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HOW ARE DATA CENTRES DIFFERENTIATING FINANCIAL SERVICES FIRMS?

Patrick Lastennet, Director of Enterprise, Interxion

 

As we delve deeper into the age of the internet our businesses and industries continue to be disrupted by new innovations brought about by technology investment and digital transformation. Financial services has not been immune to these effects. Increasingly players in this sector are turning to new technology to position themselves as leaders in particular niches that competitors aren’t occupying, and so better serving their own corners of the market.

In some ways this investment is democratising the market, making the sector a more level playing field than it has been for years, if not decades.

However, digital transformation initiatives do not come cheaply. In many cases these projects are major undertakings that are central to the organisation’s long-term business strategy. It is therefore crucial to get the strategy right, execute the project well, and select the partners who can help you do that quickly, efficiently, and at a reasonable cost.

 

The role of tech in financial services

As technology has evolved over the years, so too has the delivery mechanism for that innovation. We’ve gone through several waves of centralisation and decentralisation, but many financial services business are now realising that in order to grow and thrive they need to move away from on premises infrastructure environments in their office buildings and embrace the benefits of external IT provision.

Smaller hedge funds in particular are finding that aggressive low-latency strategies are no longer yielding the same kind of returns they used to and new approaches are needed. They are becoming increasingly reliant on being smarter, not just faster, to deliver a competitive service to customers.

To become smarter, they are bringing in more data and more diverse data, and in-house IT systems can no longer keep up. To maintain optimal levels of performance, these financial services businesses are turning to colocated data centres. By partnering with them, they can add the high performance compute capacity and GPUs they need to glean better insights from increasing volumes of data, while maintaining close proximity and connectivity to cloud providers to spin up capacity for more elastic workloads.

While in the past it may have been viable to simply tinker around with IT infrastructure that you kept on the premises, in the fast-moving world of today this is simply too complex and costly for most. Unreliable power supply, expensive FTTP tail circuits, and poor security all pose risks to the business. A new model, incorporating colocation, needs to be adopted.

As such financial institutions are working ever closer with their data centre partners to design and configure the best environments to run the calculations and workloads that now power their business, enabling them to differentiate themselves, grow, and thrive in the market.

 

Where data centres come in

Data centre services providers can help firms ascertain the right combination of public and private cloud infrastructure needed to run an organisation’s workloads, maintaining the strong security and compliance regulators demand, without running up huge bills or locking themselves in to a single vendors’ ecosystem. In fact, an off premises model in a data centre can be up to 80% cheaper than the equivalent on-premises solution.

They can also help companies connect different parts of their IT ecosystem to deliver new innovation more efficiently. For example, with latency much less of a determining factor in FS success than it used to be, many firms are turning to the data they own and have access to tell them new things about the operating landscape. Looking at historic data and using predictive analytics to map what might happen in the future is certainly being applied widely already. But firms are also looking to a myriad of alternative data sets, using any intelligence they can get their hands on to spot correlations and causations of movements in the market to help them deliver better outcomes for their customers.

Predicative analytics and the kind of complex computation needed to glean intelligence from these data sets will often mean turning to AI techniques such as machine learning. But financial institutions don’t have the technology to design and run calculations or simulations like this in house. That capability will more often than not, sit in the cloud or in a hyperscale data centre in a location where energy is cheap and therefore the costs of spinning up lots of servers running specialised chipsets optimised for AI workloads are relatively low.

But that’s not the end of the story. Once these complex models are designed, built, and trained using large data sets in these hyperscale data centres, real world data needs to be fed in to the model and insights sent to the systems and decision-makers that can utilitise them for commercial gain.

Working with a colocation partner can provide a space to run these models much closer to the office, exchanges and liquidity venues where trades occur, enabling financial services firms to react much quicker than if their data was being sent half way around the world and back for computation.

 

Critical factors for success

Selecting the right data centre partner can be critical to the success of these digital transformation initiatives and the longer term futures of these firms. In a major financial services hub like London, for example, City firms will prefer their servers to be housed in a data centre that’s close to their offices in case they need physical access. They will want that data centre to be highly connected through a wide range of global carriers. They will also want that data centre to be close by and connected to the key trading locations that they operate from.

