the financial industries' perspective on impact and role of cloud - daniel mayo

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© Copyright Ovum 2014. All rights reserved.

Financial services perspectives on the role and real impact of cloud

Daniel Mayo, Chief Analyst

[email protected]

6 © Copyright Ovum 2014. All rights reserved.

Does cloud really matter in financial services?

§  Opex cost

§  Utility/subscription pricing

§  Ready-to-go

§  Scalability & capacity

§  Maintenance / upgrades

§  Innovation


But is cloud really suitable for financial services?

§  Data protection & security

§  Regulation / compliance

§  Bespoke requirements

§  Lack of control

§  Support

§  Integration with legacy


What do financial services institutions really think?

NA:100

CALA:50

MEA:50

E:100

AP:100


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


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


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


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


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


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)


Digital channels Customer servicing


New business acquisition

Customer servicing Policy administration

Banking Insurance


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)


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


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


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%


However, is IT driving the SaaS discussion?

0% 20% 40% 60% 80% 100%


Product development

In-‐bound customer servicing

Fraud detection &investigation


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


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%


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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the financial industries' perspective on impact and role of cloud - daniel mayo

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