Cloud technology – a requirement for innovation

What makes cloud technology so important for modern businesses?

Bjørnar Engebretsen: Cloud technology is important for modern businesses because it can be used to create new commercial opportunities as it provides access to a broad spectrum of technical functionality, such as artificial intelligence, machine learning, advanced data platforms and so on. In addition, you can start using the cloud quickly and it provides a great deal of flexibility. No upfront investment is required, the services are available immediately and everything can be managed using code. The capacity you can access is also “infinite” and you can scale up or down, in or out as required.

Cloud platforms also make it possible to build real redundancy in order to ensure a high level of availability. What this means in practice is that you can create new products or commercial functionality quickly, and that you can also be quick to adapt them (hours/days rather than months/years as with older applications) in order to improve the user experience or to create new functions as you learn or the market develops.

In a Norwegian context, Vipps is a good example of the power of innovation. In other words, cloud tech helps companies to achieve change and to innovate at a completely new pace compared with before. These are absolutely essential characteristics for companies in most industries in today's market.

What trends are we seeing now in terms of using cloud-based solutions? How has the coronavirus pandemic affected developments?

Bjørnar Engebretsen: A very clear trend revealed by the financial reports of the major cloud providers is that use of cloud services is growing extremely quickly. In practice, there are two elements to this growth. The biggest drivers are digitalization and innovation, both for commercial processes and for developing entirely new products.

The other driver is the migration of existing applications and infrastructure from traditional technology to cloud technology. There is no doubt that the coronavirus pandemic has accelerated this growth. When the pandemic first hit, many businesses found that they were not sufficiently well equipped and that their processes and solutions did not work optimally in such conditions.

The simplicity and flexibility of cloud platforms also make it possible for new players to set themselves up in established markets. There are many well-known examples of this, particularly from the consumer market. It is also fun to look at which companies are the biggest today compared with 20 years ago.

What is the situation regarding cloud technology usage in the Norwegian banking and finance industry?

Bjørnar Engebretsen:  Firstly, it is important to emphasise that the banking and finance industry is subject to strict statutory and regulatory requirements, some of which also relate to the IT solutions used by the sector. The banking and finance industry has historically invested heavily in IT for many decades. Making changes to the results of all this investment represents a significant amount of work and takes time, and it also has to be done safely and securely.

At the same time, it is interesting to see just how innovative the banking and finance sector has become. Traditional banks and financial institutions are coming under pressure - both in the retail and commercial markets - from major technology companies that have large numbers of users and have either already entered this sector or are considering doing so.

In Norway, Vipps is a good example of the power of innovation, but there are also numerous other good examples at other fintech companies. It is therefore difficult to provide a specific answer regarding the current situation. It varies as some organisations have made a great deal of progress, with some now even cloud-native, but others have a long way to go. The banking and finance industry is a very important sector for cloud service providers due to the large amounts of data and complex calculations involved.

The banking and finance sector is therefore a focus area for cloud providers, and solutions to enable these industries to adopt cloud-based technology founded on the statutory and other regulatory requirements to which they are subject are being developed at record speed. This is making it easier for banks and financial institutions to get started and to be confident that security has been addressed properly. In Norway, for example, we have seen Microsoft set up data centres for its Azure platform within our borders, which it did in part in response to some of the requirements that apply to these industries.

What are the potential consequences faced by banks that choose not to use cloud services?

Bjørnar Engebretsen: I am in no doubt that over the long term those that choose not to use cloud services will not survive. At the same time, I would like to emphasise that I have not yet encountered an organisation in this sector that has made such a choice – it is rather the opposite. In my experience, banks are being proactive and have clear strategies for which cloud services are an important element.

As I have said, we need to keep in mind that this industry has invested heavily in IT for a long time and operates in a complex environment to ensure that we have a banking system we can rely on. The journey will therefore take time. In areas where innovation is underway, we can see that banks are moving directly to the cloud straight away. However, there is a lot of work that needs to be done before the banks’ core functions are, or can be, 100% in the cloud.

The dynamics of the industry create pressure for progress. The organisations that prove to be the best at completing the transition efficiently and securely while also delivering a good user experience will be the winners. I am certain of this.

What are the key elements for a successful cloud migration and is there a uniform solution for all companies?

Bjørnar Engebretsen: There are various frameworks for how a cloud migration should be carried out. All cloud providers have their own cloud migration methodology, and there are quite a number of similarities in terms of what steps you need to implement. Migrating to the cloud is a complex task. Some things can be moved to the cloud immediately, while other things need to be totally changed. In this sense, it is important to sort out what you have and to find the right method for each different area. It is also important to build an architecture that takes the whole into account. Agile ways of working and autonomous teams still need to work within a framework.

I often joke that if you don't build a solid architecture, it will be like a 100m race for people with no sense of direction, to use a reference to Monty Python. This also applies to the cloud. The majority of organisations are already using the cloud in one way or another. If you don’t plan all your use of the cloud together, you will quickly lose out on the fantastic flexibility this type of platform offers.

You may run into challenges in terms of costs running wild, but you will rarely encounter integration issues, operations or maintenance problems, project delays, security holes or functional limitations.

What has been the experience of the companies you have helped transition to cloud-based solutions?

Firstly, I would like to say that at Itera we help our customers not only with ‘transitioning to cloud-based solutions’ but also with developing and managing cloud-native solutions from scratch. In my answers so far, I have talked about some of the advantages of using cloud-based solutions, and we have experience of our customers enjoying these benefits.

We have carried out lift-and-shift infrastructure migrations, which are the simplest type of cloud transition. The benefits of this approach relate to the flexibility and efficiency of the platform, but in such scenarios there is little to gain in commercial terms (innovation and new functionality).

Lift-and-shift infrastructure migrations are a good start, but the journey does not stop there. We have built new solutions and modified existing solutions that make use of advanced functionality located in the cloud, enabling customers to digitise and optimise their business processes. We have re-designed and re-written old applications to improve their functionality and the user experience for our customers and their customers.

We have also created entirely new cloud-native applications based on innovation projects carried out in collaboration with our customers, for example where they have wanted to develop a new product for a new market. We are good at increasing the speed at which our customers change and develop by helping them to adopt the cloud and use agile ways of working.

We love challenges that are a question of whether we can reduce the time a complex change will take. When we can cut the time that a project will take from two years to one year, without any compromise needed in terms of the level of ambition, we are really in our element.

Our ambition is to be able to support our customers throughout the entire process, from the initial idea to full production, and then right up until the solution is redundant and is discontinued. We call this BizDevSecOps because we bring in and design all four dimensions together.