These factors combined allow financial services firms to not only operate effectively today, but in working collaboratively with their data centre services provider and other parts of their IT ecosystem, invest in the technology and digital transformation initiatives that will see their businesses thrive tomorrow.

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Finance

OPTIMISING YOUR FINANCE THROUGH TECHNOLOGY

Covid-19 restrictions and ongoing uncertainty have prompted a fundamental switch in mindset across a multitude of different sectors. Many organisations have begun to recognise that outsourcing their finance can make them more agile and give them the competitive edge they need to compete and scale effectively in today’s market.

Mark Pullen, CEO at Xledger  explains to what extent outsourcing can boost resilience for a lockdown recovery.

 

Solving the pain points

Inefficient processes are prone to causing delays and errors which can have a huge impact on the bottom line when viewed at scale. They can also negatively impact the client experience, causing frustration with missed deadlines and mounting uncompleted tasks.

New finance technology is automating many of the daily, monotonous back office functions such as bank reconciliation and invoice entry, meaning that the nature of the work that a finance professional provides will change. This presents a huge opportunity as it gives these employees the opportunity to be involved in higher-level work. Technology can also provide a resource that gives real time insight, allowing for better strategic decision making, which is so key in the current climate.

 

Optimising your finance function

Outsourcing high-value services within the finance function can improve workflow by implementing a defined and transparent process which streamlines operations. For a finance department, this can speed up areas that require internal controls such as expense reporting and cash release, but it can also speed up the full lifecycle of a project; from time tracking and resource to accounting and billing.

There is also a cost efficiency benefit when outsourcing, as management bandwidth is effectively increased by eliminating the need to be involved in many of the day to day processes. Instead this time can be focused on other business priorities and planning for future growth.

Outsourcing accounting functions to bespoke and standardised technologies means using data led processes that can be measured, optimised and benchmarked against in-house requirements. These processes can also be undertaken remotely, boosting the resilience of your business in these uncertain times.

 

Case study box-out: RPC Tyche

RPC Tyche is a global insurance software supplier with offices in London, Paris, and the USA. Initially a division of award-winning law firm RPC, but now a stand-alone entity, RPC Tyche’s main software offerings support capital modelling, and pricing commercial insurance and reinsurance.

 

The challenge

As part of a restructuring process following the de-coupling with the law firm RPC, RPC Tyche had to separate its back-office processes. They remained under the umbrella of the law firm while the changes were taking place, so initially had some flexibility with the shared finance system, but time was running out to separate the two entities cleanly. As a stand-alone company, RPC Tyche now needed its own financial system; one that could align with its new business processes and that could be implemented quickly to deliver the organisation’s business objectives. Furthermore, they needed a new finance solution that could help them grow exponentially, facilitate a globally diverse group structure, and still maintain efficiency when operating as a small team.

Gavin Dilley, Chief Finance Officer for RPC Tyche commented, “Following an initial discussion with a third-party advisor regarding Xero and Quickbooks, we were recommended Xledger because we required a swift and scalable solution. After contacting Xledger, their tried and tested implementation methodology ultimately assured us that we would achieve the fast-paced implementation needed for our go-live objective. We also really liked that Xledger was a multi-tenanted, true cloud solution with its scalability setting it apart from the competitors.”

 

Implementation and training

Following conversations with Xledger, RPC Tyche created a project management team to keep everything on track on their side, an arrangement that Gavin emphasised “worked really well.” He said that “as a small project team, the flexibility to undergo substantial configuration during the training sessions with the Xledger consultants brought focus and enabled us to dedicate sufficient time to the system without distractions.”

Although the implementation was expected to take three months, RPC Tyche experienced hold-ups owing to the separating of back-office processes, so they were pleased when it was mutually agreed to facilitate a one-month delay.

 

Post-implementation results

“The implementation process was highly effective, and we’re very happy with the results,” said Gavin. “Since implementing the Xledger solution, we’ve been so pleased we haven’t had to dip back into the old system as the transfer of historic data has been particularly successful.” RPC Tyche had a large volume of historic data and transactions, including timesheets and work in progress reports that were all successfully migrated to Xledger during implementation. “We’re particularly happy with how easy it has been to onboard our new Finance Controller, due to flexible training and the system being so intuitive.”

