Asset management in the cloud

We are living in volatile times and in this uncertain environment, the cloud is seen by many asset managers as a key component of their continuing growth strategy. Our research, the Future of Asset Management, suggests that most asset managers are still in the early stages of migrating to the cloud, with just 8% indicating they have completed their journey to the cloud. Operating in the cloud could provide the certainty that many firms are looking for, helping them to adapt their operations to cope with disruption, providing the ability to flex with customer demands, and accelerating digital transformation.

The key to accelerating the value asset managers realize from the cloud and lowering the risk involved in the migration process, is to agree to a clear vision and understand the strategy it could take to become a cloud-enabled business. Rushed migrations without a clear strategy for realizing value, incomplete planning, or poor execution could end up costing the firm, especially when legacy systems are involved. For asset managers, a cloud strategy really has two key elements. The first one is driven by technology— to improve the efficiency and resilience of IT systems and to improve operations and time to market. Firms can realize significant cost savings by using new architectures or new applications in the cloud. The scalability of the cloud is also beneficial in managing demand volatility and other disruptive events.

The second element is business driven—a strategy focused on the business value firms want to achieve — enabling the business to do new things and do them faster. This is where the innovation, experimentation, responsiveness and business agility of the cloud come to the fore. For example, with Infrastructure as a Service (IaaS), infrastructure can be provisioned more easily, transforming productivity by allowing you to rapidly experiment with new ideas, test and learn, fail fast, then iterate, improve and scale up. At the same time, Platform as a Service (PaaS) and Software as a Service (SaaS) solutions could help you to leverage many cloud-native innovations “out of the box”, while unlocking more value from data with machine learning and other advanced tools.

While many firms initially focus their cloud transformation programs on IT and infrastructure, realizing business value needs to be a well-defined goal from the outset. The key is to keep both elements in mind. Migration to the cloud may be viewed as a cost-cutting move. However, research by Accenture regarding the “Cloud Continuum” found that companies whose migration strategies focus simply on cost reduction actually do a poorer job than those driven more by a business value agenda. The latter realize about 2X greater cost efficiencies than cost-cutters. At the same time, they are two-to-three times more likely to innovate and re-engineer knowledge work.

A potential advantage offered to asset managers by the cloud is the ability to improve customer service. Firms need to think like their customers—who want a seamless, digital experience and the ability to view their assets across all advisors, one portal that allows them to manage their entire portfolio. 

Operating in the cloud could also make it possible to use analytics and automation tools that could further improve customer service and deliver valuable insights and innovations. Cloud data platforms enable additional business value to be extracted from data using analytics and AI. Beyond automation, AI and machine learning are now supporting more complex thinking and knowledge work.

Another potential benefit of cloud technology is the ability to improve data management. Cloud migrations provide the opportunity for asset managers to shift their data “center of gravity” away from on-premise, providing enhanced security, borderless data sharing and the ability to derive insights from their data more quickly.

How can asset management firms seek tangible benefits from migrating to the cloud based on identified value drivers? Here are some things to bear in mind:

• Take it one step at a time. It’s important to classify and prioritize the portfolio in a way that realizes the most value from the migration as quickly as possible. This means balancing factors like strategic business relevance to your industry and the capitalization profile of each application against its migration complexity and risk. There may be external market factors (such as mergers and acquisitions) to consider as well. This process could reveal the quick wins for the migration, plus a prioritized portfolio for planning future migration waves.
• Get the business on board. Cloud migration cannot be a purely IT-driven exercise. Most of the pitfalls encountered in cloud migrations occur when IT and the business aren’t on the same page. So, it’s critical to gain the buy-in of application owners as early as possible in the migration, refining the business case, articulating the business value, strengthening the migration plan, providing essential application data and timelines, and preparing for any changes to their own ways of working. This organizational alignment is also an important part of prioritizing strategically important workloads and optimizing the cost of legacy workloads: IT cannot do it all on its own.
• Accelerate using outside perspectives. There’s no substitute for experience, so decide how to best leverage cloud providers and systems integrators. Successful migrations may need support and advice on architecture choices, liaising with internal security teams, and providing critical subject matter expertise, as well as driving post-migration adoption. The big public cloud providers may also be willing to invest in enterprise cloud migration that can flatten “bubble costs” which peak midway through a migration. The key is finding the right partner(s) to verify that your migrations are designed with the broader strategic business value in mind, prioritized to accelerate value, executed with the support of the right tools and skills, and then evolved quickly to capture higher order levels of value. Firms that leverage partners as an experience-multiplier could accelerate their cloud ROI, mitigate risk, and deliver greater overall business value.
• Industrialize the journey. To execute the migration quickly and with minimal disruption to business as usual, you need an industrialized capability. That means maximizing automation, and using organizational structures like a dedicated migration factory, as well as migration tooling that uses AI, to drive the journey from source to destination. Many companies look to the hyperscalers or partners to help accomplish this, leveraging their experience and know-how to identify potential barriers and overcome them.
• Think security from day one. Asset managers are, justifiably, concerned with security and compliance issues, which is often an impediment to moving forward. In fact, the cloud can be much more secure than a proprietary data center. When building a secure cloud, it pays to be thoughtful around data need, use, access, encryption, and storage for now and the future. With this in mind, security teams need to be intimately involved in a migration from the beginning. That includes defining platform-level and application-level controls, approving cloud architecture choices, and identifying the best candidates for native security automation. Leading firms overcome the cloud security skills deficit by building security guardrails at the start, auto-remediating any deviations from their control baseline and establishing a lightweight governance process to manage security, technology and cloud evolution over time.
• Help your people adapt to the new. Finally, in order to successfully deliver a migration to the cloud, firms need to effectively manage the resulting organizational change and support your people along the journey. A cloud migration changes how the enterprise works. For the IT organization, employees may need to be reskilled to work with new tools and new platforms. Application support may be different, especially if legacy applications have been switched out for SaaS solutions, or refactoring work has been needed. Business users, too, may need to adapt to the new systems and services available to them in the cloud. All this needs to be handled with care and sensitivity, especially as workforces deal with the extra challenges of managing the uncertainty around the pandemic.

A well-planned migration to the cloud should also consider the future. What is the impact on the operating model and does it need to change? How can day-to-day active management and optimization drive ongoing value for the business? Are the skills and expertise required embedded throughout the firm to move quickly beyond the migration itself and start exploiting the higher-order services available in the cloud? Above all is the evolution to new business models needed to thrive in the future, creating a platform for innovation, enabling advanced digital technologies, and experimenting with new products and services.