The latest dos and don’ts for network virtualization in financial services

Software-defined data centers are accelerating digital transformation

by René Dufrene, General Manager of Finance Industry Solutions, AT&T Business

During a session at the AT&T Business Summit, my colleague Robbie Harrell posed this question to a room full of technical and business decision makers: “How many of your bosses are asking you about software-defined data centers?” Over half the room put up a hand. “Now how many of you are taking steps to implement software defined technologies?” The response dwindled to just a few hands. Why?

Robbie is a Senior Principal Architect in our business consulting organization. For this article, I asked him to share additional insights from that session, “Lessons Learned in Private Cloud Transformation,” and from his ongoing conversations with business leaders. I was interested in the specific impact that software-defined data centers (SDDCs) are having on the financial services industry, where FinTech startups are driving rapid response to changing consumer expectations, while stalwart financial institutions (FIs) are embracing digital transformation. Has SDDC become a cornerstone solution or is it merely one piece of the puzzle?

Digital means flexible

SDDCs gained popularity because they can replace (virtualize) hardware infrastructures and functions with software at scale. The future-flexible benefits are dramatic, especially within the ultra-competitive, ever-shifting financial sector. SDDCs offer far more speed and agility than their hardware predecessors. Functions and updates that were once reliant on frequently installing new boxes are now offered as a service (SaaS) and just a click away. Robbie has seen systems that used to take weeks or even months to deploy now running in a matter of minutes.

Another benefit to a SDDC is lower cost and higher efficiency, since the constant need to upgrade hardware is not only time consuming, it’s expensive. A 2015 study by Computer Economics underscored the reason virtualization started gaining so much momentum: Data center operations and infrastructure costs represented an average of 18% of IT spend. IDC reported that in an all-hardware edge environment, the networking staff spent 70% of their time managing infrastructure. Virtualized data centers have slashed that percentage by reducing new hardware cost, justifiably popularizing them with decision makers as cheaper and more sustainable. A recent Frost & Sullivan report pegged the enterprise cost savings for maintenance alone at 10-15%. All of this is on top of efficiencies via automation, with fewer manual tasks providing fewer opportunities for errors, while simultaneously freeing employees to focus on other things.

Making the leap

So why the gap between interest in SDDC and execution? It’s complicated. For all the benefits that make software-defined technologies a perfect fit for FIs, the barriers are daunting. From the number of stakeholders required, to C-suite resources, to inertia from those who will eventually oversee the change, managing the risks and concerns is a challenging endeavor.

What best practices does Robbie recommend by working with FIs that are already moving down the path of a successful SDDC implementation?

  • Start with a reality check and audit your strategy. IDC research shows that demand for cloud migration is growing annually at 30%. With the increasing need to be more agile, the status quo simply isn’t an option to stay competitive.
  • Think long-term vision over short-term results. Patience and persistence are key; implementing software-defined technology is no small feat. The best results often come out of a 1-2 year implementation process.
  • Don’t go it alone. It can be overwhelming to navigate all the vendors, platforms and technologies needed. Connect with trusted resources and vendors that are deeply invested in your unique success metrics.
  • The skillset to implement SDDC is still somewhat rare. So rather than relying on resources in-house, seek vendor-led support from a partner who can not only talk tech, but also help you deploy and manage it.
  • Don’t use open-source as a shortcut. The workarounds tend to create more of a headache and prove to be more costly in the long term. The biggest issue with open-source solutions is the lack of technical support. When something breaks or doesn’t work properly, who will you call? With something this integral to business, don’t risk it.

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