Is It Time to Remediate Cloud?

Is It Time to Remediate Cloud?

Three ways financial services can reap the business benefits

?Alina Timofeeva

“Every company may soon be a cloud company,” to quote a recent Financial Times headline. Cloud is moving from being the platform on which a business runs to the product of the business. Much of the value inherent in a company’s operations can now be delivered in the form of a cloud service, rather than packaged into the kind of products and services organizations have traditionally sold. Even short of this, using cloud reduces capital investment by allowing companies to focus budgets on value creation rather than building data centers, maintaining hardware, or operating infrastructure.

?It’s true. You can’t resist cloud.

But despite cloud’s potential, many financial services firms have been spending material time and money on cloud adoption without achieving the desired business benefits of cost efficiencies, faster time to market and innovation at scale. In fact, research shows that almost one-third of corporate spending on cloud is wasted on inefficient activities, with limited financial or strategic returns, according to Flexera.

Rather than seeing a transformation of the overall landscape and a rationalization of their operating model and technology estate, many companies end up with higher costs and bandwidth issues associated with lifting and shifting technology; or waste millions of dollars as a result of inefficiencies and regulatory scrutiny. In addition, a spate of recent, high-profile outages have disrupted end-to-end customer services for both business-to-business and business-to-consumer players. Those disruptions and threats, and an expected heavy-handed response by regulators, are pushing financial-services firms to think differently about how to deliver on business ambitions in a safe and cost effective way.

As an example of how things can go wrong, one global bank has been on a cloud journey since 2016, but after six years, only 25% of its services run on cloud. The challenges: unwieldy governance that could delay approval of a project by as much as a year, lack of cloud training across relevant departments, and limited re-usability of key assets, such as application process interfaces, or APIs. In addition, the bank has spent tens of millions of dollars on regulatory review and remediation. One challenging area noted is the ineffective oversight across three lines of defense (LoD). Information shared with the board did not draw attention to the scale, complexity, and risks associated with cloud adoption to enable effective understanding, challenge, and control.?

I encourage you to think differently about cloud adoption – to realize your business ambitions in a safe and cost-effective way. Cloud is an opportunity to transform your overall business operating model, to change the way departments interact and collaborate. Viewing cloud transformation as a structural and organizational change could save money and avoid regulatory scrutiny, as well as spark innovation across a company’s functions, processes, and technology.

?Here are three steps to remediate cloud and derive its business benefits faster:

1.?Invest in internal cloud capability and embed a clear cloud-operating model across the entire organization, not just IT.

A big part of cloud’s allure is the idea of third-party outsourcing, but there are still major in-house skill gaps when it comes to management and oversight of cloud. This requires upskilling existing staff across the organization and sourcing new talent so that you build long term sustainable capability internally. It’s equally important to develop early engagement, content knowledge, and new ways of working between technical, business, and risk teams across the three LoD. The lack of a clear operating model encompassing both the business and technology teams can cost time and money longer-term unless done properly from the outset.

2.?Proactively manage cloud risks across three LoD and engage early with regulators.

Ensure that your cloud strategy is aligned with your wider business strategy and risk appetite. To avoid costly rebuilds, embed regulatory guidelines in the operating model and cloud technology platform from the outset as you develop your migration strategy. Enable and aggregate cloud risk reporting across the three LoD straight up to the board, ensuring the board can effectively govern and make decisions based on understanding the overall risk position across external cloud (IaaS, PaaS, SaaS), internal and container-based platforms.

3.?Invest in automation to support efficiencies.

Use automation and analytics to improve efficiencies (e.g., around financial control, reusability of key assets, compliance) and support longer-term innovation. One area worth exploring is continuous compliance to free your teams from drowning in governance. Often, the level of deep ‘content knowledge’ is limited, leading to layer upon layer of governance in the hope that potential problems will eventually be discovered after multiple reviews. However, these time-consuming meetings and manual activities bring distress to your teams, they fail to support the proactive management of risks or bring value add. By shifting mindset from an audit mentality to a value-creation mentality, you can move from waterfall approach to an Agile innovation mode and spend your efforts on what matters most.?

Cloud as Catalyst

Every company may soon be a cloud company, just as every company eventually adopted computers, mobile telephones, and the internet. Think of the cloud not as a technology silo but a catalyst to revamp your organization’s strategy, operating model, and ways of working. Cloud is a catalyst for change rather than change itself.

Now is the right time for all companies to think differently about cloud adoption and remediate cloud to achieve its full business benefits.

If you don’t act today to address inefficiencies and cloud risks in a safe way, this can lead to commercial, regulatory, and reputation consequences that will slow down your transformation and result in wasteful spend.