Working at the speed of SaaS: innovation, collaboration and standardisation in the cloud
By Philippe Buron, chief technology officer
Financial services is a world of two halves. The customer-facing side evolves in the blink of an eye, bringing new products, services and ideas to market. The front office is full of the latest cutting edge technology.
But as you move deeper into organisations you find that the pace slows and innovation dries up. The middle and back offices are unable to access the same resources as the customer-facing parts of the business. They rely on old, often outdated technology, spreadsheets and people power to get things done.
Software-as-a-Service (SaaS) is a technology delivery model that is changing this old paradigm. As well as benefiting the front office, it brings much-needed transformation to the middle and back offices. SaaS redesigns how these functions leverage technology to meet the demands of the business.
Let’s take a look at what’s possible when you’ve got SaaS.
Software-as-a-Service platforms change how financial institutions transform their operations. This is true whether you’re deploying a platform for the first time or adding your 1,000th process.
In terms of deployment, SaaS offers you an inherently more flexible way to deploy new business platforms and augment your existing technology. It’s much easier to expand your usage and functionality because there are no hardware changes required. This means SaaS allows you to start small, prove value and then expand.
For example, consider the typical adoption path for data automation that we see with our customers. They often start with a targeted deployment that focuses on a particular use case. The Duco platform can be deployed quickly, goes live in 24 hours and easily integrates with the existing tech stack through APIs. This project quickly realises value and the business case for expansion practically writes itself. Again, the responsiveness of SaaS means that capacity, volume, functionality and users can all quickly scale.
But this ease of change isn’t limited to deployment. The legacy world is full of change requests, funding requests, prioritisation, business requirements documents and back-and-forth between ops and IT. This makes it slow and costly for firms to unlock value or evolve their environments.
SaaS, on the other hand, provides much quicker time-to-value and return-on-investment. This is true whether you’re making small changes to an existing process, adding new controls, or even new use cases.
Take our preconfigured EMIR solution, for example. Regulators announced changes to the schema on 6 September and we instantly got to work updating our agile preconfigured processes. Customers won’t need to backtrack and rebuild reconciliations – we do the monitoring and heavy lifting for them. You only get this kind of responsiveness with a SaaS environment from providers that really understand importance of agility for customers.
Innovation on tap
SaaS is a true investment in your business architecture because it makes it easy for your platforms and tools to evolve and expand. They add more functionality and become even more useful as the years go by. By contrast, on-premise software is often difficult to get rid of because of the cost sunk into it and the challenges of removing it.
SaaS enables a continuous flow of new features and improvements, liberating you from the sluggish upgrade cycles of on-premise deployments. Here at Duco we release features and performance improvements every two weeks to all our customers. We think this innovation should be included in the ‘service’ part of Software-as-a-Service. No one has to pay extra to access these features and they’re not hidden behind mandatory upgrades.
The cost savings go much further than that. A big part of upgrading traditional software is conducting regression testing to ensure that everything still works. You need to make sure the new code hasn’t broken any existing processes.
The main reason for this is that traditional vendors often hard-code customisation on a customer-by-customer basis. This means system updates have to work with hundreds, if not thousands, of unique versions of the software. It’s just not possible to test that.
That doesn’t happen with a single-instance SaaS platform. By sticking to one codebase and giving our customers an inherently flexible and customisable platform, we can test the impact of our updates before we roll them out.
This way you’re not spending a large part of your change-the-bank budget just to ensure your existing software still works. Plus, you know that there’s not some awesome new feature that another customer is getting that you’re not because you haven’t upgraded yet.
Out-of-the-box best practices and operating model insights
A single code base has significantly greater benefits than just removing your need for testing though. It means we’re able to combine the investment of all of our customers into the best and most beneficial updates and improvements for everyone. You’re sharing investment and progress with the leading firms in your industry. You benefit from the same R&D budget and the experience and insight of thousands of users and account sponsors across capital markets.
This brainstrust is constantly feeding their ideas and best practices into the vendor’s roadmap to create solutions that make everyone’s lives easier. SaaS vendors can collect this intelligence in a number of ways. Duco, for instance, allows customers to submit, rate and vote for feature ideas and improvements to the platform. Our roadmap is also influenced by working closely with customers through programmes such as our Customer Advisory Board, or the upcoming Innovation Day event.
All this ensures that our solution remains aligned to operating model best practices in the market. This benefits all our customers, allowing them to do things such as keep business and technology controls segregated while enabling speed-of-implementation through one-touch deployment.
As well as listening to customers, SaaS vendors can share insights back to them gained through monitoring how everyone is using the platform.
For instance, imagine that your vendor was able to highlight where the match rates on a particular reconciliation were much lower than what other customers were achieving for the same process. These anonymised benchmarks would help you to identify where you have potential for efficiency improvements, without compromising on anyone’s confidentiality.
As well as sharing best practices, SaaS makes it easier for everyone to share standards. If everyone across the industry is using the same software, based on the same codebase, it’s much easier to standardise.
This doesn’t just benefit firms when they work inter-company. A lot of capital markets firms end up with several customised versions of the same software in their architecture, nevermind what their counterparties are usings. Teams such as operations, finance and risk may need to perform similar, yet different, tasks using the same data. This means that skills and knowledge within the business isn’t necessarily transferable, even though the software is ‘the same’.
SaaS removes this problem, enabling users not just across departments but across geographies to share best practices, standardised workflows and terminologies. On top of this, every customer using SaaS software that runs on a single codebase shares the same building blocks for their processes and workflows. That makes sharing data much easier.
Software that can evolve with your business
SaaS provides you with something that is sorely needed for financial services technology: futureproofing.
On one level this means that the software you have today can easily rise to the challenges of tomorrow. The cloud provides near-infinite computational resources on tap. You can easily respond if a surge in business doubles the demands placed upon your software. There’s no need to upgrade a data centre to add more capacity. You won’t experience outages that cause severe delays to business processes because the demand is too high.
On a macro level the impact of SaaS on futureproofing is even more profound. So many senior leaders in the industry have had bad experiences with technology implementation and transformation projects in the past. They often end up with technology that under delivers and introduces complexity rather than reducing it. It ends up requiring additional resources or processes to achieve the intended outcomes. This has cast a shadow over technology change, with leaders rightly nervous about replacing or adding to parts of their architecture.
That’s why it’s so important that technology can continue to provide value over the long-term. The last thing anyone wants is to implement a new system that itself needs replacing a few years later.
SaaS can provide the assurance that this won’t happen. As explained above, the SaaS model allows for constant innovation and improvement. Your platform is evolving to refine the experience and enable new functionality. You can have confidence that you can keep responding to the changing demands on your business.
Compare this to the legacy approach, which usually involves mandatory upgrades that you may not need or be able to afford. If you don’t upgrade, the vendor will usually stop supporting your version. This also happens when vendors decide to sunset old software. You end up investing in a dedicated in-house IT team to operate outdated technology. A lot of resources are sunk into ‘keeping the lights on’.
When a SaaS provider runs a single code base in the cloud they only have one instance to support. All their efforts and resources go into maintaining and improving the software you rely on. You can be sure that it’ll support you for the long haul.
Time to think about technology differently
Software-as-a-Service is far more than just the same benefits as legacy on-premise technology but with different packaging. As we’ve seen, it unlocks a number of benefits that simply aren’t possible with traditional technology. A true SaaS model that harnesses the power of the cloud provides scalability, insight, collaboration, standardisation and value on a level hitherto unheard of.
Want to find out more about the benefits of SaaS-powered data automation? Check out the Duco platform.