Client : Fujitsu Country : Hong KongPublication : The Asset Page : ViewpointDate : October5, 2012 Journalist : Oliver JonesURL : http://www.theasset.com/article/22837.htmlHeadline : Financial Services Sector’s Need To Upgrade Legacy SystemsFull Text:The emergence of the renminbi is widely seen as an opportunity to upgrade legacy systems.According to the Hong Kong Monetary Authority, renminbi deposits in Hong Kong increased by 87% to588.5 billion renminbi in 2011, while the amount of cross-border renminbi trade settlements processedin Hong Kong was up by 4.2x to 1.9 trillion renminbi.It‟s clear that renminbi transactions are rising in both volume and frequency, and further growth couldplace huge demands on reliable and flexible IT infrastructure and services for banks and financialservices organizations as they are faced with increasingly complex global operations, heightenedregulatory pressures and rising demand for innovative customer service.Chinese firms have also been quick to realize the competitive advantages and security benefits to begained by investing in technology, as they expand overseas and play a more significant role in theglobal market.Disconcertingly, the financial services industry (FSI) is underpinned by infrastructure and IT systemsthat are no longer „fit for purpose‟ according to a new report by IT industry association Intellect. This isthe result of decades of ad-hoc technology investment combined with merger and acquisition activitythat have created silos of information and duplicate processes.All these create additional impetus for the upgrade of legacy systems to improve responsivenessacross international markets, adapt to new regulatory legislation, and implement rigorous controls. ITdepartments have the complex task of making the right investments and the right choices and thisdoesn‟t just affect the data center, but the places at which we work. More flexibility is required, moreaccountability, increased transparency and, of course, better cost control.Virtualization technology for cloud computing perfectly fills the gap for optimizing financial operationalefficiency and data management. It optimizes the delivery of desktops, applications and data to users,while moving the underlying PC hardware to the centrally managed and secured data centre. ITdepartments can now manage and update the OS and apps at one time from one location, deliveringdesktops and apps that are customized to meet the needs of each individual user without the hassle ofhandling multiple desktops.This type of operation model fits with the demand generated from the emergence of the renminbi –with Hong Kong as the offshore renminbi settlement hub, the FSI companies can build their cloud/virtualization environments in Hong Kong to serve offices across the APAC region.Given this background, questions have also been raise on whether financial services providers shouldoptimize, replace, or convert legacy platforms.There is no simple answer to this question, since no two companies have the same IT infrastructureand business needs. In order to decide whether optimization, replacement or conversion of legacyplatforms would best suit the business, it is crucial to first evaluate the IT legacy of the company.
Overshadowed by the recent economic crisis, the financial industry faces rigorous cost controls, risingcustomer expectations and stricter compliance regulations. All of this places a heavy burden on the ITinfrastructure, which must support operational efficiency and agility, business growth and greatercustomer centricity – despite the cost squeeze.Many banks are using outdated core systems which are hindering their ability to grow. However thecomplexity of IT, shortage of the right support and skills, and the cost of investing in new technologymake it difficult to simply „rip and replace‟ legacy banking systems.FSI companies must look for a technology partner that is dedicated to improving the longevity of ITassets. The partner should assist in modernizing applications which are functionally “fit for purpose”but are suffering from issues caused by ageing of the base technologies. After evaluating their ITlegacy, their legacy modernization plan should not only cover the total migration of applications fromone set of technologies to another, it should also cover an array of other options which may be suitableto the organization. If moving applications to the cloud or adopting virtualization, total migration ofworkloads is critical – businesses need to be able to turn off the previous cost involved of runningthose workloads on-premise if they are to truly shift from cap-ex to op-ex and lower total cost ofownership.The meticulous nature of financial services firms also means that risk has to be tightly controlled evenwithin a fast-paced environment. In moving to the cloud, financial services firms can actually benefit bytransferring much of the risk to their cloud / virtualization services provider, while the technologypartner must be able to uphold enterprise-level service level agreements (SLAs) to guarantee up-timeand a high quality service. Technology partners must support and enable an efficient and effectivetransformation journey to cloud computing based on virtualization technologies, innovative workplacedevices and other tools – but it is how these are applied and used that can make the differencebetween success and failure. When selecting an IT partner to support them on their legacymodernization journey, it is critical for FSI companies to look for a trusted partner who not only offersinfrastructure, but consultancy and ongoing services which can help fine-tune the process inaccordance to the business environment and requirements.From IT standardization, virtualization to cloud computing, we‟re seeing more financial organizationsembarking on a journey to revolutionize their IT infrastructure with the key aims of reducing cost andenhancing efficiency.By adopting virtualization and cloud computing, FSI companies can not only reduce costs but drivevalue within the organization, in a number of different ways: 1) Reduction in total cost of ownership (TCO): By virtualizing the desktop, employees only need a simple user interface including screen, keyboard and internet connection. Without all the expensive hardware of a standard PC, TCO can be reduced by up to 35%. As all data and applications are located in centralized servers, no individual servers are needed in branch offices, which can further reduce the TCO of IT infrastructure and lower maintenance costs. 2) Energy efficiency: Cloud/virtualization computing requires minimal hardware equipment in offices, thus reducing electricity consumption. Compared to the traditional environment, virtualization can reduce up to 60% of electricity consumption and over 80% of carbon footprint, which achieves the Greener IT goal for most financial institutions. 3) Pay-per-use: Unlike traditional IT systems, cloud computing is more like using electricity that users only have to pay for according to their usage. This allows companies to better control and monitor their IT expenditure, and align IT spend with business growth. 4) Shift from cap-ex to op-ex: With the cloud, everything is upgradable. You can move from capex to opex to maximize resources. Businesses have the ability to grow incrementally, so ICT growth matches business growth. You get more value back through lifecycle management, for example, always receiving the latest technology through the cloud.Other than cost reduction, FSI organizations can also benefit from the efficiency enhancementsbrought about by virtualization and cloud computing: 1) Improved response time: Systems upgrades or maintenance can be simply and centrally carried out at the data centre and all users will be able to access the updated platform. Time and effort on IT management and maintenance is greatly reduced.
2) Minimized system maintenance downtime: As all the upgrade and maintenance are done at the backend in data centre, the maintenance windows at front-end at users‟ level are kept to a minimum, in turn bringing an uplift in operational efficiencies. 3) BYOD: Today, as more and more users are increasingly demanding bring your own device (BYOD) schemes, virtualization is gospel for employees who want to enjoy the flexibility of being able to immediately access corporate information anywhere, via any device. With the support of local hypervisor-based virtual environments, users can experience the familiar desktop environment they‟re used to, while freeing up time spent on local backup and recovery tasks. This creates a win-win situation. As user experience and satisfaction improves, the business benefits from greater productivity and higher morale which in turn offers advantages in talent development and retention. 4) Improved disaster recovery plan: In case a disaster strikes, centralized cloud computing minimizes recovery time, since all recovery action can be performed in the cloud, so individual employees can resume business with the shortest down time. 5) Scalability: In view of business development, cloud computing allows organizations to easily scale up or down their IT infrastructure in accordance with their business needs.Financial services providers are concerned about achieving balance between risk and agility duringthe transformation process which is a critical period, prone to risks and instability hence reliable ITsupport services are vital. However as mentioned, with the introduction of the cloud, risk is shiftingfrom customer to technology partner.Previously, customers would have had to analyze myriad factors to assess the risks involved whendeploying new technologies, for example, which services they should adopt, which models they shouldembrace. If there was any IT downtime it was their risk and their responsibility. However thetechnology partner is now shouldering the risk. If the network goes down, they need to have the globalresources to manage this, mitigate risk and uphold the SLAs with the customer. We look at the entireecosystem to determine where risk may lie, and devise back-up plans in advance. Therefore moving tothe cloud actually helps to de-risk IT for the customer.Many technology providers are able to provide cloud and virtualization technology but it is essential forFSI companies to work with providers who are capable of extending their services beyond pureinfrastructure, by providing clients with on-going support throughout the transformation journey.Derek Yiu is the general manager of Fujitsu Hong Kong‟s solutions and services business