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Cloud-First Strategy looks unavoidable: Leaders, trends and why now

The movement to cloud-first strategy is accelerating as more senior executives are declaring this is the way forward. For the leading cloud providers, this is now a multibillion business growing at up to 80% per annum.  This business did not exist a decade ago, so why the stampede?

According to Gartner, there is no service provider today whose business model offering and revenue growth are not influenced by the increasing adoption of cloud-first strategy. This in turn, affects more than $1.3 trillion in IT spending by 2022.

The best way to explain this movement is the traditional methods of implementing IT within an organisation have been superseded. 

Every industry is going digital and it means that everyone will be on the same starting line whether they have been in business for years or just beginning.

The cost of entry to any business has reduced as cloud charges are based on usage thus eliminating the need for capital expenses.  When there are peak-days or growth spurts in business, cloud-first strategy makes it easy to handle changes in volume, giving businesses on-going revenue based on actual activity and immediate scale.

The time to market has also shortened as cloud offerings are starting to resemble Lego bricks ready to be arranged for any business. For example, offerings now include AI and Machine Learning, giving the ability to analyse and react to trends and performance at any time.

The data size in the analytics can be enormous. Given cloud technology is supported by state of the art data centres, all backed up in case of a disaster, with virtual machines with virtually unlimited storage.

One of the hardest capabilities, analysing real time transactions, is now available. For banks and their regulators this is good news. Fraudulent activities and out of policy trading can now be immediately policed.

The regulatory requirement of having all the bank’s assets in one place, often termed the data lake, can, with cloud capabilities, become an asset. The old constraints of the ‘cheap and cheerful’ data lake format can be redefined, creating valuable insight for the bank and the regulator.

The move to cloud for many, successful and established businesses can be a substantial cultural change. The change from on-premise, custom software sitting on in-house hardware to the cloud needs the people involved to be retrained. The expertise they have built needs to be retained to ensure on going success.

Cloud-first strategy looks unavoidable. One of the best ways to get underway is to identify those activities that can be moved to the cloud easily and in moving them help dimension the size of the project across the company.

As the costs are ‘pay as you go’ the investment is small. For example, building an app for a group of corporates on working capital. The time spent with the customers and their relationship managers creates insight for both parties. The whole app can be up and running in 90 days. The banking relationship is enhanced as the customer and relationship managers become more empathetic.

The way the cloud itself is going, most businesses will be using a number of cloud providers. The new age of technical linkage, API, is here so data and transactions can be moved safely and securely between the various clouds, banks and clients.

The successful, long term businesses will be the ones that become cloud-native.  These businesses will be agile, insightful, and cost-effective and scale immediately.

The leading provider of cloud services is AWS (Amazon Web Services), a subsidiary of Amazon, started this business seven years ago and has grown revenue to $25.7bn. 

The second and third positions go to Microsoft Azure and Google Web Services respectively. Both these companies had close to 80% annual revenue growth, nearly double AWS.  Around Google are IBM, Oracle, SAP, Salesforce.com and Alibaba.

The great incentive for all suppliers is simply the size and growth of the cloud market. Gartner expects the market to grow 20% per year with three cloud businesses (without SaaS and implementations), worth $170bn by 2022.

The top three suppliers are currently seeing double the Gartner expected rates this year. This suggests this is a great market to be in and being the oldest supplier in a new field may not be sufficient to stay as leader. Ironically the cloud providers and businesses have the same requirements to use the latest technology to benefit all.

Five years ago there was almost a denial around the existence of public and hybrid clouds by financial services and by the regulators. Private cloud architecture was fine back in the day but to go beyond this was seen as too high risk. Now cloud, in all its forms, is the way forward. So sit back, relax and float away.

 

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Comments: (1)

Yahya Mohamed Mao
Yahya Mohamed Mao - n'cloud.swiss AG - Zurich, Switzerland 25 September, 2019, 13:44Be the first to give this comment the thumbs up 0 likes

I'm always impressed by the dominance of American cloud providers. They have been in the market for years and I believe that this will not change easily in the future. It is definitely interesting to be in such a growing market but the competitors are giants! The main challenge for AWS, Azure & Co. for me is to find a good solution for the disunity between Cloud Act and GDPR. This is something highly discussed in Europe, also because of the intransparency of both data protection laws/regulations.

John Bertrand

John Bertrand

Head of Solutions

Cognizant

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This post is from a series of posts in the group:

Banking Strategy, Digital and Transformation

Latest thinking in respect to Banking Strategy, Digital and Transformation. Harnessing our collective wisdom to make banking better. Ambrish Parmar


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