Skyrocket Digital Transformation with Cloud

Cloud has emerged as the enabler for digital transformation, offering companies across sectors a secure and scalable platform for streamlining their everyday operations. Cloud has become essential to any modern organization’s technology stack, offering flexibility, scalability, and resilience. Gartner estimates that industry-specific cloud platforms will help enterprises to accelerate more than 50% of critical business initiatives by 2027.

However, simply adopting a cloud platform is not enough. Businesses must harness the full power of the Cloud to maximize its potential benefits. In addition, organizations need to have an effective approach to managing their resources within the cloud environment.

The Silver Lining of Cloud

McKinsey estimates enterprise IT services to be a $2.4 trillion market globally. The research giant has also identified three crucial elements that drive success in the Cloud transformation journey.

1. Strategy and management
2. Business-domain adoption
3. Foundational capabilities

Cloud is accelerating digital transformation through scalability to accommodate fluctuations in usage or demand. It frees up resources previously spent on servers, networking equipment, and physical storage infrastructure. They can be redirected toward other critical business initiatives.

Everest Group suggests the following best practices for retirement plan administration service providers to make their journey to the Cloud successful:

• Evaluate organizational readiness, requirements, and frameworks before starting.
• Establish a scalable, future-proof, and product-agnostic model.
• Divide the journey into phases to realize benefits early on.
• Set SMART goals to measure performance continuously.
• Foster a culture of collaboration and continuous improvement across the organization.

The key advantages of Cloud adoption are:

1. Security: Organizations must ensure their cloud infrastructure is secure and compliant with industry standards and regulations. Cloud providers are committed to providing a secure environment for their customers’ data and applications. Hence, organizations no longer have to worry about the security of their data centers or other IT infrastructure. In addition, best practices such as identity and access management (IAM), privileged access management (PAM), virtual private networks, encryption, firewalls, etc., help enhance data security in the Cloud.

2. Monitoring and management: Cloud capabilities enable regular monitoring to ensure resource utilization. It helps optimize costs, identify potential vulnerabilities, flag compliance issues, and improve performance. Cloud providers offer built-in monitoring tools that allow organizations to track their cloud usage and ensure they stay within their cost constraints. Additionally, some providers offer advanced analytics that helps businesses make informed decisions about cloud infrastructure deployments.

3. Automation and orchestration: Organizations must strive to automate manual tasks and processes to improve their cloud infrastructure. Automation can reduce complexity, speed up deployments and updates, and improve the reliability of applications. In addition, orchestration can facilitate the management of multiple cloud services across different providers consistently.

4. Cost savings: One of the biggest advantages of cloud computing is its cost savings. Organizations can save money by reducing capital costs associated with hardware and software procurement, maintenance, and energy consumption. McKinsey predicts using Cloud can save 30% factory costs by 2025. Organizations can also pay for services on a pay-per-use basis depending on their usage needs while benefiting from the scalability and flexibility of resources. A study by Everest Group suggests migrating to Cloud can help retirement plan providers to reduce operational costs by 70%.

5. Agility and flexibility: Cloud computing can quickly provision new applications without waiting for physical hardware to be set up. Cloud environments also help organizations test out new ideas quickly and easily make changes to existing applications. It helps them to stay ahead of their competitors while being cost-effective as they do not have to invest in physical hardware upfront.

Cloud computing models

Cloud computing services are provided in different models, each offering users various levels of access and control over resources. In addition, these models offer different levels of flexibility, enabling businesses to utilize cloud-based solutions tailored to their specific needs.

The three primary cloud computing models are:

• Software as a Service (SaaS): The most popular delivery model in which users access applications online without installing or managing software. SaaS solutions typically provide customers with subscription-based software hosted on remote servers and managed by third-party vendors. Popular examples of SaaS include Salesforce, Office 365, and Slack.
• Platform as a Service (PaaS): The model provides users an environment for creating their applications while the service provider provides the underlying infrastructure and middleware. PaaS solutions enable developers to choose and integrate the building blocks they need without setting up, configuring or managing their systems. Popular examples of PaaS include Heroku, Amazon Web Services (AWS), and Google App Engine.
• Infrastructure as a Service (IaaS)- The model provides users access to computing resources such as physical machines, storage, and networking components in a shared environment. In addition, users can deploy their applications and services on top of these IaaS solutions by self-provisioning virtualized hardware platforms as needed. Popular examples of IaaS include Amazon Elastic Compute Cloud (EC2), Microsoft Azure Virtual Machines, and Google Compute Engine.

