Finance and Insurance
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DZ BANK AG, the fourth largest bank in Germany by asset size, serves as the central institution for more than 900 co-operative banks and their 12,000 branch offices. With growing data and a greater need to manage costs, DZ BANK was not simply focused on the technology: It required an overall concept that would deliver more flexibility and a transparent cost model, based on operating expenditure (opex), not capital expenditure (capex). To achieve this, DZ BANK partnered with Hitachi to develop and implement a capacity-on-demand solution that gave the bank easier management and tighter control of its data.
DZ BANK AG is the central institution of the Genossenschaftliche FinanzGruppe, one of the largest private financial services organizations in Germany in terms of asset size. The DZ BANK Group includes Bausparkasse Schwäbisch Hall, DG HYP, DZ PRIVATBANK, R+V Versicherung, TeamBank, Union Investment Gruppe, VR Leasing Gruppe and various other specialist institutions.
Volksbanken Raiffeisenbanken, with almost 900 branches in Germany, has a majority share in DZ BANK and supports it in its capacity as central bank through the extensive range of financial services in private banking, corporate banking, capital markets business and transaction banking.
DZ BANK offers services ranging from classic and innovative products through structuring and share issuing to trading and distribution in the stock and bond market. Furthermore, as a commercial bank, DZ BANK supports businesses and institutions in need of a nationwide banking partner. Last, but not least, DZ BANK is the holding company for the strongly branded affiliated companies of the DZ BANK Group. Partnership is part of DZ BANK’s identity. It is rooted in the concept of cooperation and has proven to be the driver for success in the whole sector and for its clients over many decades. The bank has determined that working with its customers allows them to achieve more together. This conclusion was distilled from a vast amount of experience and forms an unshakable foundation stone, upon which DZ Bank’s business dealings are built.
Working together in partnership is a strong driver not only for DZ BANK’s activity within the cooperative society, but also in how it collaborates with external businesses. For many years, the financial institution has relied on storage technology from Hitachi for the storage of important data relating to clients, processes and transactions. It was therefore clear to the IT managers that Hitachi was also the first point of contact for the change in technology that had become necessary.
“In our business, data plays an increasingly important role and takes up more and more space: data about clients, financial market data, transaction data, just to name a few examples. It was clear to us in this context that we had to replace our tried-and-tested storage infrastructure in a timely manner and create data storage fit for the future,” explains DZ BANK’s head of IT, Matthias Kreft, who is responsible for data storage. “But we weren’t simply focusing on the technology to be used; we also wanted an overall concept that would deliver more flexibility and a transparent cost model,” he adds.
The motto for the new cost model was to be “opex instead of capex;” in other words, avoiding capital costs for acquisition and depreciation and presenting new storage for pure operating costs. “IT operations are not our core business. However, we are aware, of course, that IT has essential significance for our institution,” explains Yvonne Hausmann, who is responsible at DZ BANK for strategic procurement for IT infrastructures. “An opex cost model would put us in a position where we would be able to calculate precise costs over a defined time period, thereby avoiding unpleasant surprises wherever possible as far as technology is concerned,” she adds.
A strategy consultation was then held to inform Hitachi about the newly defined objectives and to work together to consider possible solutions. Even Hitachi was not able to deliver an “off the peg” operating model to meet DZ BANK’s requirements. As a result, they worked closely together to create a customized model. This approach provides DZ BANK with sufficient storage capacity, in three grades, for a set time-frame of five years, and under defined conditions. Hitachi installed two Hitachi Virtual Storage Platform (VSP) systems with flash in both of DZ BANK’s mirrored data centers, which provide three grades of storage capacity: gold, silver and bronze. Both high-quality flash modules and hard drives with varying access times in varying distribution are used in the three “storage pools.” (For example, a higher proportion of flash data storage would be in the gold pool, which is the fastest storage area.) The required base capacity was mutually defined in advance and made available together with a corresponding buffer.
This enables DZ BANK to make the appropriate storage available, with sufficient capacity, for every application scenario. The administrators responsible are able to maintain and assign the pools themselves. The overall performance of the system was adapted to accommodate peak production demands, such as processes, which are particularly demanding in terms of storage, or month-end business operations.
According to the agreed model, charges are based on the storage consumed rather than the installed storage. Every month, the actual consumption per storage pool is measured and the values for six consecutive months are used to calculate a midyear value. This value is then invoiced as the amount consumed. The hierarchical gold, silver and bronze model has another advantage. Over time, data, such as transaction data, migrates from the fast (and more expensive) storage grades to cheaper grades. This means that access speed no longer plays the primary role. The cost of unavoidable growth of data can thereby be influenced in a targeted way.
Once a month, an Hitachi employee visits the facility to carry out a capacity management test of the system as a whole. Hitachi and the DZ BANK team meet quarterly to discuss new projects and the related requirement planning and essential expansion of the system.
“We are highly satisfied with the newly developed solution. Not only have we switched smoothly to a modern storage environment, but we have also revolutionized the business model in the field of storage in one go and prepared our institution to deal with any eventualities when it comes to data growth,” says Kreft. “This has also demonstrated that Hitachi is really interested in lasting partnerships, not just in a quick sale.”
The Hitachi approach also became apparent after about 18 months, when internal reorganization at DZ BANK meant that several systems, which had previously been outsourced, were again brought back into the company’s own data center. This significantly increased the volume of data in one fell swoop. Instead of calculating the newly added data usage in accordance with the existing agreement, Hitachi agreed to renegotiate the agreed conditions in the customer’s interests.
“We achieve more together; we are delighted to have found a partner in Hitachi who defines and embodies the concept of partnership in the same way as we do,” says Hausmann, in praise of the collaboration. “The flexible and transparent billing model gives us the security to plan in an extremely important area over the next five years,” she concludes.
With the Hitachi capacity-on-demand solution, DZ BANK is able to make the appropriate storage available, with sufficient capacity, for every application scenario.
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We are highly satisfied with the newly developed [Hitachi] solution. Not only have we switched smoothly to a modern storage environment, but we have also revolutionized the business model in the field of storage in one go and prepared our institution to deal with any eventualities when it comes to data growth. This has also demonstrated that HITACHI is really interested in lasting partnerships, not just in a quick sale.
– Matthias Kreft Head of IT (responsible for data storage) DZ BANK