strategies in 2013
Cloud Computing for Financial Services
2. The Future is Hybrid Cloud
In 2013 the Pressure’s Not Easing Up for The right approach requires a decision to be made
Financial Services CIOs between buying or building the infrastructure
yourself; running your own data centre or using
Global financial services companies everywhere
that of a provider. Thomas recommends those
are facing increased market pressure. They need
considering doing it themselves, should ask
to be able to compete and grow, despite a tough
whether they will be able to deliver the same
commercial outlook and slow economic growth,
levels of security and performance, and whether
made harder by minimal government investment
this is the best use of their time.
and a general feeling of uncertainty in most of the
financial centres across the world.
“IT leaders also need to ask themselves how IT
departments can make the most of their legacy
CIOs of financial services organisations are feeling
investment and adopt new technology in parallel,”
the pressure. By aligning IT functions closely
continues Thomas. “Along with questioning
to the business, technology has become the
what they should outsource and which cloud
engine that drives financial institutions forward,
deployment provides the best route ahead.”
and the road has become bumpy. Independent
research*, conducted by Savvis, tells us the top
three priorities for CIOs in global financial services IT Outsourcing and Cloud Strategies —
organisations are increasing collaboration; the Benefits are Clear
refocusing resources to create competitive Savvis research reveals IT Outsourcing as one
advantage; and gaining greater efficiencies across of the ways financial organisations could meet
the organisation. the challenges of a constrained IT budget whilst
seeking to improve collaboration and efficiency;
and enhancing their competitive position. In fact,
Three Key Priorities for Financial Services the cost savings financial services CIOs expect to
CIOs in 2013: gain from outsourcing are as much as 26 percent
1. ncrease collaboration across the organisation
I of IT budget. It’s not surprising therefore, that
2. efocus resource to align to projects that
R outsourcing is predicted to grow from the current
create competitive advantage level of 25 percent of IT infrastructure, to a global
3. ain greater efficiencies across the
G financial industry average of 40 percent by 2017.
organisation
Heads of IT in financial services organisations are
very clear on the benefits of outsourcing. They
The challenge for CIOs is intensified as achieving told us the top reasons they need to increase the
these objectives is impacted by budget constraints amount of IT infrastructure they outsource are to:
and, since IT is the engine that drives the business • mprove IT infrastructure agility to better
i
forward, CIOs need to drive efficiencies. address the changing needs of the business
• efocus on core strengths to help gain
r
Varghese Thomas, Global Head of Financial competitive advantage
Services at Savvis, believes the knock on effect is • liminate dependence on legacy infrastructures
e
that IT leaders across all finance sectors are under • ealign expenditure from CapEx to OpEx
r
pressure to rethink business models. “CIOs need • mitigate the risks of non-compliance.
to reinvent the way IT serves the business, as they
strive to build a flexible, open, scalable infrastructure “It’s clear financial services CIOs expect a lot
that responds to any demand,” he explains. “The from outsourcing,” says Varghese Thomas,
challenge is to find the right approach.” “And they’re turning to outsourcing and cloud
computing as a way to gain greater flexibility,
scalability, innovation and market strength.”
2013 Global IT Leadership Report: Cloud Computing for Financial Services 2
3. Reinventing Financial Services IT
Delivery Models in the Cloud Figure 1:
Cloud computing offers compute resource on a Does your company use cloud
user and per usage basis often with no fixed term computing?
contract or up-front fees, and can be used for 50
individual projects, by department or function, or
throughout an entire organisation. This type of
40
delivery model is also known as utility computing
and can be deployed within a private cloud
infrastructure to assure security, privacy of data 30
and SLA driven performance targets, or a public
cloud infrastructure where cost reduction and
20
capacity spikes are the priority.
In his role as Director of Cloud Solutions at Savvis, 10
Andrew McCreath is regularly on site working
with large enterprises. “The challenge is that most
0
of them have legacy solutions with ageing or
recently re-invested, infrastructures so they still Yes, we use ‘private’ cloud services
Yes, we use ‘public’ cloud services
need to own on-premise IT equipment and use Yes, we use a hybrid model of part private/public cloud
colocation and other physical services,” he says.
