Virtualization in Banking: Assessing the Potential for Lowering TCO (Strategic Focus)

Table of Contents

OVERVIEW

• Catalyst
• Summary

KEY MESSAGES

• Tightened IT spend renews banks' interest in projects designed to reduce TCO
• The virtualization market has grown more competitive, driving innovation and keener pricing
• Opportunities for management capabilities grow as VM sprawl proliferates
• Hardware cost savings come from virtualization ratios, which will tend to increase over time
• There is also the potential for a reduction in software licensing costs
• Centralization of servers promotes greater control for the IT department

MARKET OPPORTUNITY

• Tightened IT spend renews banks' interest in projects designed to reduce TCO
• Banks are investing in infrastructure, simplification and cost reduction
• Virtualization offerings have grown more robust, enabling the technology to extend its target applications
• The market has grown more competitive, driving innovation and keener pricing
• There is interest in desktop virtualization for the trading floor
  • MACs are expensive on the trading floor - firstly, there is the cost of moves, adds and changes to the individual user' s infrastructure, should they change desks or move to another floor in the building, for instance.

• Opportunities for management capabilities grow as VM sprawl proliferates

TECHNOLOGY EVOLUTION

• VMware got the ball rolling in server virtualization on X86
• VMware also led the way on desktop virtualization
• Client virtualization promises �goffline VDI�h
• The hypervisor market has also become more competitive

CUSTOMER IMPACT: SERVER VIRTUALIZATION

• Hardware cost savings come from virtualization ratios, which will tend to increase over time
• There is also the potential for a reduction in software licensing costs
• Centralization of servers promotes greater control for the IT department
• Some banks envisage self-service server provisioning for test and development
• Some banks even want to buy test and development server capacity from the cloud

CUSTOMER IMPACT: DESKTOP VIRTUALIZATION

• The hardware options increase with desktop virtualization
• There is, however, a penalty in terms of server, storage and network infrastructure
• The real savings from desktop virtualization are in support and maintenance
• There is also a security gain from desktop virtualization

COMPETITIVE LANDSCAPE

• Hypervisor vendors
• Server hardware vendors
• Silicon vendors
• Management vendors
• Thin client infrastructure vendors

GO TO MARKET

• Not all banks are created equal, so server virtualization opportunities will differ
  • Retail banks run core systems on mainframes, proprietary Unix or System i
  • Investment banks have less of a mainframe legacy

• The potential for desktop virtualization spans retail and investment banking environments
• Recommendations
  • Hypervisor vendors need to price aggressively
  • Vendors should stress their virtual management capabilities
  • SIs should offer services in the area of testing homegrown banking applications

APPENDIX

• Definitions
  • Virtualization
  • Hypervisor

• Methodology
• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

FIGURES

• Figure: Cutting costs is banks' top priority this year
• Figure: Standardization and simplification top banks' agenda
• Figure: Spending is on infrastructure first and foremost in 2009
• Figure: Server virtualization technologies available in open systems
• Figure: The different types of hypervisor for X86 virtualization
• Figure: Example of how desktop virtualization is being used in banking