'Data Centres Should Be Targeted For Cost Rationalisation'

Biztech2.com brings to you an exclusive account of the Q&A session that took place at the BankTech Summit 2009 held in Mumbai yesterday. Veteran CIOs from the BFSI industry addressed the issues faced by their peers. Patrick Kishore, CISO-SBI; Sarabjeet Anand, head-IT, Standard Chartered Bank; Sudip Banerjee, VP-IT, Reliance General Insurance; and Richard Troksa, head-Enterprise Software, HP, addressed the audience.

Which best practices can help rationalise IT dollars spent during tough market conditions?

Kishore: The data centre is the single largest cost element for the CIO. Consolidation of data centres and the various block devices inside the data centre can help companies in reducing costs. There is a bank I know of that has consolidated their data centres in the USA, London and Mumbai. This has also reduced the hosting and networking cost. Moreover, on the networking front, the bank’s lease lines with their respective redundant links have been moved to the MPLS cloud.

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Server consolidation is another area that can significantly lower maintenance and operating costs.

Vendor management is also an area that can be considered for cost rationalisation. Incentives should be offered to vendors for disciplined adherence of SLAs. In case of an SLA break, the vendor should be dealt with in a way that further prompts him for delivering better Quality of Service (QOS). The disincentive should not be in monetary terms. An ideal scenario should be that in the long term, the relationship with the vendor should be of a partner and not a mere vendor.

For SMEs, cloud computing technology is a good fit when compared to large banks. Due to security and regulatory concerns, it is very difficult for large banks to adopt cloud computing.

Anand: We at Standard Chartered have adopted Straight Through Processing (STP) that has resulted in 30-40 percent cost savings. Since the last one year, the bank has included 240 more machines in the virtual environment. The old servers have been consolidated already. This has decreased the overall server footprint and reduced power emissions.

While CEOs are constantly directing CIOs to decrease costs and improve earnings on the current expenditure, is it possible to come up with a model of standardised cost per branch? Can adoption of new technologies help in cutting costs?

Kishore: There is a practice of standardised computation of branch costs in banks where ballpark figures are considered for budgetary provisions. At SBI, we have segregated the branches as small, medium and large branches. The business process designing, hardware requirements are considered according to the branch size.

SBI is a huge bank and we are pretty much averse from going for new technologies simply because of the sheer size of the bank. The scope of our footprint is very large. The branch count is close to 17,000 in India. So unless something is tried and tested and has attained a comfortable level of standardisation in the market, we avoid thinking about it.

The bank’s branches are networked with a connection as small as 42 Kbps lines of VSAT and fat pipes. To adopt new technologies, the testing and dry runs would be a huge challenge for us.

Data Storage is a huge challenge and it is growing by the day. What are some of the best practices for managing data in the organisation?

Troksa: The prime best practice for managing data is to dissect it according to its relevance and importance. There are various data compression solutions available in the market that compress data to 1/10th of its original size.

Priorities should also be set regarding what to store and what to discard. From a manageability and security perspective as well, data can be segregated into a) the data that is residing in the storage boxes, b) the data in transit for customer service at a point in time c) the data being used by internal employees for a certain period of time.

Compliance is driving the need for data storage and appropriate archival policies should be put in place for better manageability.