Thriving in Today’s Disruptive Financial Services Environment

Enterprise Cloud Migration for the Financial Services Industry

Organizations are adopting cloud architectures to decrease the time to market for new applications and perform upgrades and systems integrations, which in turn can drive down costs and rapidly improve product releases and quality.

Digital native disruptors are having a significant impact on every type of business today, and

financial services is no exception. Services such as the Apple Credit Card¹ and Square payment

processing² are changing the way financial services are consumed. What does this mean for

traditional financial services firms? You must be able to standardize, integrate, and innovate just

to survive – and that means you need to be in the cloud. No other approach even comes close

to giving you the agility, scalability, speed, access to innovation, and value that you’ll need to

thrive in today’s environment.

But this is not news. Businesses everywhere have been moving to

the cloud in increasing numbers. According to a 2019 IDC report,³

worldwide spending on public cloud services and infrastructure will

surpass $210 billion in 2019, an increase of 23.8% over 2018. Many

companies around the world are already reaping the benefits of

software-as-a-service (SaaS) solutions and cloud-first strategies for

their new systems.

Despite this overall increase in cloud investment, enterprise cloud

adoption has been maturing slowly. Migrating to the cloud is no

small task, and many businesses have approached it piecemeal.

Unfortunately, if you take a piecemeal approach, not only will you be

unable to realize the full value of the cloud, you’ll find that maintaining

your traditional data center environments in conjunction with cloud

migrations is neither easy nor affordable.

Take a close look at your challengesTraditional financial services institutions face some major challenges

when they’re considering a move to the cloud. A few common

challenges include the following:

• Existing business applications will need to be updated or replaced,

because they were created using the traditional IT architectures,

often with fixed capacity and in a few data centers. The cloud will

not miraculously enable organizations to leverage cloud-native

add-on features. Cloud transformation requires a new skill set for

product development toward cloud-native applications.

• Retraining staff and retaining the technical skills required to support

the cloud ecosystem is complex and costly.

• The lack of strategy around data operations, data life-cycle

management, governance and security results in siloed solutions

and inefficient systems.

The adoption of cloud

computing has been

increasing rapidly. While

large global organizations

have successfully

implemented specific

software-as-a-service (SaaS)

solutions or adopted a

cloud-first strategy for new

systems, many are struggling

to get the full value of

moving their enterprise

systems to the cloud.

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Whether you’re on an organic or acquisition-led growth journey, you’ll

need to think about how these technologies are changing the industry and

what being digital will mean for your organization. Then you can develop

your digital strategy, identifying your goals and target outcomes. Next,

you’ll develop a plan to get there, including how to measure outcomes at

each stage of your plan implementation.

Transforming your enterprise systems and architectures into

cloud environments

Working in an agile operating model

Standardizing and integrating your IT environment through

open APIs

Implementing new capabilities to drive innovative business value

Establishing a modern, compliant security framework

In addition, each of these challenges can be linked to the difficulty of

accurately measuring the return on investment (ROI) of an enterprise cloud

migration. For example, taking legacy enterprise applications and moving

them to cloud infrastructure – the “lift-and-shift” approach – might not

automatically deliver the benefits that cloud infrastructure can provide. In

fact, in some cases, that approach can result in more complex, more costly

IT systems architectures.

The best way to gain value from your cloud initiative may be to migrate

your entire ecosystem to the cloud, and to do so with a well-thought-out

strategy and planned financial investment. You can better achieve your ROI

by adopting a cohesive approach that delivers continuous, incremental

value rather than creating short-term technical debt. We’ve seen a definite

shift in the financial services industry toward this approach in recent

months.

Future-proof with a comprehensive, holistic strategy

To realize the full value of your cloud migration, consider pursuing your

digital transformation as a broader strategy rather than as a number of

siloed IT projects. A comprehensive, holistic strategy encompasses several

key tasks, including:

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Acknowledge that your organization will go

through a major cultural transformation that will

present some internal challenges. You’ll need to

be sure that your stakeholders understand what’s

involved, buy in, and are committed to your

transformation if it is to be successful. Help them

to understand that this transformation will also

present great opportunities for the organization,

its employees and its customers. Consider the

new business models you will be able to develop

and how access to advanced analytics will

transform your business – and maybe even help

you reinvent your business from the core.

Think about what you’ll need to become

“digital.” What does the concept mean

specifically to your organization? When

your digital vision is well-defined and well-

understood across your organization, you

can set up a plan to measure your outcomes

at every stage. A good digital strategy allows

you to understand how technology is going

to change your business, prepare for potential

disruptions, envision new businesses you

might build, and consider how technology

or analytics will transform your business or

reinvent your core.

What Does Digital Mean to You?Evaluate your cloud

options

Adopting a cloud approach can decrease your

time to market for new applications, increase

your business agility, reduce your maintenance

and upgrade costs, support standards-based

systems integrations, and deliver an enhanced

experience for your customers. Ultimately, your

cloud architecture should give you a robust

platform to support future business growth.

The benefits from cloud services can lead to

much lower IT costs, faster time to market and

better service quality compared with traditional

on-premises IT offerings. Public cloud offerings

such as Amazon Web Services (AWS), Microsoft®

Azure, SAP®, Oracle® Cloud and Google Cloud

PlatformTM (GCP) appeal to many organizations

because of their inherently flexible features:

consumption-based pricing, scalability, dynamic

elasticity, low latency, high resiliency, self-

service and more.