Gavin added, “Since implementing Xledger, we have far greater reporting flexibility, better distribution of skills within the finance team and are naturally more self-sufficient because we can make amendments to the system without relying on the software provider.

The system is easy to use, and the purchase order functionalities, integrated workflows and automation of processes have enabled us to be highly efficient, even as a small finance team. Not to mention that the Xledger support team are incredibly responsive, so we can continually maintain productivity.”

 

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Finance

THE FUTURE OF FINANCE LIES IN THE CLOUD

Author: Chris Tredwell, Enterprise Business Development Manager,Aqilla

 

At the beginning of 2020, 87% of public sector organisations surveyed by UKCloud expressed a desire to move traditional IT environments into the cloud. But, as a result of the Covid-19 pandemic, the rate of cloud adoption in the UK has grown significantly, as many companies not already in the cloud were compelled to make the switch due to enforced remote work.

This is certainly indicative of many other industries, finance included. Pre-lockdown, the majority of finance and accounting teams still relied on on-premises software, but the move to remote-working meant many organisations had to quickly reconsider their technology needs and move some or all of their IT requirements to cloud-based platforms.

But, in a recent survey by GrowCFO – an independent portal for finance leaders to network, learn and collaborate – it was found that there is confusion around what actually equates to a true cloud finance platform. This was apparent given some respondents replied with ‘cloud’ to known on-premises solutions, suggesting the difference between cloud-based and ‘on-premises with remote access’ is not fully understood.

This is an important point because it has the potential to influence the technology choices made by organisations across the sector. In short, traditional on-premises financial software resides on IT systems owned by the user organisation, typically on hardware hosted within their building. After purchasing and installing the software, they maintain, secure, and manage it themselves (or with the help of a specialist third party IT support business). Many of these systems also offer the option of connecting remotely, with users accessing software and data via a connection to their office-based network.

Conversely, cloud software is almost entirely outsourced and delivered via a web browser or app as a service to each user, hence the description ‘Software-as-a-Service’ (SaaS). The software resides with the service provider who is also responsible for reliability, performance, the availability of enhancements and updates, as well as the security of their service or application. The location of the user is largely irrelevant – as long as they have a good, secure internet connection, a suitable laptop or tablet and a browser, they can access the service in exactly the same way as if they were in the office.

Chris Tredwell

One of the most immediate changes organisations notice when moving from on-premises technology to the cloud is it removes the need for in-house IT personnel or external specialists to manage and maintain the technology. For many smaller organisations, it liberates the individual who has been given the task of ‘looking after’ the on-premises tech, even though it usually isn’t their specialism or even in their job description.

But that’s just the start. The massive success of the cloud-based, ‘-as-a-Service’ technology industry is predicated on a range of key developments over traditional on-premises, or ‘legacy’ software.

 

A Formula for Finance

Often of particular interest to finance and accounting professionals are pricing and payment terms that accompany today’s cloud SaaS options. Cloud-based software typically offers the convenience of a monthly pay-as-you-go model, instead of investing significant up front sums in one-off software purchases. This also saves money on the server hardware that has previously sat in the office, which may no longer be needed at all. Also included in cloud pricing arrangements should be details which clearly set out the type of service and support included in the cost. Done well, cloud-based customer support and service can deliver an exceptional experience where the provider effectively works as an extension of their in-house team.

The best cloud software providers place huge emphasis on security, focusing on data protection, backup services and their ability to deal with common security issues, such as ransomware. This also extends to compliance, and in the finance context, specialised compliance capabilities offered by many cloud software providers can be of particular benefit. Even for the most niche requirements, there is often a software provider out there whose technology has been written to meet compliance rules, often saving users considerable time and effort.

And then there’s the key issue of functionality and performance. Today’s cloud-based finance software market offers a wide range of options from simple entry-level tools to powerful applications designed to meet the needs of even the biggest and most complex finance departments. For organisations considering cloud, it’s important to assess the options available and choose a provider that most closely matches their individual needs.

For many finance and accounting organisations and their teams, the requirements of lockdown and transition to home working were made possible by cloud-based software solutions. In doing so, they have gained valuable insight into the range of services available, their potential benefits and how technology can become much more than just a labour-saving tool, but also a means to enhance their all round business capabilities.

 

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