Pub. 13 2018-2019 Issue 4

WWW.NEBANKERS.ORG 26 M AN Y F INANCI AL INS T I TUT ION E XECUT I V ES ARE struggling with the decision about whether to have an on-premise or cloud-based information technol- ogy (IT) infrastructure. Further complicating the matter, in many situations, a strong business case can be made for both options. To create an effective and efficient technology infrastructure, financial institutions must understand potential options and factors that help determine when, or if, they should consider a move to the cloud. In either scenario, financial institutions must develop a cohesive IT infrastructure strategy that encompasses all hardware and software investments, such as servers, network communications equipment and storage appliances. Choosing between on-premise and cloud deployments can be difficult, but the differences between the two platforms and specific business indicators can provide guidance in the decision-making process. Understanding the on-premise model With an on-premise IT framework, key technology applica- tions and critical data are physically located inside the financial institution’s facilities. Technology systems are owned andman- aged by internal technology personnel, and the financial institu- tion is the owner of data security measures, disaster recovery planning and all compliance requirements. Why have an on-premise model? Financial institutions typically choose on-premise technol- ogy deployments when there are network communications limitations, or if leadership within financial institutions want hardware, software and data to reside within their own fa- cility. Until recently, financial institutions have also chosen on-premise technologies because vendors did not offer cloud- based solutions. Benefits of an on-premise model An on-premise technology infrastructure can provide sev- eral benefits, including maintaining full control over decisions regarding architecture, network management and the support of the core system and key business apps. In addition, the tech- nology capital investments can be depreciated. An on-premise infrastructure may also be a better fit than a cloud solution for financial institutions in areas that have network communica- tions limitations that lead to frequent outages and business disruptions. The negatives of an on-premise model On-premise solutions require the financial institution’s IT department to have the knowledge and skill sets required to responsibly manage the technology infrastructure and protect critical data. This could be an issue, since a finan- cial institution’s IT staff is not likely to have the same level of technical expertise and available resources as a cloud provider, or have the budget to pay for the same level of se- curity and disaster recovery capabilities. In addition, with experienced technology personnel in high demand, consistent staffing can be a challenge, with productivity suffering if key personnel leave. When Should Financial Institutions Move IT Investments to the Cloud? Todd Gengenbach, Technology Consulting Manager, RSM US LLP