BFSI has always been foremost in adopting new technologies and it is one of the biggest sectors for SAP. Ross Wainwright, Global Head of Services for Financial Services, and Darren Saumur, Executive VP, North America Services, from the company talked to Jasmine Desai about in-memory computing’s relevance for the BFSI sector
What’s motivating the BFSI sector to adopt new technologies?
Wainwright: The worldwide spending on IT works out to about $500 billion per year. Banking spends around $240 billion or close to 50% of the global figure. In June, BFSI became the leading revenue and growth market for SAP amongst the 24 industries that we cater to. It is growing in terms of licenses at the rate of 250% YoY. Banks are presently focused on risk and regulatory compliance. In India, banks were already regulated and that’s why they are focused on growth by addressing multi-channel opportunities and improving the customer experience across multiple channels. Mobile banking and big data are vital to this business as they enable opportunities to cross-sell.
There’s a perfect storm in banking. Banks have historically undertaken a lot of custom development. They are starting to realize that their core competency lies in providing banking services to their clients and not in being custom software shops. After the Sybase acquisition, mobility and banking were our two biggest assets. Business Objects also had a large footprint in the banking industry. SuccessFactors has a Cloud-based HCM platform.
Banks have huge amounts of data. Through BI, they are figuring out how to create something that is consumable for their risk management officers.
There are two worlds in banking. The first is that of core banking, which is akin to open heart surgery on a bank. There is a huge opportunity here where institutions haven’t modernized their transactional engines. We have 180 banking clients using our core products. SAP Service plays an important role starting as it does with how you design the core and implement it in order to transform processes within a bank.
The second world is that of business analytics, HCM, General Ledger or Financial ERP. From a services standpoint, we are looking at partnership strategies with IBM around bundling products like HANA with their hardware and services solutions. Challenges exist, including the problem on the supply side of services people who can execute an implementation. Right now, one of our largest footprints in terms of consultants is in Bangalore. We want to reduce the ratio of services to software.
Our Rapid Deployment Solutions include those in the areas of mobility and analytics, Cloud computing etc. This is pre-configured software with the information to accelerate deployments, reducing the software to services ratio. We need to invest in strategic markets like India, China. Russia, Latin America in order to build an ecosystem.
From the perspective of analytics, customers aren’t particularly flexible about shifting from one database to another. How have you managed to convince your customers to do so?
Saumur: We acquired Business Objects back in 2008. It would take care of the underlying platform, which could be any database. That heritage continues. We recognize that a lot of BO customers may not be SAP ERP customers but we are still able to tap them. Integration is not a big issue on the business analytics front. However, shifting from any other database to HANA can be a challenge for certain customers. Customers in BFSI are more risk averse than those in other industries. Therefore, before putting the entire thing on HANA, they want to see if it is working in a POC.
The other challenge, one that’s all the more tricky, is when the database has embedded logic in it. In such cases, we try to reverse engineer the logic code of the databases in order to get more raw data in the database, which is easily consumable in HANA.
Wainwright: Credit Suisse has 600 servers and over 200 applications. They use Sybase ASE, SAP database server, replication server and Sybase IQ. They standardized all of their applications around SAP. The benefit that they reaped is that of great performance, low database cost, low database management fees and lower TCO. They were a customer prior to SAP’s acquisition of Sybase. A database can be a competitive advantage in terms of TCO.
Is there a business case for in-memory computing in the banking sector?
Wainwright: From a business perspective, we are compressing the database. We are simplifying how the database processing takes place so that extremely large volumes of data can be handled along with a high level of complexity and variability and all of this can be processed rapidly. Gaining real-time access to data is a no-brainer. The challenge is that nobody is going to build a business case around speed or pure simplicity. There has to be a business value proposition. Real time offer management is one such factor. The VP of Retail Banking’s concern is typically around the retention of mortgage business and how quickly the sales people can respond to the customer without giving him time to look at other options. We call that real time offer management. HANA can accelerate this process.
Saumur: There’s a business case associated with transactions where data can be sliced at incredible speed in real time and real time decisions can be made. Certain industries are adopting it a lot faster because HANA is eliminating network and disk storage cost.
