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QA Vector® Research: why firms make mistakes in the transition to the cloud

13 August 2019
Too often, financials and telcos miss the opportunity to analyse their software development requirements (Pictured: Greg Rivera of CAST Software, research partner)

Cloud migration is a priority for many banks, insurers and telecoms providers in North America and Europe – but more than 50% of those surveyed have yet to develop an analysis led evaluation to support their move. 

Sponsored by CAST Software, the New York-based analytics specialist, QA Vector® Research has identified three recommendations for software leaders to reduce operational risk and optimise their cloud migration strategy. Frequently grappling with legacy technology estates, more than 70% of firms report inconsistent focus and priorities for cloud migration across applications. Shane Hill, QA Vector® Research Director, said: “Success with cloud migration 2.0 requires firms to establish effective architecture, centralise the modernization and apply our application readiness assessment.”

Expecting a quick fix to generate early momentum, more than 60% of banks, insurers and telecoms providers have attempted to lift and shift their workloads, but suffered setbacks along the road. "Lift and shift" refers to moving workloads onto the public cloud without changing the architecture on which they are built.

Justyn Trenner, Head of QA Vector® Research, advised: “The principle drivers of the move to the cloud are economic or business led, rather than software suitability led. Simply being seen to move with the times embeds bad strategy and imperfect outcomes.”

Emulating the progress of FinTech companies is a critical challenge for banks, insurers and telecoms providers – which cannot carry on using legacy systems, according to UK banking regulators. FinTech companies, largely cloud-native, consistently outperform traditional firms for scalability and effort to remediate applications designed on modern architecture. 

To avoid recreating technical debt, companies need to define just how micro their micro-services have become. “Centralising cloud modernization enables firms to fluidly evolve their architecture, reduce risk and create a framework for mainframe modernization,” said QA Vector® Research's Hill.

Despite a clear need to apply robust application assessments, less than 35% of firms leverage industry tools to assess the cloud readiness of their portfolio.

Greg Rivera, VP for CAST Highlight, said: “Many companies aren’t taking a more strategic approach with their road-map to the cloud because they don't realise there are tools out there, like CAST, that will help them do it quicker. 

We’ve had customers who thought it would take 18 months to lift and shift one application to the cloud in the simplest fashion, but after using CAST Highlight, they were able to see that they actually had half a dozen applications ready to migrate in under 6 months.” 

Rivera added: “When segmenting and prioritising applications for migration, it’s good to remember that not all of them necessarily need to be migrated. There’s always the option of replacing an application with off-the-shelf products. It’s something a lot of traditional companies don’t think about, but they probably have a whole bunch of applications in their portfolio that aren’t strategic and cost a lot to maintain.”

The report, Cloud Migration 2.0: Shifting Priorities for Application Modernization in 2019, was based on interviews with 25 technology leaders at financial firms and telecoms in the UK, USA, France, Canada, Germany, Mexico, Italy and The Netherlands.

Download a copy of our detailed findings here.

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