Part of your cloud strategy will be deciding

which cloud provider – or providers – are

right for you. Will you need a private cloud, a

public cloud, or a hybrid system? Will you use

a single cloud provider or launch a multi-cloud

environment? How do you know what’s right for

your enterprise?

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Develop your cloud migration strategy

When you’re ready to devise your enterprise cloud migration strategy, it’s

important to start with the right professional services provider – one who

can help guide you on this journey successfully. Look for a provider that

uses a customer-centric approach that combines global, industry-specific

experience in financial services with proven cloud methodology and

delivery capabilities.

The ideal provider will work closely with you to develop a consultative

cloud migration solution that helps you align your cloud migration

strategy to your business strategy. Your strategy should lead to a

migration that substantially contributes to your business success without

creating short-term technical debt.

Before you commit to a provider, make sure the provider is right for your

specific needs. Can the provider assess your applications’ landscape

across technologies – that is, is the provider technology agnostic? Will

you receive recommendations for the best approach across functions,

geographies and business units? Carefully examine the proposed delivery

execution model. If it is a traditional onsite/offshore model focusing only

on lower cost, it may prove even more costly in the long run. Such an

approach is likely to miss out on the industry-specific experience and

broad innovative vision that the right professional services provider can

provide.

Key questions your provider can help you address for your enterprise

cloud journey include the following:

How will you include long-term financial backing in the project plan?

How will you document the status of your current architecture and

data processes to decide whether to replace or modernize?

How do you plan to address data security and data governance across

multiple business units, jurisdictions and regulatory rules?

How will you leverage the right experience, technologies and

methodologies to plan, execute and quantify your ROI?

What type of cloud environment do you prefer (single

provider, multicloud, or hybrid)?

What’s the best way to drive cultural change and generate

innovative use cases to achieve growth?

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One of the world’s largest asset management firms chose Hitachi Consulting

to help it develop and execute its enterprise transformation. By leveraging

Oracle and Microsoft services hosted in the public cloud, the firm expects to

dramatically reduce the annual cost base of its finance systems associated

with operational maintenance and recurring software upgrades. The

transformation will also create a digital finance platform to support the

company’s wealth management activity, increase agility and flexibility to

support its internal business demand for quality insights, deliver transparency

on cost-base limits, and improve efficiency on cost management and cost

economies of scale.

Hitachi Consulting helped the firm initiate a complete cultural change,

moving from a legacy on-premises Oracle solution to cloud migration and

integration. The project added Microsoft development and business analytics

capability to support master data management, data warehousing, and

reporting to drive the entire digital transformation. The result is a business

transformation that reconciles IT, operations and business functions to

create “IT as a service.”

A cloud migration success story

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Hitachi Consulting has experience working with financial institutions and

corporations as an advisor and a technology, change management and

digital accelerator. We collaborate with our customers to address market

disruption and create new innovative value that delivers proven results. We

accomplish this through the combination of our cloud technology and

financial services experience.

For example, one of the few industry enablers in this process is Hitachi’s

REAN Cloud Accelerators platform, which enables companies to automate

all stages of cloud adoption – from pre-migration assessment, migration,

and testing to compliance documentation and operations – and to gain

repeatable and consistent results. They can fast-track their cloud migration

and effectively respond to business demands while getting the most from

their cloud investment.

The financial services industry is rapidly becoming a digital industry.

With the right cloud strategy and the right professional services provider,

traditional financial services companies can accelerate their cloud

migration for competitive advantage, setting the stage for new business

innovation and long-term success.

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1 https://hackernoon.com/the-disruptor-of-credit-cards-apple-credit-card-5451f539ecca2 https://www.forbes.com/sites/andyswan/2018/08/31/square-growth/#7f5202ff291d 3 https://www.idc.com/getdoc.jsp?containerId=prUS44891519

Hitachi Consulting is the digital solutions and professional services organization within Hitachi Ltd., a global technology and social innovation leader. Hitachi Consulting is a catalyst for positive business change, propelling organizations to drive disruptive innovation and to accelerate digital transformation. We help organizations leverage data as a strategic asset to innovate faster, develop new revenue streams, and respond to global dynamics with insight and agility. We collaborate with clients to create solutions that help maximize operational efficiency and deliver measurable, sustainable business results.

About Hitachi Consulting

Authors

Contact

Sara de la TorreDirector of Financial Services

Hitachi Consulting, U.K. and Europe

Sara de la Torre is a subject matter expert in banking and financial services with domain

expertise in data management, risk and regulatory compliance. As part of her role, she

works alongside financial institutions to achieve data monetization in the digital age.

moreinfo@hitachiconsulting.com

Richard HercusRegional Sales Director

Hitachi Consulting, U.S.

Richard Hercus is a subject matter expert in cloud enablement and strategy with

certifications from IBM and Oracle, coupled with more than 20 years of diverse

experience in disruptive technologies and enterprise applications and platforms.

© 2019 Hitachi Consulting Corporation.  All rights reserved. www.hitachiconsulting.com