“As a result, a hybrid data centre environment
IT leaders cited the two most important benefits
has been created, combining in-house services,
of cloud computing as scalability and the ease of
collocated services, hosted services and public
increasing or decreasing compute, storage and
and private cloud computing”, continues McCreath.
bandwidth consumption to match fluctuating
demand which is often unpredictable, as well as
McCreath advises financial services CIOs to select
to increasing the reliability of the IT infrastructure
a service provider that has capability across the
(35% and 28% respectively).
hybrid value chain from colocation, managed
hosting, private and public cloud, as well as
networking and consultancy services. “Without Figure 2:
these”, he adds, “IT operators in an organisation
will be seen as ‘infrastructure-tool-selectors’ for Please select the two most important
the financial applications, as opposed to value benefits of cloud computing
contributors to the industry, truly leveraging Cloud
24%
Services Providers and their capabilities”.
Financial services CIOs from both buy and sell
sides of the industry understand cloud economics
well, and from the industries surveyed, which
include media, public sector, healthcare and 27% 35%
software, the financial services industry is the
third sector to have adopted cloud technology,
along with the software and healthcare sectors.
By divesting the responsibility of a complex
but commoditised IT infrastructure to focus on
generating core business value, IT departments 28%
and the business can only benefit and strengthen
their position. Forty-six percent of IT heads of 35% ability to scale up and down computer, storage and
financial services companies use private cloud bandwidth consumption to manage fluctuating demand
28% improved reliability
services, 21 percent use a hybrid model of part
27% environmental considerations e.g. reduced power
private and public cloud services and 19 percent use and CO2 emissions
only use a public cloud service. 24% enhanced security
2013 Global IT Leadership Report: Cloud Computing for Financial Services 3
4. Financial Services Industry —
Cloud Computing Usage Figure 4:
The CIOs surveyed represented large global Which applications are you evaluating
financial institutions of between $1billion and for the cloud?
$100billion, typically with large application sets, a
high degree of customisation and tight integration Batch Processing
into back-end systems and applications. From
the range of applications that IT could potentially
outsource, heads of IT are choosing those that
Test and Development
are the most portable and easily separated from
existing systems. These applications are often
non-mission critical, and viewed as an overhead,
Big Data and
so reducing the cost of maintenance is highly Analytics
desirable: 56 percent of IT heads use cloud
computing for email, 56 percent for intranet, and
43 percent for ERP applications. Mission Critical
Applications
Figure 3:
Which of the following applications
0 10 20 30
are you currently putting in the cloud?
For some applications, financial services CIOs
Email have completely committed to cloud computing
based on a private cloud deployment. Nineteen
percent of financial IT leaders are outsourcing
Intranet their entire storage application to the cloud, 18
percent are outsourcing big data and analytics
to the cloud and 16 percent outsource all their
Enterprise Resource mission critical applications to the cloud. Figure
Planning
5. This demonstrates a high level of confidence
and trust in cloud computing’s performance,
particularly for those financial institutions that run
Website Microsite
important mission critical applications and core
business functions in the cloud.
0 10 20 30 40 50 60
Figure 5:
For which applications does your
When asked what applications IT leaders are company use private cloud throughout
evaluating for the cloud, 29 percent said batch the organisation in this area?
processing of large quantities of data, for example,
consumer transactions within retail banks or
processing claims for insurers. Twenty-seven Storage
percent said Test and Development, perhaps
in recognition of the flexibility and scalability
it offers, as well as the ability to turn cloud Big Data and Analytics
services on and off quickly. Twenty-four percent
are evaluating cloud for big data and analytics,
leveraging the scalability of cloud providers to Mission Critical Apps
manage terabytes to petabytes of data easily,
0 10 20
and 24 percent for mission critical applications,
relying on the robust security of enterprise cloud
solutions, high availability and back up options.
2013 Global IT Leadership Report: Cloud Computing for Financial Services 4
5. Interestingly, there is a significant difference in the Thomas states that similarly a large universal
applications moved to public cloud infrastructures. bank will have operations covering most areas of
Nine percent of financial CIOs outsource all their financial services, such as retail, institutional and
non-mission critical applications to the public proprietary trading and broking etc., but as their
cloud, 8 percent outsource back up and disaster IT infrastructure is large and complex, they will be
recovery and 7 percent outsource all their storage likely to run a hybrid cloud model and select specific
to the public cloud. areas that make sense to migrate to the cloud.
