|By Avi Rosenthal||
|April 4, 2016 04:27 AM EDT|
Recently leading Cloud Computing vendors such as Amazon, Microsoft and Google approached large banks in order to start migration of systems to their Public Clouds.
I looked for evidence supporting the notion that Banks are transforming from Mainframes to Public Clouds. I found no evidence.
I am not the one to be blamed for not finding any significant evidence, because there is no evidence supporting the notion cited above.
Banks are using Public Clouds but...
Like many other organizations, banks are using Public Clouds applications. However, they do not use it for Core Banking systems deployment.
They use Public Clouds for applications which are less integrated with the Core Banking systems.
If they will not use Public Clouds for Core Systems, IBM Mainframes will be used for many years.
Public Clouds, Private Clouds or Hybrid Clouds
The answer to the question: Which type of Clouds are you using or you will use in the next years? will vary.
SMBs' frequent answer would be: Public Clouds
Large Enterprises' frequent answer would be: Hybrid Clouds.
Hybrid Clouds usage is based upon both Private Clouds and Public Clouds.
If you read a previous post titled: The Next generation of Private Clouds, you probably noticed that, according to Forrester Consulting's survey, building Private Clouds is a priority for nearly half of the large enterprises surveyed.
You may also noticed that 67% of the survey respondents said that access to Mainframe Data was critically important or very important in Clouds environments.
1. Large enterprises will continue to use Mainframes.
2. Large Enterprises will use Hybrid and Private Clouds. Mainframes will be part of Private Clouds.
Large Banks will not migrate of Mainframes to other platforms if they considering including Mainframes in their Private Clouds.
Business Barriers to Migration from Mainframes
Is there a Business Case for migrating Core Banking systems from Mainframe?
It is difficult to justify such a large and expensive endeavour.
The CEO or another manager would ask: What would we get for this multi year expensive endeavour?
The answer would probably be the same functionality.
Not the best answer for convincing Business oriented non-tech managers to spend a large amount of money.
1. resistance to change
Many of the current elderly Mainframe team members will not be able to adjust to new platforms and new development paradigm and tools. They are afraid of losing their jobs.
Some of them will resist the change and will not cooperate.
2. losing expertize
The IT staff maintaining current Core Banking systems has limitations, as far as new technologies and architectures are concerned, however some of the employees have deep understanding of current systems and the Bank's Business processes and Business goals.
They also know a lot about the Organizational Culture and about people working in the Business departments.
Many of these employees will retire or will be fired.
The new young energetic employees, replacing them, lack understanding and knowledge of the Business, the Organization and the People.
Even in case of no resistance to change do not expect 100% accurate migration.
New bugs introduced to the new system imply cost and less satisfied customers.
3. missing Functionality
Undocumented functionality will not be part of the new Core Banking Systems.
The assumption that the documentation of complex old systems is full and accurate is an unrealistic assumption.
4. missing Data
Replace the word Functionality in the previous section by Data. Do not expect 100% precise data migration.
5. Misinterpreted Business Processes
The Challenges to BPM implementations include lack of Visibility and non-documented processes.
If the Bank migrating from Mainframe, did not complete its BPM implementation, some Business Processes in the new non-mainframe systems will not be identical to current Business
6. Co-existence and Migration process
After completion the development of new systems, these systems should be deployed.
Anything could get wrong during the actual migration process.
Mainframes Security is better than other platforms Security.
In addition to the gap between Mainframe Security and Windows Security and Linux Security in non Cloud based environment, there is an issue of Public Cloud Security.
I am not sure that in house Linux and Windows based systems are more secured than Public Cloud based Linux and Windows systems.
However, customers perceive them as less secure because they are managed by employees of another company and because their systems shared resources with other enterprises' systems.
Systems and Data Security is more important to banks than to many other enterprises.
2. processing Large Amounts of Data
Mainframes are capable of processing large amounts of Data. High percentage of Business Data resides on Mainframes.
3. Scalability and Workloads Management
Current Public Clouds are based on Hypervisiors, Windows and Linux.
Are these Operating Systems capable of supporting large amount of concurrent Banking Transactions?
Reasons to replace current mainframe Core Banking systems
Maintenance of old Legacy systems could be a nightmare.
Many of the people we wrote the programs 20 years or 30 years ago are not available.
The systems are not architectured well and are not structured properly. Usually the systems are large monolithic silos.
