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Originations: Are You Ready to Step onto the Cloud?

Should our company deploy origination software on-premises or in the cloud? We’ve been fielding quite a few questions along these lines after recently launching our own FICO® Origination Manager 4.5, the first release that can be deployed either way. In this post, I’ll answer some of the top questions we’re hearing, including:

  • Why move to the cloud? What are the operational benefits?
  • Will it hinder regulatory compliance?
  • Will our data be secure?
  • What are the financial benefits?
The answers below can help you decide whether on-premises or cloud delivery is right for your organization.

The basics: Why chose cloud-based software over traditional on-premises?

Cloud-based delivery shifts operational responsibility for everything associated with you using the software – software license, implementation, servers, associated data storage, data center space and utilities, security, and more – to the provider. As a result, the cloud offers strong benefits in several areas:

  • Fast time-to-value, sincesoftware can be available in just a few days, with full configuration in weeks. Client configuration is also available more quickly in the cloud environment, compared to “getting in line” in the long project queues that many IT departments have.
  • Optimized performance, with your vendor implementing all application software, operating systems and hardware, plus updates and upgrades. Again, you won’t need to negotiate these projects with your internal IT department.
  • Seamless scalability, an important capability if your originations business is growing fast, or has demand spikes driven by seasonal factors or promotions. FICO delivers capacity on-demand to handle any increases in traffic, helping to ensure high throughputs and an excellent customer experience.
For our clients, we deploy FICO® Origination Manager in the cloud (at our data centers) and establish interfaces with other key systems, which can be inside “the four walls” of your organization. Users access the software through a highly secure online connection; data generated by the application can be stored in the cloud or on-premises, at your organization.

Regulatory compliance: Am I covered in the cloud?

In short, the answer is yes. Choosing cloud-based solution that meets PCI and/or other regional data security requirements, as well as a provider that has deep experience with regulatory compliance, can help to ensure adherence to local government regulations. In the US, these include the Truth in Lending Act, Equal Credit Opportunity Act and others. FICO has worked with many customers in this area, and can help incorporate appropriate regulatory requirements into your solution, wherever you do business worldwide.

Data security: Will my data be protected in the cloud?

Again, the answer is yes—provided your vendor follows industry-standard data security protocols. Some companies, however, feel more confident and secure with storing financial data in-house at their own data centers. This translates into a significant ongoing security burden, including maintaining all available updates to their origination software, as well as associated physical, network and database security measures.

With many organizations struggling to rein in their data center sprawl, cloud-based software and storage are attractive and highly secure. FICO maintains the utmost in security measures at every layer of the application delivery stack, from operating system and network, to secure customer access, to multi-layer security at our data centers.

The bottom line: What’s the difference financially?

Across all industries, many companies are choosing cloud-based software delivery because it can offer greater financial flexibility. Importantly, the cloud delivery model changes the very cost structure of software. Whereas on-premises deployments present a significant, upfront capital expense (CapEx), cloud-based delivery typically entails a (much lower) monthly operating expense (OpEx).

Getting started with cloud-based delivery is usually less costly (and much faster) than with on-premises software. For most enterprise applications, the cost advantage extends as far as a decade after initial deployment.

But that doesn’t take into consideration a final and very important cost benefit of cloud-based delivery: Your software will always be up-to-date. You don’t need to plan for hardware or software upgrades every few years.

Overall, we find that most customers will see operational, financial and customer-centric benefits from moving to a cloud-based origination solution. But for some, on-premises is still the right answer.

What are your thoughts on on-premises vs. cloud origination solutions?

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