In June 2018 Microsoft submerged a data center into the sea off the coast of the Orkney Islands in Scotland as part of a research project called Project Natick. This project sought to understand the benefits and difficulties of deploying subsea data centers worldwide. The data center itself had a self-sustaining energy source built to be free of regular maintenance, so it did not require network engineers with scuba diving skills to fix hardware or software issues.
You may be thinking, what a bizarre idea and why should I care?
Last month at Microsoft's yearly partner conference, Inspire, Microsoft's CEO Satya Nadella talked about Project Natick in his keynote to highlight its success and demonstrate the benefits it could usher in, such as quicker set up times, better data speeds, and increased energy efficiency.
I'm not declaring that subsea data centers are going to be a reality for corporations anytime soon. Project Natick is currently just a research project and there are difficulties and challenges which will need resolution before this project becomes commercially feasible, but it does highlight an important point. The pace of innovation in the data center/cloud business is extraordinary, and the opportunities for the financial services industry are just as impressive.
For example, Financial Services independent software vendors (ISVs) have woken up to the possibilities of combining data and AI and are building predictive models for use cases such as investment management, risk management, performance analytics, fraud mitigation and credit scoring. Data usage is rising sharply, and savvy investment professionals are looking for cloud-based solutions so they can test and improve investment strategies without installing anything locally. My advice to investment professionals is to look beyond the limited scale of excel on your workstation and find ways to leverage cloud-based solutions for a competitive advantage.
We Are Seeing a Mind Shift on the Technology Side of FSI Corporations
Flashback a few years, to when I was working in the internal IT of an FSI corporation in New York City. We had used the best open source technologies available at that time to create a custom private cloud platform for the company's internal and external use. The development of this platform was the easy part. Maintaining, scaling and securing this platform became a nightmare over time. Many years and millions of dollars later the project was scrapped. Our team learned the hard way that building and maintaining a reliable cloud is best left to cloud companies. It is telling that I was once accustomed to a quarterly software update cycle for the custom private cloud. Now I am used to Microsoft rolling out updates into Azure multiple times every day.
Tech executives are realizing that custom data centers cannot match the rate of innovation in the cloud and are adopting cloud technology to fuel their digital transformation.
Last year, my team had discussions with the C-suite of a large FinTech ISV in Boston about its digital transformation initiatives. Front and center was the need to provide business services to customers anywhere in the world at a moment’s notice. The CIO was dealing with decades of legacy IT investments, but he was determined to support quick business expansion fueled by innovation. There was an urgent need to open data hubs in the APAC region. The cloud was the answer as it provided the global scale and speed he required. We designed a new hub and spoke hybrid architecture which maintained their current hub on-premises (northeast U.S.) and connected it to spokes on Azure in the APAC region. Together, we laid the foundation for a hybrid cloud strategy that respected the legacy on-premise investments while expanding into the cloud.
Technology leaders who acknowledge the limitations of their own internal IT and are willing to leverage cloud services such as Azure, Dynamics 365 CRM and Office 365 are well positioned to drive successful digital transformation in the years to come.
Praveen S Rawat, Partner Tech Evangelist at Microsoft, is the Virtual CTO for a portfolio of strategic financial services ISV partners in the US. Praveen has rich experience in Enterprise cloud-based architecture, C-Level engagement, SaaS delivery model, program oversight, go-to-market strategy, and enterprise migration. He has received recognition at Microsoft for driving significant Azure impact through partnerships and speaking at FSI industry events. He holds a Master’s in Technology Management from Columbia University in New York City.