Will Robotic Process Automation be responsible for the next generation of technical debt?

Posted on : 28-03-2018 | By : kerry.housley | In : FinTech, Innovation, Predictions, Uncategorized

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All hail the great Bill Gates and his immortal words:

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”

With the Robotic Process Automation (RPA) wave crashing down all about us and as we all scramble around trying to catch a ride on its efficiency, cost saving and performance optimising goodness, we should take a minute and take heed of Mr Gate’s wise words and remember that poorly designed processes done more efficiently will still be ineffectual. In theory, you’re just getting better at doing things poorly.

Now before we go any further, we should state that we have no doubt about the many benefits of RPA and in our opinion RPA should be taken advantage of and utilised where appropriate.

Now with that said…

RPA lends itself very well to quick fixes and fast savings, which are very tempting to any organisation. However, there are many organisations with years of technical debt built up already through adding quick fixes to fundamental issues in their IT systems. For these organisations, the introduction of RPA (although very fruitful in the short term) will actually add more technological dependencies to the mix. This will increase their technical debt if not maintained effectively. Eventually, this will become unsustainable and very costly to your organisation.

RPA will increase dependencies on other systems, adding subtle complex levels of interoperability, and like any interdependent ecosystem, when one thing alters there is an (often unforeseen) knock-on effect in other areas.

An upgrade that causes a subtle change to a user interface will cause the RPA process to stop working, or worse the process will keep working but do the wrong thing.

Consider this; what happens when an RPA process that has been running for a few years needs updating or changing? Will you still have the inherent expert understanding of this particular process at the human level or has that expertise now been lost?

How will we get around these problems?  Well, as with most IT issues, an overworked and understaffed IT department will create a quick workaround to solve the problem, and then move on to the myriad of other technical issues that need their attention. Hey presto… technical debt.

So, what is the answer? Of course, we need to stay competitive and take advantage of this new blend of technologies. It just needs to be a considered decision, you need to go in with your eyes open and understand the mid and long-term implications.

A big question surrounding RPA is who owns this new technology within organisations? Does it belong to the business side or the IT side and how involved should your CIO or CTO be?

It’s tempting to say that processes are designed by the business side and because RPA is simply going to replace the human element of an already existing process this can all be done by the business side, we don’t need to (or want to) involve the CIO in this decision. However, you wouldn’t hire a new employee into your organisation without HR being involved and the same is true of introducing new tech into your system. True, RPA is designed to sit outside/on top of your networks and systems in which case it shouldn’t interfere with your existing network, but at the very least the CIO and IT department should have an oversight of RPA being introduced into the organisation. They can then be aware of any issues that may occur as a result of any upgrades or changes to the existing system.

Our advice would be that organisations should initially only implement RPA measures that have been considered by both the CIO and the business side to be directly beneficial to the strategic goals of the company.

Following this, you can then perform a proper opportunity assessment to find the optimum portfolio of processes.  Generally, low or medium complexity processes or sub-processes will be the best initial options for RPA, if your assessment shows that the Full Time Equivalent (FTE) savings are worth it of course. Ultimately, you should be looking for the processes with the best return, and simplest delivery.

A final point on software tools and vendors. Like most niche markets of trending technology RPA is awash with companies offering various software tools. You may have heard of some of the bigger and more reputable names like UiPath and Blue Prism. It can be a minefield of offerings, so understanding your needs and selecting an appropriate vendor will be key to making the most of RPA. In order to combat the build-up of technical debt, tools provided by the vendor to enable some of the maintenance and management of the RPA processes is essential.

For advice on how to begin to introduce RPA into your organisation, vendor selection or help conducting a RPA opportunity assessment, or for help reducing your technical debt please email Richard.gale@broadgateconsultants.com.

 

Don’t forget to keep a handle on your “Technical Debt”

Posted on : 31-10-2012 | By : john.vincent | In : Finance

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Whilst catching up recently with a CIO after a technology briefing, I asked what topics he would like to see covered in future events? He responded fairly quickly with “How to measure Technical Debt within the organisation”.

This is an interesting topic. Whilst many use risk methodologies to quantify potential impacts, the monitoring and measurement of technical debt is typically given less focus. So first of all, what do we mean by “technical debt”?

Typically it refers to incomplete or avoided changes to an evolving software architecture/development which amount to a debt that needs to be paid off at some point in the future. Basically it is the gap between;

  • Making a change perfectly – preserving architectural integrity, standards and testing etc…
  • Making a change that works – ensuring it is functionally correct, implemented quickly with as few resources as possible

Debt can build up through lack of documentation, lack of coordination of parallel development resulting in multiple code branches, code quality, design deficiencies, time pressures for new functionality etc.. which means “Interest payments” are needed to remediate the situation at some point in the future.

