2014 Cloud Technology and IT Outsourcing Trends

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PowerPoint Presentation2014 Cloud technology and IT Outsourcing Trends# Copyright 2015. Computer Services, Inc.1About the survey# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.QWhat cloud models are you familiar with?# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.[CLIFF]Respondents were generally familiar with the private and public models but they reported less familiarity with hybrid and community models. [David]We believe customers are going to start using multiple models. We are seeing institutions utilize many different types of technologies specific to their needs you need a provider that is familiar with all the different types of cloud. It is important for financial institutions to understand the model they are considering, so they can identify what issues they should be concerned with and ask the necessary questions to ensure the cloud model they adopt is right for the organization.3QWhich (IT) service(s) is your institution currently outsourcing?# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.[CLIFF]The outsourcing of IT services by financial institutions over the past three years reveals mixed trends, but does indicate an increase in cloud adoption overall. The number of institutions completely outsourcing IT has increased consistently, with 16.1% now reporting full outsourcing. This has risen steadily over the past few years, from 12.8% in 2012 to 14.9% in 2013. Institutions outsourcing IT compliance has grown to 13.1% of institutions.Conversely, there were decreases for those institutions outsourcing network security monitoring and/or maintenance, as well as those outsourcing infrastructure monitoring and maintenance, which includes servers, routers and switches. The reduction in outsourcing network security and infrastructure may be partially the cause of the increase in completely outsourced IT, because this approach encompasses the need for network security and infrastructure managementy. A second explanation could be that the boundaries between the traditional types of infrastructure outsourcingincluding managed hosting, data center outsourcing, and remote infrastructureare blurring, and over the next 10 years, these markets will converge. The number of institutions reporting no outsourcing at all has decreased by 4.7%, to only 10.2% of all respondents. The survey also indicates that project-based outsourcing jumped from 31.1% to 43.1% between 2013 and 2014. With technology continuing to increase in complexity and more new banking services coming to market, the need to outsource projects increases as well.4QWhat percentage of your IT assets is currently delivered from the cloud?# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.[CLIFF]Most financial institutions have already embraced the cloud to deliver a portion of their IT assets. There was a sharp decline in institutions reporting no IT assets currently being delivered in the cloud, from 39.1% in 2013 to 21.1% in 2014. The estimated percentage of IT assets currently delivered from the cloud has steadily increased for all percentage ranges, with the exception of the top range (76-100%), which dropped slightly from 5% to 3.1% in 2014. While we are still at the forefront of the adoption curve, the survey indicates that momentum continues to gain significant traction among financial institutions. In examining the shifts to more assets being delivered in the cloud, it is apparent that both awareness and acceptance of cloud services are growing. Whats more, financial institutions that started with a measured, smaller approach are now moving more solutions to the cloud as they become more comfortable with the environments. David would you mind commenting on the not sure category? Why do you think there has been a increase here year over year?[DAVID] comment5QWhat benefits have your institution experienced by implementing cloud technology and/or services?# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.[Cliff]Across the board, respondents reported increases in all areas of benefits from their use of cloud technology and services. The percentage increases relative to 2013 ratings were very significant, ranging from 20% to 203%. Highest-rated areas of benefit:Improved disaster recovery 39.5%Simplified management 33.9%Reduced cost 29.8% Flexibility 29.8%With improved disaster recovery being the highest-rated benefit, respondents confirm their understanding that cloud services are much more effective in recovering from possible outages. Cloud applications and models typically provide a higher level of redundancy, thereby reducing the number of service outages. Additionally, it is more cost effective and faster to spin up virtual environments in the cloud. Financial institutions must be able to prove to examiners that they can recover from a disaster in an appropriate amount of time, so respondents recognition of this benefit underscores the significant role cloud services can play in disaster recovery.Respondents rated simplified management highly as an overall benefit to cloud services. This may be the result of the processes implemented when a cloud provider moves the systems to the cloud, including standardization when a customer first comes on board. It also smooths out one-off environments and creates a standard environment for the client. This takes the daily burden of management off internal IT resources. Cliff- Make this into a second slide on question 10 and talk to the rest belowLargest numerical increases in rating of benefit:Security/reduced risk 28.2%, a 15.2% increase over 2013Reduced cost 29.8%, a 13.6% increase over 2013Agility 18.6%, a 12.4% increase over 2013Largest percentage growth in rating:Agility 203% increase over 2013 ratingSecurity/reduced risk 117% increase over 2013 ratingImproved cost predictability 106% increase over 2013 ratingThe overall largest percentage growth in benefit rating for 2014 was agility. Cloud agility gives institutions IT staff the opportunity to respond to a business need with an IT solution very quickly. For example, when a financial institution has acquired a new branch, it can bring the branch online into the overall IT infrastructure much easier using a cloud-based network and asset deployment. According to Gartners Market Trends: Managed Cloud Infrastructure 2013, the chief concern of customers looking for managed cloud infrastructure is achieving business agility. This includes quick but real-time provisioning, flexible capacity and other benefits. 6QContinued# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.