While deploying key financial service systems in the cloud has numerous advantages, the paradigm, as compared to on-premises systems, is sufficiently different as to require a comprehensive analysis of risks and readiness. The benefits of the cloud have been well documented (reduced up-front infrastructure costs, speed, ability to add server and storage resources on demand, etc.); however, the impact to system customizations, integrations, and support must be carefully evaluated. Information and platform security is yet another factor to be carefully considered.
Firms more often than not customize on-premises systems to better meet their specific business process. Some of these customizations are created to support proprietary business functions, while others are often related to having the system conform to the way the business process has always been done.
In contrast, cloud-native applications (Software-as-a-Service or SaaS) are typically standardized to foster straightforward, frequent updates with minimal impact to users. While cloud applications offer a degree of configuration to tailor the setup and performance of the systems to a specific firm’s requirements, the amount of customization is limited. Firms migrating their core applications to the cloud will have to evaluate whether the lack of complete and absolute control over the behavior of the software outweighs the advantages provided by the cloud.
While it’s true that a firm can migrate its existing core financial systems to the cloud as-is, allowing the full complement of their business-specific modifications to continue (aka “lift-and-shift”), many of the benefits associated with a SaaS cloudbased deployment would be negated. The periodic cost spikes associated with software patches and version upgrades would remain, along with the continued costs of the application support staff. With the requisite infrastructure and support personnel already in place supporting the existing in-house systems, there would be little impetus to make a transition of this nature. However, redeploying the firm’s core application suite using standardized applications as a service may provide the most advantageous, cost-effective solution.
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