Types of Cloud Infrastructure

Identifying the right Cloud infrastructure for an organization depends on the nature of the business, its scale, scope, and the IT budget. The main types of Cloud infrastructure are:

• Public: The most common type of Cloud computing system, the Public Cloud, provides a virtualized environment on publicly available servers, with access to services over the public internet. It has low upfront costs but requires users to pay for resources as they are used. The primary benefit of using public cloud infrastructure is that organizations can access high-performance computing capabilities without investing in their hardware or software licenses.

• Private: A private cloud is a dedicated environment that provides a secure and isolated infrastructure as a service. It allows organizations to maintain control over their data and applications while still benefiting from the scalability and cost-effectiveness of the Cloud. Private clouds are often hosted in an organization’s own data center or by an external provider in a closed network, providing maximum security and flexibility.

• Hybrid: Combining aspects of public and private clouds, Hybrid Clouds allow organizations to reap the benefits of both models. By using a hybrid model, companies can implement new services on a public cloud while keeping sensitive data securely stored on their own private resources. It allows businesses to take advantage of the scalability of public services while maintaining complete control over their critical systems.

Cloud technology can be used in countless ways, from hosting applications to managing databases and providing data storage solutions. By understanding the different types of cloud models, you can find the best fit for your organization’s specific situation while maximizing cost-effectiveness and security. Whether you use a private, public, or hybrid model, a well-thought-out cloud strategy will help ensure you get the most out of this versatile technology solution.

Components of Cloud Infrastructure

Cloud infrastructure provides organizations with a  range of tools and services that can be used to build, deploy, and manage applications. These components include

• Hardware: The Cloud is seemingly virtual, but hardware is responsible for connecting the various pieces of cloud infrastructure. It includes networking equipment such as switches, routers, firewalls, load balancers, storage arrays, and backup devices. These are mandatory to provide users access to the Cloud.

• Virtualization: Cloud technology allows physical resources to be divided and abstracted into virtualized environments that can be managed and accessed remotely. It helps to increase efficiency by allowing multiple applications to share resources on a single server.

• Storage: Cloud storage solutions provide an easy way to store and manage data. Data can be stored in multiple locations, preventing redundancy and protection against outages. In addition, it supports scalability, allowing for adding and removing storage resources as needed.

• Networking: The networking layer provides secure access to the cloud environment and allows communication between various system components. It also helps to speed up data transfer and system updates. A secure cloud network’s important components are firewalls, security groups, and access control lists.

Access Cloud on demand with serverless solutions

Cloud on demand provides a serverless solution to deploy an application without the need to manage and maintain the underlying infrastructure. Organizations do not need to provision or manage any hardware. This service allows businesses to scale their applications quickly and easily without worrying about configuring or managing expensive infrastructure. The provider manages all underlying components, such as compute resources, storage, and other services needed. Businesses can deploy their applications and let the provider handle the rest.

Upwards to the Cloud

Cloud provides a secure and reliable platform for the retirement plan industry. It reduces costs associated with hosting systems on-site or maintaining costly software licenses.

Additionally, the use of cloud technology in the retirement plan industry enables advanced analytics capabilities to provide personalized advice based on participant needs and preferences. Finally, reducing costs allows recordkeepers to focus on delivering a better customer experience amidst the rising fee pressures.

Everest Group lays down an efficient Cloud migration strategy beyond cost savings. Recordkeepers and retirement plan administration services providers must adopt a  Cloud-first growth strategy for managing 401(k) plans. It states the following ways to realize the total value of transitioning to the Cloud:

• Obtaining a 360-degree view of objectives encourages collaboration between IT and business stakeholders.
• Partnering with cloud-native SaaS providers to be future-ready.
• Identifying operational inefficiencies and modifying the IT infrastructure to eliminate them.

Overall, the future of US retirement plans depends on adopting cloud technology. It provides an efficient and cost-effective way to manage 401k while offering advanced analytics capabilities that can help maximize participant outcomes. Therefore, plan administrators and recordkeepers should continue seeking ways to leverage cloud technology to remain competitive in today’s market.