[Cliff]Across the board, respondents reported increases in all areas of benefits from their use of cloud technology and services. The percentage increases relative to 2013 ratings were very significant, ranging from 20% to 203%. Highest-rated areas of benefit:Improved disaster recovery 39.5%Simplified management 33.9%Reduced cost 29.8% Flexibility 29.8%With improved disaster recovery being the highest-rated benefit, respondents confirm their understanding that cloud services are much more effective in recovering from possible outages. Cloud applications and models typically provide a higher level of redundancy, thereby reducing the number of service outages. Additionally, it is more cost effective and faster to spin up virtual environments in the cloud. Financial institutions must be able to prove to examiners that they can recover from a disaster in an appropriate amount of time, so respondents recognition of this benefit underscores the significant role cloud services can play in disaster recovery.Respondents rated simplified management highly as an overall benefit to cloud services. This may be the result of the processes implemented when a cloud provider moves the systems to the cloud, including standardization when a customer first comes on board. It also smooths out one-off environments and creates a standard environment for the client. This takes the daily burden of management off internal IT resources. Cliff- Make this into a second slide on question 10 and talk to the rest belowLargest numerical increases in rating of benefit:Security/reduced risk 28.2%, a 15.2% increase over 2013Reduced cost 29.8%, a 13.6% increase over 2013Agility 18.6%, a 12.4% increase over 2013Largest percentage growth in rating:Agility 203% increase over 2013 ratingSecurity/reduced risk 117% increase over 2013 ratingImproved cost predictability 106% increase over 2013 ratingThe overall largest percentage growth in benefit rating for 2014 was agility. Cloud agility gives institutions IT staff the opportunity to respond to a business need with an IT solution very quickly. For example, when a financial institution has acquired a new branch, it can bring the branch online into the overall IT infrastructure much easier using a cloud-based network and asset deployment. According to Gartners Market Trends: Managed Cloud Infrastructure 2013, the chief concern of customers looking for managed cloud infrastructure is achieving business agility. This includes quick but real-time provisioning, flexible capacity and other benefits. 7QWhat are your greatest concerns with migrating your systems and services to the cloud?# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.[Cliff]Overall, financial institutions fears surrounding migrating systems and services to the cloud have decreased over the years. Respondents, for the most part, reported lower levels of concern, but some areas still remain high. Three major declines in percentages have occurred over the past year.Security and compliance remain at the top of the concerns, but dropped 17%, from 75.2% in 2013 to 58.1% in 2014. Loss of control also remains a top concern for financial institutions, but it, too, has decreasedfrom 49.1% in 2013 to 42.7% in 2014. Additionally, cost or uncertainty on ROI decreased by 12.4%, from 44.7% in 2013 to 32.3% in 2014. {while security is still a great concern, as you saw on the previous slide security is the highest benefit once they move to the cloud}The availability, reliability and speed concerns increased slightly, from 41% in 2013 to 42.7% in 2014. Fear of vendor lock-in increased marginally this year, at 25% from 21.1% in 2013. This increase may be due to the fact that some vendors, specifically larger corporate entities, make it extremely difficult to switch providers. When selecting a provider for outsourced cloud services, it is important that you conduct due diligence on all third-party relationships in order to best protect your institution. This includes reviewing the contract termination clause to ensure you can terminate early, if necessary, with minimal penalties.8QWith respect to security/compliance in the cloud, please select your primary concerns.# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.[Cliff]As stated in the previous section, security and compliance top the concerns for financial institutions, at 58.1%. More specifically, the leading issue regarding security and compliance focuses on data privacy and segregation, according to 76.6% of respondents. For most institutions, the concern is where does the data reside. If its not hosted in the United States additional audit concerns are introduced. Additionally is the solution architected in a way that keeps organizations data separate and secure. As such, due diligence on your third-party vendor is crucial for alleviating this concern. As reported by 54% of financial institutions surveyed, the second-highest security/compliance concern is security incident management. This is based on how quickly the cloud provider alerts the institution to a security threat and takes action. Security incident management has become a rising concern for financial institutions, with well-known security threats occurring more frequently than ever, including the Heartbleed bug. The third concern is cloud provider viability. Again, understanding your vendors and their financial standing is very important for your financial institution. 9QHas an examiner or auditor provided any guidance on the use of cloud services within your financial institution?# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.[Cliff]While examiner or auditor guidance on the use of cloud services remains relatively low, 12.9% of respondents report that examiners and auditors have discussed cloud services with their institution. This represents a more than 400% increase over 2012.In the survey, respondents also provided insight on the types of guidance they were receiving from their auditor. Much of that guidance strongly urges financial institutions to ensure they are conducting the necessary due diligence on cloud vendors. 10View it Today:Click ahead to see how banking in the cloud works and what it means to financial institutions like yours.-then-Go on to see how to download the white paper.# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.managedservices@csiweb.com800.519.4348 facebook.com/CSIsolutions@CSIsolutionsExecutive Report: 2014 Cloud Technology & IT Outsourcing TrendsGet the Full Reporthttp://www.csiweb.com/Resources/Overview/WhitePapers.aspxThis annual report summarizes the findings of CSI Managed Services' survey of how financial institutions are using cloud technology and IT outsourcing.# Copyright 2015. Computer Services, Inc.# Copyright 2015. Computer Services, Inc.

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