However, we also believe that the term can be applied to other areas of technology, such as infrastructure, 0rganisation and processes. Operational systems need to be Fixed, Enhanced and Adapted…as do the processes and resources supporting them. They require constant modification in order to remain fit for purpose…and of course all this uses up scarce resources which is much more difficult to allocate in terms of ROI. Could some of the more public technology outages of 2012 be related to a build up of technical debt?

Measuring technical debt interest is difficult (there are several theories and computational algorithms out there if you’re interested).  However, taken simply, it is the cost of fixing the shortcuts taken during the release cycle to bring all components up to the same level, be that coding, documentation, infrastructure, design or whatever…

Note: it is generally accepted that a level of technical debt is unavoidable…indeed in some cases building up a degree of technical debt can be good in terms of time to market or to elicit quick feedback…but, this shouldn’t be confused with “cutting corners” and should always allow for the ability to payback in the future

However, it isn’t simple. In the development world there are platforms such as CAST which can measure architectural flaws and allow organisations to estimate technical debt from the results. However, there are many other factors as we touched on earlier, not least being subjective elements which cannot be mechanised and require a more creative approach – technical debt is not a science.

That said there are certain elements that should be monitored, tracked and in some cases measured. Some of these to keep an eye on are:

  • Time to market for new features. If routine enhancements or new features, that appear simple, turn out to be complex or cause seemingly unrelated components to break, that is a sign of too much technical debt. Unwieldy systems and software, or the feeling that support around them is a “black art”, is a key indicator of under investment in development rigor/maintenance.
  • Loss of stakeholder engagement. Easy to spot…we’ve all seen or been aware of systems which gradually lose interest/sponsorship, either from a development or support perspective. This can occur when staff move on, business revenues switch (such as Investment Banking vs Retail and the respective underlying systems), or cost efficiency pressures shift priorities elsewhere.
  • System performance degradation. Obvious maybe, but can sometimes get overlooked and not differentiated from capacity management. Potential impacts of technical debt can be found by conducting load testing, monitoring memory utilization, disk reads and writes, CPU usage, network activity, thread creation, etc. and measuring results/trends over time.
  • Communication breakdowns become more frequent. If people are forgetting to share information or keep the team informed of events that impact the project, they clearly have more important things on their minds.
  • Cost Efficiency Pressures. We are living through a difficult period in terms of declining revenues and subsequently increased focus on spend. Whilst discretionary budgets are cut to only mandatory projects, organisations still need to ensure that whilst seeking increased efficiency in underlying applications/infrastructure, shortcuts are not taken which store up future interest payment burdens which ultimately translate into stability issues.
  • Organisation. Likewise, staff are currently being asked to work harder than ever. However, if teams supporting certain applications are consistently in “fire fighting” mode then something isn’t right. An occasional burst of extra hours to meet a critical deadline is fine, or to deal with sporadic issues…if it becomes a trend it will lead to an increase in operational errors.
  • Monitoring team metrics. Even when teams measure their performance using something like velocity or earned value, they often ignore deteriorating performance. If you see dropping productivity and missed deadlines, it is likely only to get worse.

The point is that keeping a handle of technical debt across all areas of the operating model is very important – even more so when the economic pressures can encourage skipping a few payments…

Extreme Outsourcing: A Dangerous Sport?

Posted on : 27-09-2019 | By : kerry.housley | In : Uncategorized

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Recently I’ve thought about an event I attended in the early 2000’s, at which there was a speech that really stuck in my mind. The presenter gave a view on a future model of how companies would source their business operations, specifically the ratio of internally managed against that which would be transitioned to external providers (I can’t remember exactly the event, but it was in Paris and the keynote was someone you might remember, named Carly Fiorina…).

What I clearly remember, at the time, was a view that I considered to be a fairly extreme view of the potential end game. He asked the attendees:

Can you tell me what you think is the real value of organisations such as Coca Cola, IBM or Disney?

Answer: The brand.

It’s not the manufacturing process, or operations, or technology systems, or distribution, or marketing channels, or, or… Clearly everything that goes into the intellectual property to build the brand/product (such as the innovation and design) is important, but ultimately, how the product is built, delivered and operated offers no intrinsic value to the organisation. In these areas it’s all about efficiency.

In the future, companies like these would be a fraction of the size in terms of the internal staff operations.

Fast forward to today and perhaps this view is starting to gain some traction…at least to start the journey. For many decades, areas such as technology services have be sourced through external delivery partners. Necessity, fashion and individual preference have all driven CIOs into various sourcing models. Operations leaders have implemented Business Process Outsourcing (BPO) to low cost locations, as have other functions such the HR and Finance back offices.

