Technology
Common pitfalls in cloud migrations and how to avoid them
Global Banking and Finance Review
Company
By Yuvaraj Madheswaran
In today’s rapidly evolving technological landscape, the move to the cloud is a near-inevitable journey for financial institutions seeking agility, scalability, and cost-efficiency. Although adoption in the financial-services industry lags behind many other sectors, cloud migration is gaining momentum. While the value of the shift is promising, this transition is not without its challenges. Like any transformative endeavor, cloud migration has its intricacies, potential pitfalls, and multifaceted challenges that organizations often encounter. Research shows that one in three cloud migration projects fail. Still, Gartner’s projection that end-user spending in the public cloud will reach nearly $600 billion in 2023 underscores its undeniable significance. The path to cloud migration is laden with hurdles, from unexpected technical glitches that can disrupt operations to the resistance encountered within the ranks. As such, it is critical for leaders to understand the common pitfalls in cloud migration and devise solutions to overcome these challenges.
A survey analysis reports that 38 percent of financial institutions use a hybrid cloud environment. One of the most common pitfalls in cloud migration is underestimating the complexity of hybrid environments where applications and data reside both on-premises and on cloud. To avoid this, it is vital for enterprises to conduct a comprehensive assessment of their current application and database landscapes. This assessment includes evaluating whether applications write logs to local filesystems—a practice incompatible with cloud environments where local filesystems are unavailable—and externalize such logs.
For database-dependent applications, careful planning is essential. Migration strategies should consider the seamless transition of databases to the cloud. A well-thought-out migration plan identifies which applications and workloads are suitable for migration based on their complexity and dependencies. This prevents issues from attempting to migrate critical systems first or starting with overly simple ones, which can lead to failures and a lack of confidence in the migration process.
A recent Treasury report cautions that the financial sector could have a widespread impact due to a single cloud service provider (CSP) failure. Inadequate data security measures during cloud migration can lead to severe consequences. Addressing this pitfall requires a comprehensive approach. First, data in transit and at rest must be secured and encrypted. Many cloud providers offer robust encryption features, but it’s essential to implement customer-managed keys to retain control over encryption keys. By utilizing customer-managed keys, organizations ensure that even the cloud provider cannot access their data without the proper encryption keys, increasing security and compliance.
Additionally, designing an exclusive secrets manager akin to HashiCorp Vault can help safeguard sensitive information. Regularly rotating encryption keys and secrets adds extra protection, reducing the risk of unauthorized access. Automated key rotation ensures that even if a key is compromised, it remains valid for only a limited time, minimizing potential security breaches.
Identity and access management (IAM) solutions offered by cloud providers like AWS, GCP, and Azure should be employed to manage and control access to resources, ensuring that only authorized users can interact with sensitive data. IAM enables organizations to define and enforce policies that govern access, guaranteeing that employees and systems have the correct permissions for their roles while preventing unauthorized access to critical resources.
Financial organizations are under pressure to migrate key applications to the cloud rapidly. A poorly defined cloud migration strategy, however, is a recipe for disaster. While learning from the successes of institutions like Capital One is valuable, it’s important for each enterprise to curate a strategy to its specific needs and circumstances.
Estimating the subset of applications to migrate is crucial. Starting with the riskiest or the smallest applications does not strike an appropriate balance. Migrating critical applications first can lead to excessive failures, while migrating small ones may not instill confidence in the migration process. Instead, conduct a risk assessment to identify applications that are suitable candidates for migration based on factors like complexity, dependencies, and potential impact on the organization.
Consider workload compatibility, data dependencies, and performance expectations for each application or workload in the migration strategy. A tailored approach is crucial to success. Some workloads may be better suited for lift-and-shift migration, where applications are moved to the cloud with minimal changes, while others may benefit from refactoring or rearchitecting to fully leverage cloud-native capabilities.
