the financial industries' perspective on impact and role of cloud - daniel mayo
DESCRIPTION
The potential of cloud has seen much industry discussion in recent years, but as this model matures what is the reality? To understand this, Ovum has recently interviewed over 400 bank and insurance companies to assess both how much and where cloud is changing the industry.TRANSCRIPT
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Financial services perspectives on the role and real impact of cloud
Daniel Mayo, Chief Analyst
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Does cloud really matter in financial services?
§ Opex cost
§ Utility/subscription pricing
§ Ready-to-go
§ Scalability & capacity
§ Maintenance / upgrades
§ Innovation
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But is cloud really suitable for financial services?
§ Data protection & security
§ Regulation / compliance
§ Bespoke requirements
§ Lack of control
§ Support
§ Integration with legacy
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What do financial services institutions really think?
NA:100
CALA:50
MEA:50
E:100
AP:100
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IaaS/PaaS is core part of new infrastructure spend
7.5%
12.0%
36.5%
24.5%
12.0%
7.5%
9.5%
8.5%
23.0%
34.0%
12.5%
12.5%
0% 5% 10% 15% 20% 25% 30% 35% 40%
0-‐9%
10-‐19%
20-‐29%
30-‐39%
40-‐49%
50%+
Proportion of respondents
Please estimate the current proportion of new IT infrastructure spend is that is allocated to IaaS/PaaS versus on-‐premise infrastructure
Insurance Banking
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Similarly SaaS has become mainstream
2%
17%
33%
27%
15%
7%
2%
13%
25%
27%
18%
17%
0% 5% 10% 15% 20% 25% 30% 35%
0-‐9%
10-‐19%
20-‐29%
30-‐39%
40-‐49%
50%+
Proportion of respondents
Please estimate the current proportion of application spend allocated to SaaS versus traditional packaged or in-‐house developed software
Insurance Banking
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Tactical policy prevails, with growth as preference
0.5%
29.0%
42.5%
26.5%
1.5%
0.0%
33.0%
41.5%
23.5%
2.0%
0% 10% 20% 30% 40% 50%
Which of the following best describes your organization’s policy towards the use of SaaS?
Insurance Banking
Project will not be implemented unless using SaaS
SaaS is the preferred option and used where possible
Considered for every IT project and sometimes deployed
Rarely considered
Never consider or use SaaS
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SaaS usage grows as maturity develops
Asia Pacific
Latin America
Europe
MEA
North America
Global average
0%
10%
20%
30%
40%
50%
60%
70%
20% 25% 30% 35% 40%
Prop
ortio
n of re
spon
dents tha
t expect S
aaS spen
d to increase sign
ificantly in th
e ne
xt 18 mon
ths
SaaS as a share of total application spend
Average SaaS penetration and future growth plans in SaaS usage
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SaaS use is expanding across business processes
0% 20% 40% 60% 80% 100%
Product development
Business support services
Marketing & customer targeting
Regulatory compliance
Fraud detection &investigation
In-‐bound customer servicing
Proportion of respondents where SaaS significant
Please indicate to what extent the following business functions are currently supported by SaaS technology within your organization
Insurance Banking
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Front-office focus strong across most regions
Top area planning to increase SaaS adoption in next 18 months
New product opening Customer servicing
Product development (lending)
Regulatory compliance
Digital channels Customer servicing
Marketing & customer targeting
New business acquisition
Customer servicing Policy administration
Banking Insurance
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Cost and IT capacity main drivers for SaaS adoption
Banking Insurance
1 Reduces need for internal development Supports geographic expansion
2 Reduces overall IT cost Reduces overall IT cost
3 Allows IT group to focus on strategic projects
Reduces need for internal development
Business benefits sought from SaaS (top driver)
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Wider business benefit of SaaS is being seen
0% 5% 10% 15% 20% 25% 30% 35%
Please rank the top 3 benefits sought by the wider business functions of your organization through the use of SaaS with 1 being the most significant benefit
First Second Third
Reduces the need for internal development
Supports geographic expansion
Allows IT group to focus on strategic projects
Lead to the wider business having more influence on IT strategy
Reduces time taken to introduce new business functionalitySupports flexible business
process redesign
Reduces overall IT costs
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Institutions impact transformative impact in 3 years
0% 20% 40% 60% 80% 100%
In 3 years +
Within 2 years
Within 1 year
How significant do you believe the impact of SaaS will be on your organization over the following time frames?
Will transform the organization Significant impact Some impact Very limited impact
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With SaaS changing business dynamics
SaaS impact Strongly agree Agree
SaaS allows organizations to respond more rapidly to market opportunities 25% 59%
SaaS services make it easier for new entrants 17% 70%
SaaS helps organizations deliver more innovative financial products 14% 61%
SaaS makes it easier for organizations to launch services in new countries and regions 9% 66%
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However, is IT driving the SaaS discussion?
0% 20% 40% 60% 80% 100%
Marketing & customer targeting
Product development
In-‐bound customer servicing
Fraud detection &investigation
Regulatory compliance
Business support services
Please indicate the degree of involvement in the decision to use a SaaS solution within the following business areas
Made entirely by business function Made by business with IT involvementMade by IT with business function involvement Made entirely by IT group
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Institutions need to adapt rather than react to SaaS
SaaS strategy Proportion
We have adopted a "cloud/SaaS-first" strategy for new projects 66%
We have modified our IT security policies to take account of public and off-premise hosted cloud/SaaS usage 63%
We have updated our IT governance practices to cover cloud/SaaS-based services 59%
We have implemented a business-wide governance model for the use of cloud/SaaS services 57%
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Key take-outs
§ Cloud has become a reality in financial services
§ Adoption and prevalence will continue to expand
§ SaaS provides cost and capacity benefits
§ But also changes business dynamics
§ Is your IT function reacting or driving the cloud debate?
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