Financial services companies increasingly use cloud computing to launch innovation labs, attract talent and allow current employees to experiment. Thousands of fintech companies offer SaaS for payments, capital markets solutions, risk management, portfolio management and more.
Yet the truth is the benefits of these tools can all too quickly be swallowed up by the costs of implementation and maintenance. The following tips can help your firm take advantage of the cloud computing revolution — without costs spiraling out of control.
Keep sight of strategy
Eager to jump on the cloud computing bandwagon, some financial firms are starting projects without establishing strong controls around cost. Yes, cloud tech makes it possible to deploy new features swiftly and to scale up quickly — all coming at a price. It is not uncommon for developers, eager to try out and test something new, to run up costs without supervision.
To stick to a budget, cloud projects, like all projects, need a defined scope. Before making any big moves into the arena, a firm should define its goals, know what it seeks to deliver and have a plan to stay on track throughout. Sometimes, the goal may not be cost-savings. For example, Bloomberg’s move to make market data available in the cloud was driven by a desire to increase clients’ convenience in accessing data.
If, on the other hand, a company is already in the game and has an existing cost problem it hopes to rein in, the firm needs to first ensure that the initiatives are tied to business strategies. Begin by taking inventory of who is using the cloud and for what purpose(s).
Once the situation has been assessed, put sensible, relevant monitoring tools and communication guidelines in place. Also, help employees understand the costs behind what they are striving to accomplish. Developers and technologists can be encouraged to build and test new things in the cloud, but they need to hear clear communications about budget and business strategy so they can weigh the benefits versus cost.
It does not make sense to spend $10 million to build something with only $1 million in value.
Chasing the newest trends
Cloud service providers are growing fast and adding new products and services rapidly.
The pros and cons: Yes, a wider palette of access, options and opportunities can be a boon. Given the fast pace of development, however, many large financial services providers legitimately fear that today’s new products or services will need a costly upgrade or become irrelevant in six months. The relationship with a cloud provider is both long term and critical to business operations, adding pressure to the decision to invest.
There are no easy responses to these concerns. When weighing cloud solutions, companies should keep in mind that the cloud is only one part of the technology stack. There is a misconception that companies can — and should — save money by moving to cloud.
Perhaps. Perhaps not.
While cloud computing can be a cost-effective way for smaller companies to ramp up quickly, it does come with recurring costs that can be comparable to traditional build-outs.
Remember the cost of maintenance
Cloud computing comes come with many attractive services that make it easy to implement new data analytics tools or language translation. These come with recurring costs, however.
Adding a cloud-enabled feature like foreign language translation on a website is simple with cloud, but the cost of maintaining that feature will increase as the site ramps up. Companies that want to leverage cloud providers need to think of cloud providers as long-term partners. Firms need to weigh the benefits of faster time-to-market against the associated costs.
Moving operations into cloud offers many benefits. Establishing and sticking to a smartly conceived, well-tailored business strategy are key to controlling costs.