Cloud computing is ushering in sweeping changes across the economy. According to estimates from management consulting firm McKinsey & Company, the cloud will create more than US$1 trillion in increased Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for Fortune 500 companies by 2030. The research also shows that effective use of the cloud can cut infrastructure costs by a significant 29%. With such potential, it is therefore no surprise that the finance industry has positioned the cloud at the very core of its digital transformation.
When integrated with other cutting-edge technologies, such as Artificial Intelligence (AI), big data, and blockchain, the cloud becomes even more powerful. It enables financial enterprises to create innovative, agile services — embedded into ecosystem scenarios — and diversify revenue streams.
Financial enterprises have multiple options for adopting cloud technologies. They can build their own cloud platforms using an open-source foundation, for example, or they can opt for commercial cloud solutions — or, indeed, employ a combination of both. However, even with open-source technologies, going it alone is a major challenge because of the speed at which new capabilities become available.
As such, no matter the model, financial enterprises will need to work closely with partners to develop sound cloud strategies, select platform tools, and adapt management solutions. In fact, choosing the right cloud partner is one of the seven best practices for cloud transformation in cloud expert Stephen Orban's Ahead in the Cloud: Best Practices for Navigating the Future of Enterprise IT. Why emphasize that word partner rather than simply talk about a cloud vendor? Orban notes that a platform alone is not enough. Instead, reliable partners are the key to a successful cloud transformation journey.
With so many vendors in the market, finding the right partner may seem like a daunting task. Regardless, it is crucial that any partner must understand the typical cloud migration process of a financial enterprise and what challenges and capabilities are involved. As such, there are five main phases: cloud planning, building, migration, management, and innovation.
• Cloud Planning
A comprehensive cloud strategy is key to success. The main goal of cloud migration is to provide better financial services that add value to a company. There is a direct relationship between technology and value: technology is the means and value is the goal.
When choosing a partner, financial companies often focus on the partner's technological expertise, which is essential, of course. However, that is sometimes not enough. For example, if the partner adopts new technologies to integrate with existing systems and solutions without having a clear understanding of the industry's requirements, performance may suffer or worse — the system may fail once it goes online.
Financial businesses should look for a strategic technology partner that can address their actual cloudification needs. This partner should first provide consulting services, conducting in-depth interviews to get a full understanding of a company's transformation objectives and current capacity. Only then can the partner tailor its technical capabilities to help customers plan their cloud technology, while continuing to focus on services.
• Cloud Building
The finance industry has unique security compliance requirements, which are often best met through hybrid cloud models to ensure that key applications run in proprietary data centers. For example, when a bank builds a cloud platform in a data center, it needs to build a complete set of capabilities, ranging from computing, storage, and network hardware for Infrastructure as a Service (IaaS), to those for Platform as a Service (PaaS) and Software as a Service (SaaS). The bank should integrate complex software and hardware capabilities into the cloud to meet the strictest security and reliability requirements.
This is an area where a partner's expertise is important, because not all public cloud vendors can build hybrid clouds or deploy multiple types of clouds. Financial enterprises need a partner with full-stack cloud capabilities in both hardware and software. The partner should be able to provide the products, capabilities, implementation services, and expertise to help financial enterprises build true hybrid clouds, which both comply with security requirements and are suited to service innovation.
A partner with a full range of hybrid cloud software capabilities will be able to modernize even the most complex financial applications. It is critical that any solution delivers business continuity, high availability, and Disaster Recovery (DR) for even more secure services.
A long-term partnership is, of course, preferable. And an Information and Communications Technology (ICT) vendor brings with it many advantages, because it can draw on its expertise in edge clouds and smart devices. It may also be able to offer distributed clouds that connect a variety of clouds, edges, and devices, enabling innovative financial services. Finance firms should look for platforms that allow them to centrally manage multiple clouds, simplifying Operations and Maintenance (O&M), reducing costs, and implementing hybrid cloud deployment policies.
• Cloud Migration
Once the cloud system is planned, applications need to be migrated onto the cloud to begin generating business value. For the migration, however, there is no one-size-fits-all solution. Policies should be developed with full consideration given to Return On Investment (ROI) and the application lifecycle. Based on such analysis, some applications can continue unchanged, some can be migrated, while others may need to be rebuilt using microservices. In order to make these decisions, an enterprise first needs to classify its applications and then select the appropriate migration paths using the bimodal approach, which balances stability and agility. This is the systematic part of the project, where automation tools play a huge part in efficiency improvement and risk reduction. Apart from tools, expertise and mature migration implementation services are essential.
Some things to look for include existing cloud migration tools for server, data, and object storage, an experienced cloud migration service team, and a partner's ability to work across old and new Information Technology (IT) architectures, as well as public, private, and hybrid clouds.
• Cloud Management
With the cloud, finance companies have more agility and elasticity. That said, they also face a lot more complexity in terms of O&M. Microservice architecture contains a huge number of computing and data nodes, and the number of instances grows exponentially. That's why secure and stable cloud O&M management is the key to reducing operating risks for financial systems. When such a platform is in place and something does go awry, finance companies are far better prepared and can respond more efficiently, ensuring uninterrupted services.
A solid technology partner should be able to optimize fault tracing, locating, and handling through a variety of technologies. Some of the latest solutions on the market include proactive monitoring using AI, holographic topology and data aggregation, and holographic tracking through real-time analysis.
• Cloud Innovation
Ultimately, the main goal of cloud migration is to facilitate innovation. Rich technical cloud services and financial ecosystem services enable ongoing innovation. There are two approaches for financial innovation. The first is building digital open platform foundations and financial ecosystems on clouds. The alternative is using AI, big data, blockchain, and other technologies to enable the internal creation of new application scenarios. Both approaches create plenty of room for innovation and business improvement.
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Over the past few years, Huawei has become an innovator in the field of AI, with widespread application in the finance industry. For example, Huawei's Data as a Service (DaaS) one-stop development platform incorporates efficient knowledge, models, data, and computing power, empowering AI services for finance.
Financial cloudification is a systematic project that cannot be accomplished overnight. Selecting the right partner can be the difference between success and failure for the entire cloud transformation process. Certainly, be sure to find a reliable partner before embarking on the journey to the cloud. But note that that journey must be embarked on — and embarked on soon.
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