But perhaps there are two more fundamental questions that CEOs or organisations should ask as they survey their business operations;

  • 1) What functions that we own actually differentiate us from our competitors?
  • 2) Can other companies run services better than us?

It is something that rarely gets either asked or answered in a way that is totally objective. That is of course a natural part of the culture, DNA and political landscape of organisations, particularly those that have longevity and legacy in developing internal service models. But is isn’t a question that can be kicked into the long grass anymore.

Despite the green shoots of economic recovery, there are no indications that the business environment is going to return to the heady days of large margins and costs being somewhat “consequential”. It’s going to be a very different competitive world, with increased external oversight and challenges/threats to companies, such as through regulation, disruptive business models and innovative new entrants.

We also need to take a step back and ask a third question…

  • 3) If we were building this company today, would we build and run it this way?

Again a difficult, and some would argue, irrelevant question. Companies have legacy operations and “technical debt” and that’s it…we just need to deal with it over time. The problem is, time may not be available.

In our discussions with clients, we are seeing that realisation may have dawned. Whilst many companies in recent years have reported significant reductions in staff numbers and costs, are we still just delaying the “death by a thousand cuts”? Some leaders, particularly in technology, have realised that not only running significant operations is untenable, but also that a more radical approach should be taken to move the bar much closer up the operating chain towards where the real business value lies.

Old sourcing models looked at drawing the line at functions such as Strategy, Architecture, Engineering, Security, Vendor Management, Change Management and the like. These were considered the valuable organisational assets. Now. I’m not saying that is incorrect, but what often has happened is that have been treated holistically and not broken down into where the real value lies. Indeed, for some organisations we’ve heard of Strategy & Architecture having between 500-1000 staff! (…and, these are not technology companies).

Each of these functions need to be assessed and the three questions asked. If done objectively, then I’m sure a different model would emerge for many companies with trusted service providers running much on the functions previously thought of as “retained”. It is both achievable, sensible and maybe necessary.

On the middle and front office side, the same can be asked. When CEOs look at the revenue generating business front office, whatever the industry, there are key people, processes and IP that make the company successful. However, there are also many areas where it was historically a necessity to run internally but actually adds no business value (although, of course still very key). If that’s the case, then it makes sense to source it from specialist provider where the economies of scale and challenges in terms of service (such as from “general regulatory requirements”) can be managed without detracting from the core business.

So, if you look at some of the key brands and their staff numbers today in the 10’s/100’s of thousands, it might only be those that focus on key business value and shed the supporting functions, that survive tomorrow.

Selecting a new “digitally focused” sourcing partner

Posted on : 18-07-2018 | By : john.vincent | In : Cloud, FinTech, Innovation, Uncategorized

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It was interesting to see the recent figures this month from the ISG Index, showing that the traditional outsourcing market in EMEA has rebounded. Figures for the second quarter for commercial outsourcing contracts show a combined annual contract value (ACV) of €3.7Bn. This is significantly up 23% on 2017 and for the traditional sourcing market, reverses a downward trend which had persisted for the previous four quarters.

This is an interesting change of direction, particularly against a backdrop of economic uncertainty around Brexit and the much “over indulged”, GDPR preparation. It seems that despite this, rather than hunkering down with a tin hat and stockpiling rations, companies in EMEA have invested in their technology service provision to support an agile digital growth for the future. The global number also accelerated, up 31% to a record ACV of €9.9Bn.

Underpinning some of these figures has been a huge acceleration in the As-a-Service market. In the last 2 years the ACV attributed to SaaS and IaaS has almost doubled. This has been fairly consistent across all sectors.

So when selecting a sourcing partner, what should companies consider outside of the usual criteria including size, capability, cultural fit, industry experience, flexibility, cost and so on?

One aspect that is interesting from these figures is the influence that technologies such as cloud based services, automation (including AI) and robotic process automation (RPA) are having both now and in the years to come. Many organisations have used sourcing models to fix costs and benefit from labour arbitrage as a pass-through from suppliers. Indeed, this shift of labour ownership has fuelled incredible growth within some of the service providers. For example, Tata Consultancy Services (TCS) has grown from 45.7k employees in 2005 to 394k in March 2018.

However, having reached this heady number if staff, the technologies mentioned previously are threatening the model of some of these companies. As-a-Service providers such as Microsoft Azure and Amazon AWS have platforms now which are carving their way through technology service provision, which previously would have been managed by human beings.

In the infrastructure space commoditisation is well under way. Indeed, we predict that the within 3 years the build, configure and manage skills in areas such Windows and Linux platforms will be rarely in demand. DevOps models, and variants of, are moving at a rapid pace with tools to support spinning up platforms on demand to support application services now mainstream. Service providers often focus on their technology overlay “value add” in this space, with portals or orchestration products which can manage cloud services. However, the value of these is often questionable over direct access or through commercial 3rd party products.

