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Home Vision Financial issue 04 Retaining the agility advantage

Retaining the agility advantage

To support the launch of new customer offerings, medium sized financial services firms need to ensure their IT is as nimble as the rest of their business

Speed-to-market is everything in today’s fast-paced financial services market. The competitive advantage that comes with new customer offerings will quickly vanish if it takes months or even years to turn an idea into a service reality.

To shorten the development and deployment cycle for new products, financial services firms need every area of their operation to be nimble and flexible. Meeting this goal can be a substantial challenge for the large global institutions with their thousands of employees, locations and systems, which gives niche and national players a distinct advantage in the agility stakes.

This edge, however, will be rapidly eroded if the IT systems needed to support new product launches and emerging markets are not readily available. As Julie O’Hara, Computacenter’s Director of Financial Services, explains: “A new customer offering will invariably require a new application, which can mean implementing additional servers and storage or even building a new datacenter. The impact of these changes on an organisations network must also not be overlooked to ensure a high performance, reliable, securely delivered application.

Completing the business case to justify such an investment is in itself a time-consuming process. When you add testing, procuring, configuring and the actual deployment, then you could be looking at a 12-month process.”

A year is a long time in any market, but especially the financial services market, which is heavily impacted by economic forces around the globe. Customer demand, competitor offerings and industry legislation can all change dramatically during 12 months, impacting the scope – and future success – of any new products in development.

“Financial services firms need to move fast if they are to attract and retain customers and maximise their investment in new business opportunities,” comments Julie. “Speed-to-market is even more important for medium sized firms where a new customer offering can have a much greater impact on business growth and profitability.”

The price of agility

To achieve this velocity, IT departments need to find a way to rapidly implement and change infrastructure assets to support business expansion and emerging markets 

Such IT agility, however, can come with a price. A price that many financial services firms simply can’t justify in today’s climate. “With fewer resources and capital reserves than the global players, medium sized  firms can only invest in a limited number of new opportunities – and supporting IT systems – each year,” comments Julie. “But firms can break free from these constraints by taking advantage of optimised IT infrastructures – both on and off premise.”

For example, by deploying virtual datacenter (VDC) solutions, such as VCE vBlock 2 or NetApp SMT, financial services firms can not only dramatically reduce server provisioning times but also cut capital and operational expenditure by as much as 50 per cent.

Neill Burton, Computacenter’s Datacenter Solutions Director, comments: “A VDC is a pre-packaged solution that combines all the technology components needed to create an optimised infrastructure that can support evolving business needs. VDC solutions are highly scalable and space-efficient: an average VDC container can support between 500 and 6,000 virtual machines from a footprint of just six standard datacenter racks.”

Scalable and affordable infrastructure provisioning

Although virtualising the datacenter can help smaller financial services firms retain their agility, this approach still requires capital investment in hardware and can come with a high internal management overhead - despite the benefit of automated provisioning.

To achieve an optimal balance between agility, cost and performance, financial services firms need to look beyond their own datacenters. For example, managed hosting enables organisations to overcome space, resource and power constraints by providing immediate access to scalable infrastructure resources in a secure environment.

As a result, infrastructure capacity can be easily scaled up or down to support pre-launch development and testing for new customer offerings as well as changing demand once they are in production.

As well as safeguarding agility, a managed hosting model can also provide niche and national players with increased systems availability, which would be prohibitively expensive to achieve with internal resources.

“Any financial application involving customer transactions has to be constantly available – especially if it is web-enabled,” comments Julie. “This requires not only a fault tolerant infrastructure and resilient network but also 24x7 on-site support for resolving hardware problems. These requirements come with a high price tag and a very low ROI as the resources are only needed during an emergency situation.” 

High availability without a high price tag

Managed hosting makes this level of availability affordable for organisations of all sizes. For example, Computacenter’s Romford datacenter offers accredited Tier IV managed hosting facilities, which can be packaged to suit the budget and needs of smaller financial services players as well as their global counterparts.

Computacenter also offers managed hosting services at a Tier II and Tier III level, which means financial services firms can avoid ‘over-servicing’ systems, such as payroll and HR which don’t require the nonstop 99.995 per cent availability that comes with a certified Tier IV datacenter.

“With Computacenter’s managed hosting offering, organisations can ‘mix and match’ availability according to the business criticality of individual systems,” comments Neill. “Managed hosting enables Tier 2 financial services firms to access an industrialised enterprise IT infrastructure based on a flexible yet predictable cost structure. Infrastructures can be shared or dedicated and can work alongside internal datacenters or private clouds.”

Safeguarding security and regulatory compliance

Given the nature of the financial services sector, migrating business critical applications – especially those that involve customer and financial transactions – to an externally hosted infrastructure can raise various security concerns. This, however, should not prevent adoption, as Julie explains:“ If financial services firms partner with a trusted provider, they can still tick all the security and auditing boxes – and reduce the costs associated with maintaining regulatory compliance.” 

For example, Computacenter’s Tier IV datacenter is equipped with comprehensive security features, including access control to all internal areas, 24x7 monitoring as well as an on-site security presence 24x7.

A hybrid approach to infrastructure deployment delivered as physical or virtual systems located on or off premise has also resulted in Computacenter championing the need for enhanced management, automation and security. As Colin Williams, the company’s Networking and Security Practice Leader, explains: “The impact and importance of information security within financial services organisations means visibility of infrastructure events is no longer desirable but mandatory.  With the need to ensure and maintain regulatory compliance, plus reduce the time and cost of remediating failing or vulnerable systems, security information and event management (SIEM) solutions more than justify the deployment investment and effort involved.”

As well as checking the supplier has all the correct security certifications, it's also important to consider their longevity and financial stability – there’s a risk that new entrants to the managed hosting market may not last the length of the contract. 

Freeing up staff to support business growth

Although managed hosting can help financial services firms begin to close the velocity gap between the concept and realisation of a new customer offering in terms of the IT infrastructure, many companies need to apply the same flexibility to their IT personnel.

“With small internal IT teams, niche financial services firms need to ensure they are focusing their efforts on activities that support business growth rather than ‘keeping the lights on’,” comments Julie. “Although managed hosting can help organisations achieve more for less, there are ways to further optimise resources.”

For example, by out-tasking routine IT management activity, such as network and end user support, internal staff can be freed up for more strategic activities. Or in the case of Threadneedle, internal skills can be supplemented with a scalable pool of external experts. 

Under contract with Computacenter, the asset management and investment services provider has out-tasked a range of non-core aspects of IT management, including support for servers, operating systems, storage, backup, email and IP (Internet Protocol) telephony. Computacenter also provides 24x7 monitoring of the company ’s systems and overnight processing.

Mark Prior, IT Director at Threadneedle, comments: “Computacenter’s shared services model means that we have access to a large pool of highly skilled resources as and when we need them.”

This out-tasking approach has not only saved Threadneedle approximately £500,000 a year but also helped to safeguard the continuity and quality of the company’s investment services.

Cost-effective access to additional IT resources

Cost reduction and service improvement are the two key reasons for organisations outsourcing IT to Computacenter.

According to a study by consultants EquaTerra*, 70 percent of Computacenter customers signed outsourcing agreements with the provider to achieve cost reduction.

“Whether a financial adopts a hosted, outsourced or hybrid approach to their IT infrastructure, they will be able to remove cost and complexity,” comments Neill. “They will also gain rapid access to scalable IT resources – both systems and personnel – which is fundamental for retaining the agility advantage and meeting customer demand for a more responsive ‘retail’ approach to delivering financial services.”

* “Outsourcing 2010 Service provider performance in the UK Region”.

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