Winston Churchill once said “without innovation it [art] would be a corpse”. Like art, innovation is as fundamental to business as water is to mankind. If there was no water, there would be no life on earth. If businesses don’t innovate, they cease to exist.
Take Deluxe Corporation. It celebrated its one-hundred year milestone by ringing the opening bell at the New York Stock Exchange on Wall Street.
The Minnesota based company began with a man, a $300 loan and an innovative idea for the first flat-book cheques. One-hundred years later, Deluxe generates $1.7 billion in revenue. However, it may not have reached this significant anniversary if it hadn’t evolved along the way.
Deluxe’s executives understand that in a world of digital wallets, credit cards and Bitcoin, consumers and businesses are writing fewer cheques. It recognised that it had a choice – to disrupt itself or be disrupted.
It chose the former and diversified its offering. It took a good hard look at its IT infrastructure and initiated a programme to move to a private cloud within a managed services environment. It now has the technology it needs to grow, deploy next-generation applications and accelerate its time-to-market.
Scores of other businesses in the financial services industry are facing the same reality (and opportunity).
Victorian by comparison
In 2014 Chris Skinner, Director of the Financial Services Club claimed that core bank systems are “creaking at the seams and, in some cases, falling apart”. He warned that if financial institutions don’t replace “the granite foundations of the banks’ technology base foundations…they will look Victorian by comparison to new competition or banks that have systems fit for purpose.”
Thankfully, the task of replacing and decommissioning technology is far less drastic a measure than this damning verdict might suggest.
For instance, Deluxe modernises rapidly but incrementally when it updates individual systems or processes. Moreover, working with Hitachi any enterprise whether it be a bank or retailer, can start to enjoy the benefits of a private cloud just 90 days after the date of order.
A bespoke cloud
In fact, in all respects cloud technology offerings have matured in line with financial services companies’ requirements. To date banks have battled legacy systems and yearned for greater flexibility, but felt hamstrung by the limitations of public cloud. The hybrid cloud addresses these concerns.
Historically the IT industry talked about two distinct types of cloud environments: private and public. Each came with their strengths and weaknesses.
Despite improvements in the security of public cloud services, many financial institutions didn’t think they could enjoy its limberness while striving to remain a trusted and profitable custodian of other people’s money. Or that they could benefit from the control and service level protections that private cloud affords, without spending huge amounts of money and compromising on agility.
The hybrid cloud resolves this dichotomy by mixing on-premise, private cloud and third-party, public cloud services with orchestration between the two platforms; meaning that workloads can be moved between private and public clouds as needs change.
Returning to the life-giving water comparison, the hybrid cloud represents the perfect blend of hydrogen and oxygen to create H20 – the chemical components of water.
Protecting the crown jewels
As a customised cloud offering, the hybrid cloud appeals strongly to businesses with the typical 80:20 ratio: 80% of their revenue comes from 20% of their applications. These applications are business critical and cannot be compromised in any way. For a bank, this 20% represents their internal core banking systems (responsible for moving money around, standing order instructions etc.). Here the private cloud element of the hybrid cloud offering is sacrosanct.
Which brings us back to our water analogy. Just as the covalent bonds that hold hydrogen and oxygen together are very strong, the bonds that knit the hybrid cloud together must be impenetrable; to shore-up security, prevent data leakages and deliver robust service level agreements - an imperative for any company operating in a highly regulated market.
Working with Hitachi enterprises can purchase a private cloud and then extend it to a hybrid cloud when ready, without compromising on security.
Financial services on speed
Another benefit of the cloud services provided by vendors including Hitachi is the speed and ease of provisioning. Today financial services companies need to release new products and services quickly. With cloud technology, application developers can get what they need to run and build applications reducing the need for time-consuming internal processes. All their resources can be acquired through a self-service portal, and then quickly decommissioned when resources are no longer required.
Concluding with the water analogy, when you get the cloud environment right, you can create the business equivalent of water – a life source on earth. If you get it wrong, you could create hydrogen peroxide, a harmful oxide with toxic characteristics.
Businesses of all types and sizes have long since realised that they face a stark choice ‘innovate or die’ but the flexibility of the hybrid cloud enables them to proceed with caution and within a safe environment.
For more information, do watch our recent webinar discussing how Hitachi is helping companies advance their Digital Transformation strategy through the cloud.