It’s important to define clear migration objectives and key performance indicators (KPIs) to track progress. These measures ensure that the migration stays on course and allows for adjustments as needed. Communication and collaboration between IT teams, business stakeholders, and cloud experts are vital to align the migration strategy with organizational goals.
Change management is an essential component of a financial institution’s compliance management system. Neglecting change management can undermine the success of cloud migration. Upskilling employees is necessary to adequately prepare them to shift to cloud-native practices. They can be trained to understand the new cloud environment and how their existing processes and workflows fit into the cloud-native world.
Effective change management involves clear communication and support for employees to minimize resistance. Demonstrating how the migration enhances their work can help foster buy-in and a smoother transition. For example, emphasizing that cloud-native technologies reduce manual, repetitive tasks and improve scalability can motivate IT teams.
The lack of monitoring and optimization is a pitfall that can lead to operational nightmares for banking and finance institutions since every transaction matters. Even the slightest latency during peak hours can lead to significant financial losses. Traditional troubleshooting involving mining through logs becomes impractical in the cloud. Planning for a cloud-native log aggregation solution, such as Splunk or native cloud offerings, is essential. These tools allow for efficient log management, real-time monitoring, and rapid issue resolution. Splunk, for instance, provides powerful log analysis and monitoring capabilities, enabling organizations to gain insights from their data and quickly detect and respond to anomalies.
Continuous optimization is equally important. Implementing cost management and optimization tools provided by cloud providers ensures that resources are used efficiently, preventing cost overruns and performance bottlenecks. AWS Cost Explorer and Azure Cost Management are examples of cloud-native tools that provide visibility into spending patterns, helping organizations identify opportunities for cost savings.
Another aspect of optimization is resource scaling. Leveraging cloud-native auto-scaling capabilities allows financial organizations to automatically adjust resource capacity based on demand, ensuring optimal performance without overprovisioning.
Vendor lock-in is a concern for financial institutions during cloud migration. To avoid being overly reliant on a single cloud provider, organizations can prioritize portability and interoperability. Using core programming languages and adopting infrastructure as code (IaC) tools like Terraform instead of cloud-specific solutions (e.g., AWS CloudFormation or Azure Blueprints) promotes portability.
Additionally, embracing open standards and technologies reduces the risk of vendor lock-in. Open-source solutions and containerization technologies like Kubernetes enable applications to run consistently across different cloud environments. With its ability to orchestrate containerized workloads, Kubernetes provides a level of abstraction that decouples applications from the underlying infrastructure, making it easier to migrate and manage applications across various cloud providers.
ING, the largest finance company in Amsterdam, Netherlands, believes that in the future, it could go from idea to production in less than 48 hours by adopting open-source, cloud-native technologies. Building cloud-agnostic architectures ensures organizations can take advantage of the best features and pricing options from multiple cloud providers, giving them greater freedom and resilience.
Don Anderson, CIO at the Federal Reserve Bank of Boston, thinks ignoring the cloud may “introduce new security vulnerabilities” as on-premises vendors discontinue support for their products. This is another reason why it’s vital for financial institutions to prioritize migration as an essential part of their roadmaps for the future. Successful cloud migration requires careful planning, robust data security, and effective change management. Additionally, recognizing the complexity, securing data, defining a tailored migration strategy, addressing change management, monitoring proactively, and avoiding vendor lock-in are all pivotal to success. By proactively addressing these aspects and leveraging best practices, financial organizations can ensure their cloud migration initiatives succeed and contribute to their long-term growth and competitiveness in an increasingly digital landscape.
Yuvaraj Madheswaran is an IT cloud technical lead with over 17 years of experience in the financial services industry. He is responsible for the design, development, testing, and deployment of cloud-based applications. Yuvaraj has a passion for using emerging technology to help financial institutions improve their efficiency, profitability, and customer experience. Yuvaraj has a proven track record of success in the financial services industry. He has worked on a variety of projects, including the development of a new cloud-based lending platform, the migration of a legacy system to the cloud, and the implementation of a new fraud detection system. Connect with Yuvaraj on LinkedIn.
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