Investment banks are turning to the cloud for familiar reasons, transforming capital expense to operating expense, flexibility and simplification of their infrastructure. They also like the way cloud billing provides a precise view of costs.
Xenomorph, a data and analytics company working in capital markets recently announced it has joined Microsoft’s Enterprise Cloud Alliance.
“We already have a number of banks and vendor partners using our cloud-based data and analytics service, which has been delivered via the Microsoft Azure cloud platform since its launch, as well as others that are deploying our TimeScape EDM+ platform over the same infrastructure,” said Xenomorph CEO Brian Sentance.
The company, which runs Microsoft technology, first began using Microsoft Azure in 2013 with its TimeScape data management software and then collaborated with Microsoft to launch TimeScape Marketplace, an innovative data and analytics as-a-service platform, the following year.
Chris Budgen, CTO at Xenomorph, said the two companies have worked together over 20 years to drive waves of technological innovation “from infrastructure, operating system and database layers right up to end-user applications like Excel and PowerBI.”
Sentance has been surprised at some of the other reasons investment banks want to put the company’s software onto AWS or Azure. Several bankers have told him they like the cloud because “you get a monthly bill and are told exactly who is using what and how much that costs you in a transparent manner.”
Microsoft (Azure) and AWS can identify what compute usage was by user or department.
“Data centers weren’t designed for dividing up the total cost of ownership, while the cloud is very much designed to say this user used these amounts of CPUs, this amount of storage and this network consumption,” Sentance explained.
Customers who want to upgrade their systems find that doing it on the cloud is much faster than doing it in-house, where it typically takes six months to implement a service once you take into account the purchase, administration, delivery, installation, testing, integration with all the network services and actual installation of the software,” he added.
Sentance saw the difference between on-prem and cloud a few years ago when a Microsoft engineer pulled out his laptop, asked what Sentance needed to run his software — including servers and networks — and 20 minutes later it was ready. No in-house IT team can achieve that kind of agility.
“If you have a piece of software and need more power, you can just provision it to run on bigger, faster hardware and 20 minutes later it is done. It is like coming out of the dark ages in terms of how quickly it happens.”
Although financial firms are overcoming their distrust of operating in the cloud, outside their protective firewalls, IT is often still resistant, he said
“I think it is changing, but at many organizations the IT departments are fiefdoms, very protective. They want to build things themselves. You are dealing with people, and some of the changes we make with our software is to retire, when appropriate, the proprietary parts and replace them with more mainstream software based on Microsoft, Oracle and other providers who are in the market — software people are familiar with and which is easier to adopt. Bank staff want to use skills they can transfer from one bank to another.”
Learning legacy applications developed in-house at a large investment bank doesn’t appeal to young technologists who want to develop skills they can use in the future.
One reason investment banks developed their own technology in the past was they didn’t trust vendors to add features in an acceptable amount of time.
“With our technology, the software is designed so the client can change it if they want to. That responsiveness to changing the business need is baked in, so there is no longer an argument that IT needs to be in control. And from an operational risk point of view, often these systems that the banks have had developed by a specific team of individuals haven’t been documented and tested to the same extent as a vendor product.” Not to mention the personnel risk if key technologists retire or move to another company.
Sentance said that moving to the cloud might be a way for banks to clean up their spaghetti codes and reduce the share of their IT budget — variously estimated at 70 to 80 percent — that goes to simply keep the bank running. Along the way banks might also take the opportunity to engage in IT asset management, he added. Banks have a lot of wastage both in the software they use and their data and often don’t know what lurks in their code. One client transferred to Xeno and saw its cash points stop working for foreign currency because a bit of FX code was hanging on the back end of a system.
This article was written by Tom Groenfeldt from Forbes and was legally licensed through the NewsCred publisher network.