Holding the fort

Arabian Banking & Finance finds out how hosted solutions and outsourced infrastructure can help financial institutions boost efficiency and focus on what they do best.

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By  Daniel Stanton Published  June 30, 2007

The decision to outsource IT services is a tough one for any organisation, but it is even more difficult for financial institutions.

Concerns about regulatory compliance and availability can deter some organisations from making the move to hosted services, but at the same time, maintaining an IT infrastructure can sometimes be a distraction from the core business of managing money.

Mohamed Fouz is the CEO of eHosting DataFort (EHDF), and was previously CIO at Mashreq. He has seen a change in attitude among banks and other organisations in the region when it comes to outsourcing their IT requirements.

"The region is slowly learning and I think they are understanding the value of outsourcing now," says Fouz. "Multinationals coming into the region choose the path to outsource, and local banks are seeing the advantages of that."

EHDF offers services from data centre hosting to fully managed services, data centre consulting, security consulting and managed security, as well as disaster recovery and business continuity.

Fouz believes that all organisations can benefit from outsourcing, whatever their size, but that they will have different needs. "If you're a bank and you want to replicate or put up infrastructure for everything from A to Z, it's going to cost a lot of money because you need to have standard security practices and things like that," he says.

"Not everyone can afford their own infrastructure so it's better to share it. For small banks it makes a lot of sense. And it's the same thing for big banks - they want to control their costs and the best thing to do is share those expenses."

Part of that saving can come from a quicker time to market and lower operational costs.

"Outsourcing can reduce the total cost of ownership of IT by the sharing of services, and reduce the lead time for new products - if they want to launch a product it's very easy because they don't have to replicate the infrastructure," says Fouz. "They would not have to worry about future investments in resources and technology upgrades because we take care of that, which means that they can focus more on their core business.

"Most of the service providers have already invested in and adopted best practices, so every organisation doesn't have to reinvent it again."

Clients will face an extra expense, in the form of increased bandwidth use to connect to the off-site data centre, but again this is a cost that is reduced when it is shared between users.

For organisations outsourcing for the first time, there are bound to be concerns about handing over responsibility for certain processes to an outside organisation.

Apart from the terms of the service level agreement between parties, the design of a data centre can also reassure clients that their data is going to be handled responsibly by a service provider.

"The major concern for any organisation is data security, especially for banks, who are worried about things like customer data," says Fouz. "When we bring in those banks, we don't mix them up, we have them located in separate areas.

‘For example in our data centre you can have cages, and you can have totally isolated rooms. If they would like to monitor their own infrastructure, we can set up cameras and give them monitoring facilities so they can monitor from their own premises. The trust factor is very important, but nowadays independent entities like ourselves have gained the trust factor of banks."

Confidence in the service provider's reliability is especially vital when it comes to hosted business continuity or disaster recovery services.

EHDF works with telecoms providers who have access to data centres in Geneva, meaning that clients can be sure that their IT functions will not be interrupted by, for example, a natural disaster in the country in which they are headquartered.

Some application providers are also offering to host their own solutions for clients. In April, Financial Technologies Middle East (FTME) established the Financial Technologies Centre for Straight Through Processing Services (FT-CSS), a high end technology platform which allows brokers of stocks and commodities to outsource their complete trading and back office processing activities.

"Brokers who sign up for our complete end-to-end Straight Through Processing (STP)-enabled services suite will fully rid themselves of worries about the operational and technical side of their businesses," explained Arshad Khan, director of FTME.

"Not only will they be free to focus full attention on their business, but also cut costs by 50 to 60% as they will not have to spend on technical infrastructure, staffing, software, hardware and maintenance." The STP solution suite integrates and automates processes relating to the full trade life cycle and allows brokers of multiple exchanges to centralise their operations on a single platform.

Document management is another area where inefficiencies can be reduced by taking a different approach. Xerox provides outsourcing services through its Document Advisor Office.

"The Document Advisor Office (DAO) is a strategic approach that is designed to bring optimal control, cost efficiency and client responsiveness to the document-related communications needs of organisations on an enterprise level," says Adrian Mitchell, Xerox global services manager, Xerox Middle East.

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