The code was changed many times by many different people.
2. lack of Agility and a long Change Backlog
The lack of Agility is an additional maintenance difficulty.
The Business result of the difficulty to change systems is a long list of unfulfilled change requests.
3. Skills unavailability
Young professional prefer to work with mainstream technologies and/or new innovative technologies. Gradual skills decline is a real problem in Mainframes environment.
Are there non-migration alternatives?
Basically there are two alternatives addressing Mainframes concerns without risky migration to other platforms:
Systems modernization could be performed without migration.
The Modernized systems could be Service Oriented and may use advanced modern technologies, which are available on Mainframes.
It is not a Big Bang risky approach but it is still a long journey. Those who will decide to modernize their Mainframe Core Banking systems will use Mainframes for more than Short Term period.
However, after completing systems Modernization they will be capable of gradual and relatively smooth migration, if they will decide to migrate.
2. Core Banking Packages
Core Banking systems could be replaced by Core Banking packages. These packages resemble ERP products. Some of these packages can be deployed on Mainframes and on other platforms as well.
An endeavour of choosing a Core Banking Package and replacing current Core Banking Systems by it is also a long journey. Usually it is a longer journey than Modernization.
After completing the journey maintenance could be easier and cheaper, the dependency on employees is reduced and future gradual or complete migration from Mainframe is smoother and cheaper.
Migrated from Mainframe but not the Public Cloud
After long journeys to Modernization or Core Banking packages the last thing you would think of is another migration from Mainframes to another platform.
Few years later you may start migration to another platform. Even if someone will migrate to Linux or Windows the systems are still deployed in his Private Cloud (or not in any Cloud).
There are still significant barriers to Public Cloud based deployment.
I will name few major barriers: Local Regulation, International Regulation (e.g. Basel 3), Security and integration with other systems in the Data Center and in other Public Clouds.
Real World Case Studies? - Capital One
Amazon's leading Early Adopter is Capital One.
Capital One is a Credit Cards company and a Large Bank.
Capital Bank is using Open Source software, Microservices and Devops. Capital is performing transformation to Digital Banking.
Capital Bank's CIO Rob Alexander presented a Keynote presentation in last October at Amazon's re:Invent conference.
Alexander described how they start experimenting AWS in 2014 and how late in 2015, they launched production Mobile Banking applications based on Amazon's AWS.
I guess that the Mobile applications are using Mainframe Core Banking Applications and Data.
According to Capital One's CIO "the bank has been working closely with Amazon's team to develop the Security model".
For more details read:
AWS Case Study: Capital One
AWS reinvent 2015 keynote - Rob Alexander
The private Security model will be only the first step in a long process of development of industry Security standards and implementing these standards.
Me bank is a full fledged retail bank. The Melbourne-Headquartered company manages 20 billion $ in assets and has 800 employees who support 280,000 customers around Australia.
Amazon AWS is used for Development and Testing.
The Core Banking systems reside in the bank's Data Center.
For more details read:
AWS Case Study: ME Bank
ME Bank is not a large bank. I do not know if the Core Banking Systems were deployed on Mainframes.
If they were, I would not predict migration from Mainframe in the following 5 years.
Microsoft's partner: Capgemini
Capgemini partnered with Microsoft in order to provide Cloud based Services in Microsoft's Azure.
I did not find Case Studies in Capgemini's white paper Cloud Computing In Banking.
However, I found the following text: " Banks are expected to enter the cloud computing arena cautiously, with no single cloud services delivery model being a silver bullet for best meeting their demanding business needs".
Capgemini's white paper also discussing the first methodological step of choosing the right cloud model. The models are: SaaS, PaaS, IaaS and BPaaS (Business Process as a Service).
Microsoft's partner is preparing the methodology for banks entering the Cloud Computing arena. No Case Studies yet.
It should be remembered that the first banks that will use Azure will be smaller banks using Windows operating system and not Mainframe based large banks.
The Bottom Line
Mainframe was not dead in the 90ies and was not dead few years ago.
Large Banks will continue Core Banking systems deployment on Mainframes at least for the following 5 years.
SYS-CON Events announced today that Linux Academy, the foremost online Linux and cloud training platform and community, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Linux Academy was founded on the belief that providing high-quality, in-depth training should be available at an affordable price. Industry leaders in quality training, provided services, and student certification passes, its goal is to c...