“The variance between the two is because public Enterprise Grade Cloud Security for
cloud infrastructures are shared and potentially Financial Services
less secure than dedicated cloud,” explains Andrew
In the quest to rethink and reinvent IT delivery
McCreath. ”The good news is that financial services
models, Andrew McCreath, believes that global
IT leaders are starting to have a better understanding
financial services CIOs are investing more in
of public and private cloud infrastructures, which
the cloud and will continue to do so. ”Yet when
applications suit which deployment model,
asked why some IT leaders are not using cloud
and what is the optimum mix to balance cost
computing, they tend to cite concerns around
efficiency with enterprise grade security.”
security, legal and compliance,” he adds.
Figure 6: Figure 7:
Which applications does your company What are the reasons for not using cloud
use public cloud throughout the computing within your company?
organisation in this area?
60
Non-mission
Critical Apps 50
Back Up and 40
Disaster Recovery
30
Storage
20
0 5 10
10
Varghese Thomas, Global Head of Financial
Services at Savvis, continues to see increased 0
confidence in cloud services from all segments of Security concerns
Legal/compliance issues about processing workloads
the financial services sector. ”Each of the financial in an unknown geographic location
services segments is adopting a private, public
or hybrid cloud environment according to their
specific business requirements and the proprietary
Financial services CIOs and Heads of Compliance
and sensitive nature of their data,” he explains.
are particularly worried about the security of
sensitive customer and other data being shared
“A commercial bank or credit union will have
with unauthorised third parties who reside on the
different requirements and propensity to use the
same cloud infrastructure, as well as breaches of
public cloud, than a broker running algorithmic
data protection through processing data outside
trading strategies. A commercial bank may deploy
of an authorised jurisdiction. Fear of data security
a public cloud for commoditized, non-proprietary
has been caused in part by the many mass market
content such as hosting their website, whilst a
cloud solutions available; which do not offer the
broker may not, due to proprietary nature and
high standards of security or SLAs which are
sensitivity of their data.”
available from enterprise cloud providers such as
Savvis. It is also true that high profile attacks on
cloud sites receive wide publicity, encouraging the
perception that cloud computing is not secure.
2013 Global IT Leadership Report: Cloud Computing for Financial Services 5
6. McCreath suggests most large financial services 2. ecurity levels drive the cloud architecture
S
firms have very complex IT infrastructures Next, financial services organisations should
built up over a period of time, with multiple review the data that will be stored, transmitted
interdependent applications and systems. As and processed in the cloud, classify it and
a result, cloud adoption requires a planned understand the level of security that must be
approach and usually takes place in stages and applied. The level of data security will dictate the
over a period of time, as IT leaders learn more cloud architecture, public or private, and the
about cloud operation and the IT infrastructure delivery model: Software-as- a-Service (SaaS),
is evaluated, configured and made ready for a Infrastructure-as-a-Service (IaaS), Platform-as-
deeper cloud migration. a-Service (PaaS), as well as the service provider
and security controls used. Proprietary and
“Cloud adoption is essentially a journey of discovery sensitive customer data needs the highest level
on the one hand, evaluating and preparing the IT of security that in most cases, only a private
infrastructure on the other,” continues McCreath. enterprise-class provider could offer.
“Once CIOs have a better understanding of the McCreath advises that the type of application
cloud and have organised their IT Infrastructure determines the cloud architecture and the
into a cloud portable state, they will quickly see classification of the data determines the
the benefits and move to the next stage of cloud delivery model. “At Savvis, we recommend
adoption: a hybrid model that offers private and highly critical or protected data is best suited
public cloud, with the ability burst into the public for private clouds, and non-critical, unprotected
cloud when the need arises.” data is most economically managed in a public
cloud, where infrastructure is shared,” he adds.
