Virtualization in Banking: Assessing the Potential for Lowering TCO (Strategic Focus)
Datamonitor, April 2009, Pages: 39
An in-depth analysis of the use of server and desktop virtualization technologies in the financial sector, looking at which vendors have penetrated the sector to date and what the prospects are for new entrants. In desktop virtualization, there will be particular relevance in retail banking, because Western institutions are moving into Eastern Europe without putting in local IT support.
Scope
- Server and desktop virtualization technology
- Retail and investment banking, trading floors
Highlights of this title
The global financial crisis means that financial institutions around the world must find ways to lower the total cost of ownership (TCO) of their IT infrastructure. Thus, doing more with less will become the mantra for good business practice for the next couple of years, with virtualization a logical candidate for achieving this aim.
Key reasons to purchase this title
- Gain insight into how virtualization technology is being adopted in the banking sector
- Understand how virtualization technology itself is evolving
Overview
Catalyst
Summary
Key Messages
Tightened IT spend renews banks interest in projects designed to reduce TCO
The virtualization market has grown more competitive, driving innovation and keener pricing
Opportunities for management capabilities grow as VM sprawl proliferates
Hardware cost savings come from virtualization ratios, which will tend to increase over time
There is also the potential for a reduction in software licensing costs
Centralization of servers promotes greater control for the IT department
Table of figures
MARKET OPPORTUNITY
Tightened IT spend renews banks interest in projects designed to reduce TCO
Banks are investing in infrastructure, simplification and cost reduction
Virtualization offerings have grown more robust, enabling the technology to extend its target applications
The market has grown more competitive, driving innovation and keener pricing
There is interest in desktop virtualization for the trading floor
MACs are expensive on the trading floor - firstly, there is the- cost of moves, adds and changes to the individual users infrastructure, should they change desks or move to another floor in the building, for instance.
Power constraints are another issue in trading environments -- then there is the sheer power that each traders infrastructure requires, particularly in areas such as Londons Canary Wharf, where the imminence of the 2012 Olympics means that the local electricity provider has told banks there will be no further power available until the end of that event.
Space and heat generation are also problems - finally, there are- the issues of the space available for so much hardware per trader and the heat that multiple machines per desk generate, making trading floors physically challenging environments to work in, quite apart from the nature of the work carried out there.
Opportunities for management capabilities grow as VM sprawl proliferates
Technology Evolution
VMware got the ball rolling in server virtualization on X86
VMware also led the way on desktop virtualization
Client virtualization promises "offline VDI"
The hypervisor market has also become more competitive
Customer Impact: Server virtualization
Hardware cost savings come from virtualization ratios, which will tend to increase over time
There is also the potential for a reduction in software licensing costs
Centralization of servers promotes greater control for the IT department
Some banks envisage self-service server provisioning for test and development
Some banks even want to buy test and development server capacity from the cloud
Customer Impact: DESKTOP VIRtualization
The hardware options increase with desktop virtualization
There is, however, a penalty in terms of server, storage and network infrastructure
The real savings from desktop virtualization are in support and maintenance
There is also a security gain from desktop virtualization
Competitive Landscape
Hypervisor vendors
Server hardware vendors
Silicon vendors
Management vendors
Thin client infrastructure vendors
Go to Market
Not all banks are created equal, so server virtualization opportunities will differ
Retail banks run core systems on mainframes, proprietary Unix or System i
Investment banks have less of a mainframe legacy
The potential for desktop virtualization spans retail and investment banking environments
Recommendations
Hypervisor vendors need to price aggressively
Vendors should stress their virtual management capabilities
SIs should offer services in the area of testing homegrown banking applications
APPENDIX
Definitions
Virtualization
Hypervisor
Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
List of Figures
Figure 1: Cutting costs is banks top priority this year
Figure 2: Standardization and simplification top banks agenda
Figure 3: Spending is on infrastructure first and foremost in 2009
Figure 4: Server virtualization technologies available in open systems
Figure 5: The different types of hypervisor for X86 virtualization
Figure 6: Example of how desktop virtualization is being used in banking
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