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Juha Holkkola

Online Cloud Banking and the Organizational Inertia

Online Cloud Banking

Having spent this last week at the Cloud Connect event in Silicon Valley, I have had a number of interesting discussions with people involved with various aspects of cloud computing. While industry analysts such as Gartner and IDC are projecting that 80% of all servers running on native hardware are expected to be virtualized by 2020, many service provider and media representatives I’ve spoken with continue to be a little skeptical as far as these projections are concerned.

From a technical standpoint, the development effort by industry bellwethers like Cisco, IBM and HP has significantly accelerated the technological development in this space. Based on what I have seen at Cloud Connect and in the course of our daily work, I am confident that the underlying solutions will be ready to hit the mainstream by the end of 2013. Having said that, to meet the growth projections made by the analyst community, finalizing the facilitating technology stacks is not enough.

Over the last couple of months, our team conducted a vendor survey with 102 service providers around the world. Although there is still some work to do as far as technologies are concerned, I think perhaps the most interesting finding was that the biggest obstacle holding service providers back in their cloud and data center automation efforts is organizational inertia, not technology. In retrospect, this is of course logical, because large shifts like this also require changes on the organizational level.

Retail banking is another industry that has gone through a similar change, By now, most of us are used to doing the majority of our banking online, without the need to visit our local branch or to contact a designated representative to complete daily transactions. For banks this has required significant organizational changes involving cut-backs at the individual branches and increases in the size of the workforce managing the technology platforms that make online banking possible. Ultimately, this has made banking a lot more convenient for the average user, while providing the banking institutions with operational efficiencies.

Amidst all the hype, it is easy to forget that cloud computing is really not about technology. Rather, what the cloud promises us all is a new way to consume applications without having to give any thought to the underlying technologies. That translates to cost efficiencies, ease of use and self-service IT, based on process automation. When one thinks about all the companies using IT as an integral part of their operations, it becomes obvious that the impact of cloud computing will affect pretty much all industries, ultimately helping consumers to get more for less.

With an upside of this magnitude, it is no wonder that service providers and IT departments around the world are thinking about ways to benefit from this opportunity. Before embarking on this journey, however, most of these organizations would be well-advised to take a good look at their organizational structures. In traditional computing, various specialist teams have been working in silos, focusing on different areas of computing such as applications, databases, servers and networking. To enable end-to-end automation that spans across all these functions, organizational changes will likely be necessary.

To decide whether or not your own organization is ready for the change, here is a quick check-list:

1. Has the cloud computing initiative been made a strategic priority in the organization?

As people in IT departments always have a number of items on their to-do list, making cloud computing a priority across the organization is key to success. Unless everyone in the organization appreciates the strategic importance, coordinating efforts between different teams will become difficult and the momentum will be lost.

2. Have you named a sponsor who is senior enough to push the initiative through?

Resistance to change is natural. To make sure that the strategic cloud computing initiative is not derailed through politics, the initiative must be headed by a respected senior member of the organization whose judgement other people will trust. Ability to build trust between cross-functional teams is also a great asset.

3. Have you thoroughly assessed the make or buy aspects of cloud computing?

Since cloud computing is all about end-to-end automation and efficiency, a natural reaction within an IT department is to start securing bases by driving the cloud initiative towards home-grown or highly customized technical solutions provided by systems integrators. While this approach can be justified in select service provisioning environments, for most enterprises spending time and/or resources on developing IT systems in-house – or paying someone else to do that on customized basis is a waste of time and money. There are ample cloud computing and automation solutions available that can help your organization in meeting its requirements, making job security the only real driver for home-grown tweaks.

By Juha Holkkola

Juha Holkkola

Juha is managing director of Nixu Software Oy Ltd, the cloud application deployment company, an affiliate of Nixu. He joined Nixu in early 2000 and has since held various business and sales management positions. Before Nixu, Juha worked for Nokia Networks and financial services company Sampo Group in various marketing and treasury positions.

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