A three-year journey in fundamental technology and business architecture design has resulted in a private Cloud at National Australia Bank that may eventually be used to host all its applications and services.
In August 2008, before Cloud computing became the talk of IT, NAB announced it would undertake a five year Next Generation Platform transformation program to overhaul its core banking systems.
NAB’s IT leaders believed existing systems had served the business well, but they were less confident in their ability to support the bank’s future strategic direction. Less than a year after NGP was announced, Adam Bennett replaced the long-standing Michelle Tredenick as CIO and inherited the bank’s Cloud strategy, which now manifests itself in the form of platform-as-a-service (PaaS).
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NAB’s PaaS philosophy centres infrastructure around three strategic themes: Agility, utility and simplicity.
Within the infrastructure context, NAB is moving to a private Cloud operational paradigm, but uses public Cloud services “where it makes sense” to achieve “flexibility through standardisation”.
In documents obtained by CIO, the IT leaders at NAB aren’t holding back when it comes to the full-scale deployment of a private Cloud. Ubank, NAB’s online-only banking service launched in October 2008, is already the flagship ‘tenant’ and running almost exclusively on virtualised infrastructure — from the operating system to Web portal.
UBank is the first ‘user’ of NAB’s new enterprise technology platform, but plans for expansion into the rest of the bank are very ambitious.
In a presentation at Oracle’s OpenWorld conference in San Francisco late last year, NAB’s principal architect for hosting services, Stephen Beer, detailed the technology architecture that is set to revolutionise information management at the multinational financial services provider.
“We’re going through a very significant business transformation program at the moment,” Beer said. “Really, what we’re looking to do is transform a large number of our business platforms. Underlying that, of course, is a technology transformation as well.”
Shared services calls for fresh approach
With its strategy firmly aimed at delivering differentiation from a banking sales perspective at the customer level, NAB is unashamedly looking to standardise its IT infrastructure.
“We build banking products and deploy banking products,” Beer said. “So we’re looking to have very capable products as we deliver them to our business consumers internally as enterprise services as well as very capable products we deliver to our banking customers externally. We’re not looking really at a lot of differentiation in our technology environment.”
NAB classifies its IT transformation journey into three paradigms — the dawn of banking technology in 1968, where having an internal core banking system was a key differentiator; 20 years of significant change in transactional banking up to 1988 when online banking became common; and since 2008, when open systems were used to launch UBank.
“It’s now completely customer-driven relationship-focused environment,” Beer said. “And the bank as an organisation understands that it does need to transform the way in which it delivers outcomes to its customers so it has embarked on this business transformation program.”
Beer said as an organisation, UBank has been “extremely successful” and exceeded all of its targets for a new business startup. Within NAB PaaS architecture, IT is now viewed as a commodity platform for shared services.
“We’re driving a model where we are consolidating, commoditising and sharing underlying infrastructure at the operating system and database level through commoditisation [and] where possible into the platform service layer through shared database servers, shared Web and Java application platforms,” Beer said. “[This is] quite well aligned to the Cloud paradigms of infrastructure-as-a-service and platform-as-a-service.”
NAB’s infrastructure strategy is now being designed for a “private Cloud operational paradigm”.
Some of the inhibitors to that vision, according to Beer, are the things many technology organisations find difficult in such an environment, such as achieving the right charge-back models and being able to charge for use directly to consumers.
“As an organisation we find those things difficult so I do use the term ‘the operational paradigm’ of Cloud,” he said. “We’re not completely successful yet in delivering a full internal Cloud capability because of those types of constraints.”
When the technical and operational hurdles are overcome, NAB is set expand its use of PaaS throughout its enterprise.
With the arrival of UBank just after the global financial crisis, NAB took an opportunity to break free from its legacy infrastructure and test a new technology stack — built almost completely with Oracle software.
[ Read Part I of NAB's private Cloud journey at CIO ]
From the hardware up, NAB engineered a private Cloud based on Oracle Enterprise Linux and Oracle’s (Xen-based) virtualisation platform for infrastructure-as-a-service.
Above that, there are the Oracle clustered databases (11g RAC) and Oracle business intelligence which provides ‘database-as-a-service’. And, at a higher level, shared WebLogic installations provide application PaaS.
The higher-level software is a mixture of software Oracle now owns following its acquisition of BEA and Sun, including Tuxedo and JRockit.
NAB is also deploying a number of Oracle banking applications in the Flexcube suite and several other finance and risk applications. A Web front-end portal sits along side the Oracle identity and risk management solutions.
“So in our environment we’re basically building up what we refer to as an infrastructure-as-a-service internal private Cloud, based on Oracle virtual grid technology and blade servers underneath that as well,” Beer said. “It’s a combination of both VMs and physical server deployments [and] operating systems in that environment.
