The financial services industry is on the cusp of massive transformation. Changing perceptions of banking and lending, demand for digital money transfers, and pressure to simplify and digitize the payment process are pushing businesses to make technology centric to their business strategy to optimize growth and innovation.
Cloud based solutions are emerging as a primary catalyst to drive business value. With benefits like on-demand provisioning, ease of use, ability to scale dynamically and inbuilt reliability, cloud and associated technologies offer strategic and operational advantages for businesses.
The adoption of cloud-based technologies in the financial services industry has been ongoing and is now growing at an accelerated pace. There has been a steady increase in the move of applications and workloads into the cloud and the crafting of sustainable cloud strategies. In this environment, a question often asked is do all cloud transformation initiatives succeed? The answer is – “No”!
So why do some initiatives succeed while others falter? It usually comes down to developing a clear understanding based on a few foundational aspects that are common across all cloud transformation initiatives. The key aspect is that any cloud transformation initiative is multi-dimensional. Technology is one part of it and probably the easiest to address. Developing a good understanding across all dimensions is paramount to deliver a successful cloud transformation.
Identify the primary need for the transformation
This is the first and most pivotal aspect. Any cloud transformation risks getting subsumed with technical aspects. The truth is that technology is just an enabler to fulfill a compelling business need. Business needs are oriented to maximize business value either through new customer acquisition, scaling up existing portfolios, optimising costs, or through a combination of these. Understanding the business need(s) that is driving the transformation will provide clarity of purpose to the transformation.
Develop a clear understanding of constraints
Constraints manifest in relation to costs, time available, resources and access to skills. Calibrating each constraint and its impact on the overall transformation strategy provides perspective to inform viable and practical decisions.
Determine end outcomes and establish milestones
Plans look good on paper, but execution can be messy. As with any technology-oriented initiative, cloud transformations involve multiple experimentations with uncertain outcomes. What becomes imperative is ‘rapid prototyping’, developing a ‘fail-fast’ mindset, and an ability to test early with real users. Defining the outcomes, milestones, and timelines upfront acts as strong anchor and enables ongoing evaluation of progress. The root cause of many failed initiatives is often a fluid definition of success, long gestation periods and limited time to course correct.
Ability to build fast, deploy frequently and test every time
Cloud-oriented models are innately built around the concept of agility and provide sufficient tools to enable it. However, these tools often are rendered ineffective owing to lack of clarity from the start. Investing in an ‘automation first’ execution strategy right up front is recommended. Anything and everything that is a repeatable task should be automated. Make automation objectives intentional and clear from the project’s inception. In the initial days, this investment will look as a trade off against building business features, but will pay off as the transformation journey progresses.
Build sustainable operating models
Running on cloud is a new paradigm and will bring with it new challenges. For example, in the cloud an incident is never limited to one customer and rapidly gets exposed across multiple customers, reducing the time to respond. The tolerances around change management, performance, reliability, security, and compliance must be adjusted accordingly. Developing operating models that provide proactive insights and address risks before they are manifested becomes a necessity. While there are multiple tools to help, it is essential to define key operational metrics to track. Without this, there is a risk of being drowned under the noise of too much operational data.
Visibility of cost
Lastly, success of any cloud transformation initiative should be rooted in creating business value. Operating on cloud by its very nature converts much of the upfront investment around infrastructure and capabilities into operational expenses that can be paid as per use. Additional benefits can include on demand provisioning, ease of use and availability. While these elements help businesses to scale and fulfill demand faster, the flip side is that, unless there is visibility into utilisation and costs associated with it, there is significant risk of operating costs escalating and sub-optimal use of underlying resources. It is essential to design metrics and dashboards to understand utilisation and costs on a real time basis to manage utilisation in a cost-effective manner.
Moving a specific product or workload to cloud is accompanied with associated technical challenges. However, when considered as a multi-dimensional initiative with different aspects factored in holistically cloud transformations can be successfully accomplished and yield immense business value.
Girish Raghavan Narsimha, Vice President, Engineering & Transformation Group, Fiserv