What to Consider when Selecting an
Enterprise Cloud Provider Hybrid clouds offer financial institutions
greater control enabled through private clouds,
1. ybrid cloud solutions provide optimum
H
combined with cost savings enabled through a
performance
public cloud. An example of this might be an
Number one on the selection criteria is a
online bank placing its catalogue of products
provider that offers a hybrid cloud solution
and other public facing marketing content on
of public, multi-tenanted cloud services for
a public cloud, but choosing to place customer
commoditised content and non-sensitive data,
information, ordering systems, and other
and private cloud services for proprietary and
private information on a private cloud.
sensitive data requiring a high level of security.
IT leaders then have the control to choose the
“I’m confident that our data is safe in the cloud,
optimum mix of colocation, private and public
we don’t have to internally worry about backups.”
cloud deployment to meet the end-to-end
2012 Survey Respondent
business requirements, security, privacy and
performance.
3. ecurity controls are key
S
The last stage in ensuring enterprise-class cloud
As a starting point, Andrew McCreath
security; is to select a provider that can offer the
advises financial services CIOs to review the
full range of security controls: firewalls, intrusion
applications to be moved to the cloud. “Not
detection and prevention, log management,
all applications are suitable for the cloud,” he
application and API protection, database
explains. “For example some corporate and
protection, identity and access management,
ERP applications are so embedded into existing
encryption, vulnerability scanning and
infrastructures that it’s simply impractical to
penetration testing and DDoS mitigation.
migrate them to the cloud in their current form,
whereas other applications could easily be
adapted for the cloud.”
2013 Global IT Leadership Report: Cloud Computing for Financial Services 6
7. Conclusion About Savvis
Through our ITO and Cloud computing survey, Savvis, a CenturyLink company, is a global leader
CIOs of financial services organisations told us in cloud infrastructure and hosted IT solutions
they are under pressure to squeeze more and for enterprises. Nearly 2,500 unique clients,
more value out of their IT infrastructure, and including more than 30 of the top 100 companies
that they’ve turned to cloud computing to help in the Fortune 500, use Savvis to reduce capital
them do that. In their quest to drive the business expense, improve service levels and harness the
forward they’re having to build an open, flexible, latest advances in cloud computing.
scalable and cost effective IT engine that delivers
all the advantages technology can offer. For more information:
Call us on +44(0)207 400 5600 email us at:
Financial services IT leaders have increased cloud emea-sales@savvis.com or visit us at
computing usage and continue to do so, but www.savvis.co.uk
they are on a journey. Despite some fears around
data security, the risk of compliance and the About the Research
complexities of migrating legacy IT infrastructure This independent survey was commissioned by
to a cloud model, heads of IT in financial Savvis and conducted with 550 CIOs, IT Directors,
services are becoming more knowledgeable Heads of IT and Senior IT Managers of global
and confident about cloud computing, have a enterprises based in the USA, UK, Germany,
better understanding of the public cloud, and are Japan, Hong Kong and Singapore. 35% of the
realising how they can combine the two. audience was from financial services companies
with more than 500 employees and global annual
What’s fast emerging is a hybrid cloud for financial revenue between $1billion and $100billion. The
services. A cloud world where financial services research used a combination of online fieldwork
CIOs will control what’s proprietary and core and methodology and telephone interviewing and was
therefore what should reside in a private cloud, conducted by Vanson Bourne, a research based
and what’s non-proprietary or a commodity, and technology marketing consultancy committed to
can be outsourced to a public cloud. An enterprise the latest MRS Code of Conduct.
hybrid cloud combines the security, performance,
flexibility and scalability demanded by financial
institutions, usually at significantly reduced cost
and optimum performance levels. 2013 will be the
year of the hybrid cloud for financial services.
Find your solution with Savvis
Financial services organisations around the world
have turned to Savvis to help them achieve the
IT infrastructure they need to excel in today’s
constantly changing and competitive financial
markets. Savvis will help to you make the
right decisions about how and where to house
your data and infrastructure. Using a blend of
colocation, managed hosting and public and
private cloud services, we can ensure you achieve
the efficiencies you’re looking for, the agility your
business demands, and the focus on what adds
true value to your organisation.
2013 Global IT Leadership Report: Cloud Computing for Financial Services 7
