Half of FIs & Telcos Fly Blind Into Cloud Migration: Report

Over 50% of financial institutions and telecommunication companies fly blind into cloud migration according to an annual global cloud migration report, which analyzed application modernization priorities in financial and telecommunications firms.

New York City-based CAST, which provides software intelligence, found fewer than a third of financial institutions and telcos analyze applications before cloud migration. The findings show critical missteps which mean cloud migrations are falling short of expectations in mature institutions, just 40% meeting targets for cost, resiliency and planned user benefits. Lack of pre-migration intelligence and fear of modernizing legacy mainframe applications are the main drivers for these shortcomings. Adoption of microservices as a modernization technique is also faltering from lack of financing.

The study noted while these legacy process institutions realize only third of their target benefits for cloud migration, cloud-native approaches are enabling fintech firms to outperform traditional financial institutions, achieving more than half their target benefits.

Fewer than 35% of technology leaders use freely-available analysis tools, according to the report. There is a systematic failure to assess the underlying application readiness for cloud migration with Software Intelligence, a deep analysis of software architecture. CAST suggested IT leaders must ensure the right architectural model and compliance is in place to avoid increasing technical debt. Unchecked, this leads to more IT meltdowns with customers paying the expensive price for these mistakes.

“Over 50% of firms are primarily basing their decision to move applications to the cloud on gut instinct and ad hoc surveys with application owners,” the report stated. The report also recommended the need for IT leaders to adopt an analysis-led approach over gut instinct to implement the right cloud migration strategy and realize all potential benefits of migrating to the cloud.

The CAST report found more than 40% of software leaders are yet to define a class-based approach to application modernization. Heavily legacy process firms tend to rehost apps, while rehosting, or so-called ‘lift-and-shift’, benefits apps with up to three years before end of life. However, existing and continuously evolving apps should be re-platformed and restructured during cloud migration. To successfully complete migration first gather intelligence and actively assess applications objectively.

Greg Rivera, vice president CAST Highlight, commented on the findings, “Pilots going into storms turn to their instruments. If you run headfirst into a cloud migration without objectively assessing your applications, you are flying in the dark.

Rivera added, “even one small change to an application has a ‘butterfly effect’ on the rest of the code set, so a disruption as big as cloud migration has detrimental effects including IT outages and loss of business. Migration to the cloud is vital when digitally transforming a business. But it needs to be done right if organizations want success instead of suffering.”

Analysts from QA Media spoke with 25 senior technology leaders, the majority holding director-level responsibilities, during June and July 2019 at financial institutions, insurers, fintech firms and telecommunications providers. Interviewees were based in the U.S., U.K., France, Canada, Germany, Mexico, Italy and the Netherlands with functions relating to architecture, cloud, product/strategy and DevOps.