“Using those technologies, we create a database-as-aservice platform that we’ll offer out to, or are offering out to, a large number of our other applications that we need to deploy [including] business services beyond just the UBank platform.”
By building a WebLogic-based shared Java application platform, NAB is using a combination of shared services with multiple, consolidated Java virtual machines, multiple application environments and private virtual machines where it needs to for changing dependency purposes.
With a large number of different business units, adopting a private Cloud should go a long way to standardising the way application servers are used at the bank.
On top of the all the software infrastructure is what the bank calls ‘Web portal-as-service’, which is another example of a PaaS, but Web portal-focused.
As NAB moves forward with PaaS and the software matures, it will look to integrate identity management services and adopt better Cloud management capabilities.
“UBank as a business, or as a brand, for us started with a zero customer base,” Beer said. “It’s a complete end-to-end banking solution that we’re building up both from an application level and from an underlying service level.”
NAB’s journey towards PaaS has given it the confidence to expand the infrastructure beyond new ventures like Ubank.
The bank plans to transform and renew its core platforms to enable future business models. “As we continue on the path of our business transformation we will be moving all of the existing customer base from our National Bank brand,” Beer said. “We have something like 6 million customers under the National Australia Bank brand in Australia [to move] onto this platform”.
“So it’s quite important to us to build a service-focused, service-orientated infrastructure and platform as a service provisioning capability. Obviously there’s a maturity path as we go forward and we’re looking at some of the Cloud management tools but [if] it can be done for an organisation the size of the National [then] it can be done probably in your organisation as well.”
NAB IT strategists view PaaS as “significantly less complex” and easier to integrate. The architecture also poses less of an IT focus and is less costly to support and adapt as its business evolves.
An early adopter of open systems
NAB’s private Cloud is certainly a radical development for an organisation of its size and influence, but the bank has a history of challenging incumbent processes and methodologies.
In 2004 the NAB developed SOA-based applications for financial planning and in 2006 went public with details of its Linux-based grid computing infrastructure which used Oracle’s 10g database on Red Hat Linux.
At the time it was one of the largest data warehouses (about 11TB) in the sector with some 30GB of transactions processed every day on Linux-based infrastructure. The data warehouse is used for every major part of the bank, but critically for financial reporting, global risk management, and regulatory reporting, including Basel II compliance.
NAB’s Linux innovation lab, dubbed ‘G2’, demonstrated to the IT executives that cheaper Intel hardware running Linux could do the job of more expensive Sun servers running Solaris.
Moving from large-scale systems to low-cost hardware was a big change for the bank, but it did result in faster transaction processing and more flexible procurement options.
The first move to Linux on Intel may have paved the way for broader adoption of open systems for NAB’s private Cloud, but it still needed to adopt yet another platform in Oracle Enterprise Linux and its associated virtualisation tools.
While Red Hat maintains it still has a good relationship with the bank and “hundreds of servers” in production, time will tell if it can compete against the Oracle juggernaut, particularly with NAB standardising on Oracle at the application level.
The development of a greenfield private Cloud is facilitating NAB’s IT revolution, but compared with more traditional banking platforms the new technologies may not be without challenges.
Delays in transaction processing has left workers across Australia without pay after a the fault crashed its payments system. The bank issued a media statement on Friday April 15 saying it was working to rectify the matter.
The meltdown is the second in less than six months; in November last year the bank was struck with technical problems resulting in delayed transaction processing. A few weeks later CEO, Cameron Clyne, said the problem was related to batch processing systems and a combination of factors, including a software change dating back to 2001.
Clyne said the problems validated the decision to move to a new core banking platform, but NAB may not escape technical challenges so easily. Sources familiar with NAB’s operations told CIO Oracle’s new banking Cloud is essentially an “untested platform”.
There have been several issues with UBank to the extent of having to reboot the platforms to keep them running. That said, apparently the problems exist across NAB’s mainframe and Oracle environments, as evidenced by the recent outages.
With NAB’s outsourcing and offshoring activities, the problems may be more closely related to skills dilution than the technology itself, according to the source.
The are concerns offshoring to India and the recent IBM outsourcing deal have watered down in-house skills at the bank. It means problems that would have been caught are slipping through — including standard tasks relating to database administration and systems management.
In another sign support is overwhelmed, lower-order issues are being escalated “in order to get something done about them”.
Another source close to the bank told CIO Oracle Enterprise Linux is now more prevalent at the NAB than Red Hat Enterprise Linux, but no decision has been made on whether to use Oracle or Red Hat as the standard server platform.
Recompiled series and posted together from http://www.cio.com.au/article/383439/nab_private_cloud_builds_new_paradigm_part_3/