Cloud transformation in FSI – why strategies get stuck and the key to successful cloud transformations

Exclusive Q and A with Des Ryan, Director of Solutions and Sales at Microsoft Ireland
Date posted
20 April 2021
Reading time
10 minutes

We recently had a virtual chat with Des Ryan, Director of Solutions and Sales from Microsoft Ireland about cloud transformations in FSI organisations. He discusses why FSI cloud transformation strategies tend to get stuck, the key steps to make them successful and how to move beyond 'lift and shift' to modernisation projects that can improve productivity. Read the full interview below.

From your experience, what are the reasons for cloud transformation strategies of FS firms getting stuck or simply underdelivering when it comes to their promised business outcomes? 

FSI organisations are operating in a very risk-averse world, more so than most other industries. They're dealing with highly sensitive data and it's natural then that they're a little more prudent in what they do with their IT.

A lot of the larger FSI companies tend to be coming from a legacy, on premise environment and when they try and move to the cloud, challenges like lack of technical capability and less agile internal processes crop up. Identity tends to be at the core of a lot of these things, as well as distributed environments. These legacy issues creep up and slow down a cloud deployment.

The other thing that I often see, particularly in the larger organisations is an outsourcer in place. I come from an outsourcing background myself and have seen that an outsourcer isn't always incentivised to be innovative and to help the organisation transform. From an outsourcer's perspective, you can lock the environment down and there's little chance it's going to break. Between the prudence of the industry, the legacy background that they're working from and the outsourcers that are often at play here - these are three things that play heavily in FSI when it comes to really embracing cloud transformation.

On top of that, there are other things like governance - it's a highly regulated environment. But there is actually no real impediment stopping Irish FSIs to embrace the cloud and get those transformational benefits. The European Banking Authority (EBA) has issued guidance in this area - there is nothing that stands in the way of a FSI truly embracing cloud.

 According to Forbes, around 23% of IT workloads are in the cloud. What are the most important considerations for FSIs when building cloud-first, resilient and modernised IT systems?

Microsoft has issued specific information for FSIs with regards to this. We outline four essential steps to a successful cloud adoption and deployment 

Full, informed stakeholder involvement

Any move to the cloud that is going to be smooth, requires that everyone is on board from the start and understands what the organisation is embarking on, what the pitfalls could be and how they will be mitigated. If you get everyone on board early, you tend not to have detractors later. In the FSI world, the advice is to get as broad a stakeholder group as early as possible. The decisions need to be made by people who fully understand cloud. That's another common pitfall - you've got someone who is not involved in cloud day to day but hears all of the horror stories and presumes the organisation can't go there. But a little bit of education from the outset is a key thing in mitigating that.

Targeted CSP (cloud service provider) selection criteria

In FSI, you have to make sure you have the right security capabilities, the right controls, the right auditing and the right reporting capability. You also have to look at the provider's corporate governance, for example, reviewing Microsoft (or our competitors' positions) to ensure you're working with a reputable organisation. You also have to have the right ISO standards and risk management. It's important to make sure that is captured and defined early on - again, reinforcing the importance of broad stakeholder involvement. If you don't do that and run forward and select a cloud provider, you're open to someone coming out of the woodwork and enquiring about some regulation which hasn't been covered off. Make sure you have all of your key stakeholders involved and educated and they all input into the selection procedure for whoever your provider is.

A compliant contract

There are, under EBA's guidance, clear expectations of what's in a contract, and specifically who is responsible for what part of an environment. When you're thinking about cloud, particularly security in the cloud, you don't outsource your security requirements or regulatory compliance to the outsourcer. That is a shared ownership. Have clear understanding on what the CSP is going to do on your behalf and what they're not, so where appropriate you need to build something to cover the other aspects of it.

Appropriate engagement with the EBA

Appropriate engagement with your banking regulator is essential. In the EU, there are three organisations that you will likely need to be engaging with. There's the EBA, the European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (Eiopa). Those are the main ones that issue regulation that affect the EU. If a bank is operating in another jurisdiction, you might have to consider other things like SOX or FDA. But from a European standpoint, EBA, ESMA and Eiopa plus GDPR are the standard ones which need to be covered off.

That guidance is for the most significant of workloads. There are other workloads that don't require regulatory sign-off, like moving your email to the cloud. It's when you start moving core banking workloads that you need to go through the process that I've outlined. 

One of the key aspirations of cloud-based operations is to join the dots and promote interactivity between teams and their data, but if those involved aren’t thinking beyond existing siloes from the outset, cloud frustrations will persist. What are your top recommendations for propelling internal alignment and developing that critical relationship between the business and its IT function?

There are couple of pieces to consider here.  

The pre-sale environment

Internal alignment is not really within Microsoft's or Kainos' control and it's hard to get right. When Microsoft engages, or when our best partners like Kainos engage in the pre-sales environment, we're trying to build as broad a business case as we can. The broader the business case, the broader the value the customer is going to get from the ultimate project. When you're building a broad business case, you're trying to go broad in terms of your stakeholders.

There's a certain amount we can do ahead of time to make sure we're asking the right questions and discuss with our customers what we're seeing in other environments - like who is coming in from your risk team, security team, treasury team etc. It's paramount to make sure we've had those discussions so we truly understand what the FSI is looking for from the solution.