Mar. 30, 2017 04:15 PM EDT Reads: 4,335
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
Mar. 30, 2017 04:15 PM EDT Reads: 3,329
Providing the needed data for application development and testing is a huge headache for most organizations. The problems are often the same across companies - speed, quality, cost, and control. Provisioning data can take days or weeks, every time a refresh is required. Using dummy data leads to quality problems. Creating physical copies of large data sets and sending them to distributed teams of developers eats up expensive storage and bandwidth resources. And, all of these copies proliferating...
Mar. 30, 2017 03:45 PM EDT Reads: 6,736
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
Mar. 30, 2017 03:30 PM EDT Reads: 2,365
SYS-CON Events announced today that StorageCraft Technology Corp, a global leader in backup and disaster, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. The StorageCraft family of companies, founded in 2003, provides award-winning backup, disaster recovery, system migration and data protection solutions for servers, desktops and laptops in addition to powerful data analytics.
Mar. 30, 2017 03:17 PM EDT Reads: 112
In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), will provide an overview of various initiatives to certifiy the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldw...
Mar. 30, 2017 03:15 PM EDT Reads: 1,025
SYS-CON Events announced today that Auditwerx will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Auditwerx specializes in SOC 1, SOC 2, and SOC 3 attestation services throughout the U.S. and Canada. As a division of Carr, Riggs & Ingram (CRI), one of the top 20 largest CPA firms nationally, you can expect the resources, skills, and experience of a much larger firm combined with the accessibility and attent...
Mar. 30, 2017 02:45 PM EDT Reads: 945
SYS-CON Events announced today that Technologic Systems Inc., an embedded systems solutions company, will exhibit at SYS-CON's @ThingsExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Technologic Systems is an embedded systems company with headquarters in Fountain Hills, Arizona. They have been in business for 32 years, helping more than 8,000 OEM customers and building over a hundred COTS products that have never been discontinued. Technologic Systems’ pr...
Mar. 30, 2017 02:45 PM EDT Reads: 3,981
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
Mar. 30, 2017 02:45 PM EDT Reads: 2,409
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Mar. 30, 2017 02:00 PM EDT Reads: 9,003
HyperConvergence came to market with the objective of being simple, flexible and to help drive down operating expenses. It reduced the footprint by bundling the compute/storage/network into one box. This brought a new set of challenges as the HyperConverged vendors are very focused on their own proprietary building blocks. If you want to scale in a certain way, let’s say you identified a need for more storage and want to add a device that is not sold by the HyperConverged vendor, forget about it...
Mar. 30, 2017 01:58 PM EDT Reads: 147
SYS-CON Events announced today that Loom Systems will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Founded in 2015, Loom Systems delivers an advanced AI solution to predict and prevent problems in the digital business. Loom stands alone in the industry as an AI analysis platform requiring no prior math knowledge from operators, leveraging the existing staff to succeed in the digital era. With offices in S...
Mar. 30, 2017 01:45 PM EDT Reads: 1,878
FinTech is the sum of financial and technology, and it’s one of the fastest growing tech industries. Total global investments in FinTech almost reached $50 billion last year, but there is still a great deal of confusion over what it is and what it means – especially as it applies to retirement. Building financial startups is not simple, but with the right team, technology and an innovative approach it can be an extremely interesting domain to disrupt. FinTech heralds a financial revolution that...
Mar. 30, 2017 01:45 PM EDT Reads: 3,201
What if you could build a web application that could support true web-scale traffic without having to ever provision or manage a single server? Sounds magical, and it is! In his session at 20th Cloud Expo, Chris Munns, Senior Developer Advocate for Serverless Applications at Amazon Web Services, will show how to build a serverless website that scales automatically using services like AWS Lambda, Amazon API Gateway, and Amazon S3. We will review several frameworks that can help you build serverle...
Mar. 30, 2017 01:45 PM EDT Reads: 2,369
Most companies are adopting or evaluating container technology - Docker in particular - to speed up application deployment, drive down cost, ease management and make application delivery more flexible overall. As with most new architectures, this dream takes a lot of work to become a reality. Even when you do get your application componentized enough and packaged properly, there are still challenges for DevOps teams to making the shift to continuous delivery and achieving that reduction in cost ...
Mar. 30, 2017 01:45 PM EDT Reads: 560