Asian Banks Are Adopting Cloud Computing, But Best Practices Are Scarce

Ahead of the publication of my full report in mid-April, I wanted to follow on from my recent blog post and expand on the topic of cloud adoption in the Asia Pacific (AP) banking sector. Despite some views to the contrary, all AP banks will ultimately leverage cloud-based services and capabilities; most already do. The real challenge is mapping workloads, processes, and data to the various flavors of cloud approaches — in other words, it’s still a portfolio management exercise.

Legacy application architectures and inflexible software licensing practices will certainly influence, and potentially hinder, cloud adoption. But while banking regulations will continue to heavily influence cloud strategies, they don’t forbid them. Senior technology and business decision-makers in the AP banking sector should therefore consider the following:

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Australian CIOs Talk Agility And Collaboration In Sydney

Last week I hosted Media Corp’s CIO Leaders Summit in Sydney. In addition to my emcee duties, I also moderated two panels, both of which inspired significant discussion among the more than 50 senior IT decision-makers present. Highlights included:

  • Peter Bourke, CIO of Westfield, helped drive a lively discussion on the changing role of the CIO and strategies for leading innovation within the organization versus simply responding to business needs.
  • Andrew Wiles, CIO of Vodafone, addressed the importance of talent management and the skills that IT professionals require to succeed in a fast-paced business environment.
  • The CTOs of Avaya and Cisco provided excellent insight from the vendor perspective, while David Gee, CIO of Credit Union Australia, wrapped up the event with a vision of the future — the “microtrends and megatrends” likely to affect our lives, both professionally and personally.
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Asian Banks Are Embracing Cloud Computing Faster Than You Think

As research for my upcoming report on cloud adoption among banks in Asia Pacific (AP), I’ve spent the past several months interviewing senior IT and business decision makers at banks and other financial institutions across the region. I’ve also met with banking regulators and spoken with cloud providers with a strong AP presence. Look for the full report early in the new year. In the meantime, I wanted to share some key findings.

  • Cloud adoption is among the top priorities for most banks in the region. In fact, contrary to popular belief, I’d categorize cloud adoption as nearly mainstream among banks in many parts of Asia Pacific. But adoption drivers vary based on the cloud approach. Private cloud initiatives, for instance, centered on data center transformation to drive improved operational efficiency and cost savings. Public cloud initiatives typically focus on expanding mobile banking capabilities and other customer-facing systems of engagement — the key to customer retention and overall growth.
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Evaluating BI Services In Asia Pacific

Business decision-makers in Asia Pacific (AP) are increasingly aware of the importance of business intelligence (BI) and broader analytics to business strategy and execution. However, lack of internal expertise remains a significant barrier to BI project success.

In response, Fred Giron and I have just published The Forrester Wave™: Business Intelligence Service Providers In Asia Pacific, Q4 2013. In it, we identified eight companies that offer strong capabilities and services for AP-based organizations seeking BI service support.

To succeed in the region, BI service providers must provide guidance on how to translate data access into actual insight and information into business value. This requires a strong understanding of local cultures, business practices, regulatory frameworks, and market dynamics. When evaluating providers, understand how their capabilities are likely to evolve across five categories:

  • People. To minimize project risks, understand who will be the on-site business and technical leads on BI projects and how many successful implementations this staff has led in a similar industry and similar technical environment within the region.
  • Technical expertise. Service providers need to demonstrate region-specific knowledge of the technical characteristics of various BI tools, platforms, architectures, and applications. Most companies will not have all of the necessary skills on site, so closely evaluate ease of access to remote staff from the service provider as well.
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Microsoft's Asia Pacific Analyst Summit 2013: A Tale Of Two Days

Forrester attended Microsoft’s second annual Asia Pacific Analyst Summit in Singapore last week for an update on the company’s progress in transforming into a devices and services company. The event highlighted Microsoft’s strengths and exposed some obvious challenges, which I’ve shared below. Forrester clients can access further event-related analysis and implications here.

Day One: Impressive Capabilities And A Strong Understanding Of Customer Needs

Day one was well designed and delivered, with a clear focus on customer and partner case studies and go-to-market strategies based on three core imperatives:

  • Transforming IT. Focusing primarily on Cloud OS, Windows Azure, and Office 365, this imperative highlights Microsoft-enabled capabilities and resources to help IT organizations transform both internal data centers and IT delivery.
  • Engaging customers and employees. This imperative essentially combines mobility and social to help organizations thrive in the age of the customer by delivering improved customer service and customer and user experiences.
  • Accelerating customer insight and business process improvement. This imperative targets the changing needs and expectations for data and information access and real-time decision making via a combination of traditional analytics and big data.
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CA Makes A Case For Renewed Growth in Asia Pacific

Since joining CA Technologies as president of Asia Pacific (AP) in August 2010, Lionel Lim (formerly president of Sun’s AP business) has consistently stressed the need to re-establish CA as a leading enterprise IT provider across the region. Along with a mix of regional and global executives, Lim used the recent CA Expo 2013 in Melbourne as an opportunity to update analysts on the company’s progress.

