IT Transformation Case Study – State Street

IT transformationWhile many enterprises are migrating dev / test environments to the cloud, few are using cloud to drive changes in application development like State Street.

State Street is a leading provider of financial services and asset management for both businesses and financial institutions.  State Street manages $2 trillion in financial assets, and has approximately $22 trillion under custody and administration.    With an IT budget over $1 billion, and an IT organization of approximately 7,000, State Street historically had a highly-complex IT environment dependent on proprietary technologies and platforms.

State Street’s CIO Chris Perretta is using large scale private clouds to fundamentally transform application development, which historically had represented approximately 25% of State Street’s IT budget.   State Street is going the private cloud route to provide flexible resource provisioning while still being able to maintain control of customer data and ease compliance with financial services regulations.

Standardization and simplification are two of the more powerful levers CIOs have to reduce cost with cloud computing. State Street is pulling these levers hard, standardizing not just platforms and technologies, but also core development processes.  In conjunction with the private cloud rollout, State Street is creating 10 common enterprise-wide rules for software development that seek to:

  • Increase use of approved open source components
  • Improve code reuse across development teams
  • Implement common security frameworks
  • Normalize change control processes
  • Standardize database access

The potential impact of State Street’s private cloud transformation effort  is staggering.  In addition to being able to provision a new server instance in five minutes, State Street’s initiative is seeking to:

  • Reduce amount of written code by 30-40%
  • Reduce test time by 30%
  • Achieve $600 million in total cost savings by end of 2014

In addition to the cost benefits, State Street is also allowing customers to host data and applications on their new private cloud for a fee, creating a new revenue stream for the company.

State Street’s private cloud transformation initiative didn’t happen overnight.  The IT team developed a two year project roadmap that started in 2009, and which included two major pilots spanning 120 different use cases.   As part of the transformation State Street is replacing Solaris and AIX-based servers with commodity x86 servers, leveraging open source virtualization tools wherever possible.  Initially State Street will be providing  a Linux-based development cloud, with plans longer term for a .Net cloud.

It’ll be interesting to see how it turns out, and to see if State Street can drive the cost efficiencies it’s targeting through relying solely on a private cloud environment.

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