Our partners like Kainos are key in helping us do that - Microsoft will have certain relationships but our partners will often have slightly different relationships, usually on the operational side. It's key for Microsoft to leverage the relationships of our partners to bring about the best outcome for the customer.

The post-sale environment

We don't stop when a project kicks off. We've got teams and partners who are continually looking to innovate and drive more value onto the platform. You might not get 100% alignment ahead of time. As long as you're continuing to pull on that value while on the platform, you'll eventually get more buy-in from the organisation. Microsoft set up our Customer Success Unit around five years ago. At the start of this financial year, we changed the organisational structure to move our engineering teams closer to our customers. We're putting more focus on that operational alignment and bringing key technical assets closer to our customer.

The connected customer experience is hugely important to us. Microsoft now have Account Managers looking to drive customer success in a not-paid environment which is a real shift for how we align and bring value to our customers.

In terms of developing that optimal supplier partner-customer relationship, are you seeing a strong enablement trend? Is this making a difference in terms of what a supplier partner can bring to that relationship?

Enablement is becoming a key part of an optimal supplier-customer relationship and it's certainly something that Microsoft is doing a lot more of. Kainos' enablement drive and how it helps customers become more self-sustainable is a particularly strong differentiator. Last year, Microsoft launched the Enterprise Skills Initiative (ESI), a free and/or subsidised technical education programme on our platforms. From our perspective, the more skills, the faster the adoption, the faster the customer will be comfortable embracing the cloud and new technologies and the more benefits they'll unlock. ESI is hugely important to Microsoft and it's great that Kainos have embraced it and are pushing the same message.

Microsoft have also been pulling our technical teams and engineering teams closer to customers. They have an overview what the customer is trying to achieve and give technical guidance. No customer wants to have all of the relationship held by sales, so having alignment right through the organisation to operations is key. We do QBRs for all of our major customers, review what's going on, understand the latest trends and try to stimulate the conversation. Microsoft's customers are increasingly embracing the cloud and they're pulling us into the core environment. Our customers trust us and we need to make sure we're doing everything we can to help them.

In a perfect world - there will be a three-way conversation, between Microsoft, the customer and the go-to supplier. Between us, we have an amazing capability to delight our customers.

Improving business productivity is at the heart of legacy modernisation, what can FSIs do to take the leap beyond migration 'lift and shift' projects to modernisation projects which deliver enhanced benefits through emerging technologies?

There are two areas I would talk about here. 

App modernisation capability

Within Azure there is a whole DevOps capability that I would say is second to none. Additionally, Microsoft acquired GitHub, there's a huge capability about application modernisation and there are a lot of assets that enable customers to quickly transform. We're definitely seeing that increase. We see customers move to cloud quickly with lift and shift, and then consider "now that we're in the cloud, what else can we do?" Modernisation should quickly become part of the conversation with the potential through IaaS and PaaS.

Increase in leveraging Azure for data

There is a huge amount of data in FSI organisations that can really be differentiating for them. When that data is on-prem and siloed, it's hard to get value from it. We're seeing when customers embrace cloud, they can use tools there to get value from their data.

We're also seeing improved collaboration generally speaking, through COVID-19 - it's been amazing and I'm very proud as a Microsoft employee that Teams has been a key part of keeping organisations running. We'll see continued evolution in this space - like more workflow features being built into Teams to improve streamlining and drive more efficiencies for the customer experience.

We have found that sometimes the obstacles to achieving cloud goals are often less about modernisation and more to do with mindset. How is Microsoft working with FSIs to help them build with confidence and change that mindset to drive more modernisation beyond migration?

The FSI organisations in Ireland are amongst our key customers. We collaborate with them in similar ways - there's a lot of education on how cloud works and driving some of the fallacies out of the market. We're continually reinforcing and proving the levels of security and compliance that are built into our cloud offerings - this is part of the Enterprise Skills Initiative, increasing the skillset of people so they're more comfortable. We'll also have FSI industry leads come to Ireland and speak to customers, providing an external outlook.

Because a lot of organisations are coming from legacy environments, we do a lot of work around roadmaps. If you have 10 different things in your way, how do you get through them quickly and where do you get your quickest bang for buck - roadmaps are key to helping customers modernise and continue maximising the cloud opportunity.

Satya Nadella said that we saw two years of digital transformation in two months when COVID-19 hit which saw customers dashing to keep their businesses running. We saw all industries embrace the cloud to keep the lights on. As they've done so, they can see the potential and they're more educated about it now so there's no going back. We've also seen a significant shift in terms of cloud adoption in FSI. We're at a tipping point, where previously customers were dipping their toe into cloud - the momentum has built so much, we're now having convos which are 'all-in' and customers asking what else can we move and what else can we do? With that shift, there has been a conversation change, and move beyond CIO and COO to also bring in CEOs and board members. It's fantastic to see this engagement and very relevant, particularly for the big shift conversations to the cloud.

At kainos, we are passionate about helping financial services organisations overcome their most difficult cloud migration hurdles by enabling them to re-imagine their technology platform in the cloud, with our 'Ambition to Reality' approach we help FS organisations unlock the true value of the cloud in just 30 days. To find out more about our unique approach and how we can help you unlock the true value of cloud click here.