Key messages at the event all centered on CA’s value in helping CIOs drive, manage, and optimize IT/business transformation. The company plans to achieve this goal by supporting open, heterogeneous management capabilities across all internal and cloud-based systems, from mainframes to mobile devices.

This is a major leap for CA, a company whose strength has always been IT performance management, particularly for mainframe platforms. The broader focus now involves providing key capabilities and solutions to help CIOs on the journey to private cloud enablement and “as-a-service” delivery of applications or application capabilities. CA has not been shy in making the case. As one executive stated, “CIOs not viewing themselves as service providers to their organizations are not adequately addressing the needs of the business.”

While I applaud the position, it also carries risk. CA is aligning itself with CIOs as change agents. In many parts of AP, CIOs are still more interested in maintaining the status quo, which typically means traditional on-premises data center-related investments and minimal disruption. By preaching so forcefully for change enablement, CA is positioning itself well for future strategic growth, but could be risking near-term opportunities in its more traditional, but still stronger, mainframe-centric IT performance management market.

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IT Salaries in Australia and New Zealand – Paying A Premium for Value

In Q4 2012, Forrester interviewed over 2,800 senior IT and business decision-makers across Asia Pacific, including 250 senior IT decision-makers with budgetary authority in Australia and New Zealand (A/NZ). Respondents included a mix of small and medium-sized businesses (SMBs) and large organizations, with all major vertical market segments represented. On average, 6% of A/NZ respondents’ total budget is currently spent on IT (including both operating and capital budgets). Of that total IT budget, an average of 26% is targeted at new initiatives, versus 52% targeting ongoing operations and maintenance and 22% targeting capacity replacement & expansion.

While these findings are interesting, the expected spending on IT staff salaries is what really stands out. Our Forrsights data shows spending on IT salaries in A/NZ rising far faster than all other IT-related line items (see Figure 1). This is not an anomaly. In fact, it’s a sign of things to come.

 

 

There are several likely reasons for this dynamic:

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IaaS Supply Is Beginning To Create Increased Demand - It's Time To Enable and Manage IaaS Access To Inspire Innovation

I recently wrote about the need for IT organizations to embrace SaaS to maintain relevance and help drive business value. This quarter, I’ve set my sights on IaaS. In my forthcoming report, “IaaS Adoption Trends In Asia Pacific”, I explain in detail why my advice remains the same.

Internal IT resistance to expanding IaaS usage based on security, data management, and availability/performance concerns are certainly valid. But project-driven, opportunistic IaaS usage will continue to grow across the region as business decision-makers rationally seek out public cloud-based services that meet needs not met by internal IT.

IT decision-makers failing to consider all service-provisioning options will see their credibility wane and their control usurped by the inevitable emergence of shadow IT, driven by clear business demand. On the positive side, as usage expands internally, I’ve already seen Asia Pacific organizations begin viewing IaaS as a mechanism to fuel innovation based on easy access to cloud-based compute resources. Put another way, IaaS supply is beginning to fuel increased demand.

Some key recommendations for encouraging IaaS-related innovation while minimizing risks:

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CIOs and Mobility: Present Concerns Still Trump Future Vision

 

I recently hosted an Executive Roundtable in Singapore along with my colleagues Dane Anderson and Tim Sheedy. The theme of the session was “From Systems of Record to Systems of Engagement - Understanding the New Mobile Imperative for IT Leaders".

The discussion centered on the fact that mobility doesn’t simply mean another device for IT to support. Instead, mobility is driving a clear and permanent link between virtual services and physical activities. In other words, mobility is part of a broader set of technologies – including social, cloud, and advanced analytics – that are creating ubiquitous and information-rich Systems of Engagement.

The above broad themes made for great discussion. And there was general agreement among the CIOs present that mobility would drive significant business transformation. But there was also a common set of concerns that emerged among the group:

·         Deploying new technology (including mobile apps) with limited budget or relevant skills. And more broadly, how to prioritize mobile strategies relative to other IT (and business) initiatives. Ultimately the challenge for CIOs is how to align business requirements with budget realities, particularly as user expectations continue to rise and change management becomes a critical issue due to condensed release cycles. A critical first step is to better define your mobile strategy using a simple framework for prioritizing mobile applications and features.

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Grudging Acceptance Is Not Enough — Time for IT to Embrace SaaS

 

I’ve noticed a growing trend among Asia Pacific organizations over the past 6-12 months: complete IT resistance to SaaS has steadily given way to more pragmatic discussions, even if IT has come to the table grudgingly. Over the next two years I expect this trend to accelerate. In fact, I believe that many SaaS solutions, particularly those that cross business and functional boundaries, will be rapidly subsumed within the broader IT portfolio, even if they were originally sourced outside IT.

Many SaaS vendors report already seeing more IT involvement in procurement, requirements definition, RFP creation, and negotiations. The clear procurement guidelines published by the IT department of the Australian Government Information Management Office (AGIMO) is one high profile example. Don’t get me wrong, in most instances business decision-makers will still lead, particularly in identifying the required business processes and determining how best to consume SaaS-based services. But IT decision-makers are getting more involved, particularly around integration.

Some areas to consider as you look to work more closely with business decision-makers to evaluate and negotiate SaaS and other public cloud deals:

 

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