Secondly, as we’ve discussed here before, technology advances in RPA, machine learning and AI are transforming service provision. This of course is not just in terms of business applications but also in terms of the underpinning services. This is translating itself into areas such as self-service Bots which can be queried by end users to provide solutions and guidance, or self-learning AI processes which can predict potential system failures before they occur and take preventative actions.

These advances present a challenge to the workforce focused outsource providers.

Given the factors above, and the market shift, it is important that companies take these into account when selecting a technology service provider. Questions to consider are;

  • What are their strategic relationships with cloud providers, and not just at the “corporate” level, but do they have in depth knowledge of the whole technology ecosystem at a low level?
  • Can they demonstrate skills in the orchestration and automation of platforms at an “infrastructure as a code” level?
  • Do they have capability to deliver process automation through techniques such as Bots, can they scale to enterprise and where are their RPA alliances?
  • Does the potential partner have domain expertise and open to partnership around new products and shared reward/JV models?

The traditional sourcing engagement models are evolving which has developed new opportunities on both sides. Expect new entrants, without the technical debt, organisational overheads and with a more technology solution focus to disrupt the market.

Digital out of Home – a growth and innovation market

Posted on : 28-09-2017 | By : jo.rose | In : Cloud, Innovation, IoT

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The acceleration of growth in the digital out of home market (DOOH) is impressive. As providers switch from traditional mediums to digital based technologies and with creative technological advances, such as programmatic and Virtual Reality (VR) and Augmented Reality (AR), it is an exciting time for the sector. Indeed, in 2016 the market was valued at USD 12.52 billion and is forecast to grow to over USD 26 billion by 2023.

According to William Eccleshare, chairman and chief executive of DOOH media provider Clear Channel International;

Globally, press has collapsed, TV is static and radio has declined. Outdoor though has been growing steadily

This growth naturally brings opportunities for the large incumbents (such as Clear Channel) as well as new startups, but at the same time there are challenges to switch existing inventory to the new distribution mediums, transform legacy systems and business process, as well as the requirements to design scalable and secure digital networks.

As with all industries, the DOOH ecosystem is shifting to cloud based platforms to allow for businesses to both flex with demand and also deploy campaigns to audiences on a global basis. These platforms are capable of processing increasingly large and complex data used in the delivery of more targeted audience driven products, which are more cost effective and allows for better integration with external systems. Indeed, as the internet of things (IoT) gathers pace, this data requirement and inter-connectivity will continue to grow at pace.

Let’s look at some of the trends in a bit more detail

Programmatic: Firstly, there’s a lot of talk about programmatic advertising and it’s major influence in the overall DOOH market. The programmatic advertising platform is an online auction where media buyers specify their targeting requirements, such as audience demographics, time of day and location, as well as their budgetary constraints. In itself this isn’t particularly innovative, with other markets such as retail auctions and financial services offering for many years. What it will do though is put pressure on the players (and margins) current value chain, from advertising creative to distribution. It will also provide further pressures on the incumbents who carry more legacy technical debt.

Data is everything: whilst (within reason) signs themselves remain static, the data regarding audiences and how they interact with their environment does not. It constantly changes based on numerous factors, from the time of day, to the weather and external new events etc. With over 75% of UK consumers owning a smartphone, and checking that c.80 times a day, harnessing and correlating this data as consumers go about their daily lives creates value. This plays naturally into the hands of the tech companies and mobile providers who have access to resource, networks and expertise to exploit this value. Here the providers of the digital infrastructure have a real challenge to maintain a foothold and become an integral part of the chain rather than a consumer of more and more costly data.

User Experience enrichment: DOOH is providing more opportunities than ever to touch, interact and engage with valuable consumers; helping to bring brands to life in creative and digitally disruptive ways. In todays “Experience Economy”, it is estimated that 65% of 18-34 year olds are more fulfilled by live experience than possessions. Digital advertising is already interactive in a lot of senses, through simple NFC, QR codes, facial recognition, context awareness etc. and we expect further innovations in a connected context to develop at pace.

Augmented Reality: the first big AR sensation was Pokemon Go. Within a week of its launch last year more than 28 million people a day walking around town and staring at their screens to catch a Pokemon (much to the bewilderment of many onlookers). Now technology partner and advertisers are rightly excited about the potential. Tim Cook recently said of AR that it presented;

broad mainstream applicability across education, entertainment interactive gaming, enterprise, and categories we probably haven’t even thought of

Beacon connectivity: to facilitate the consumer personalisation journey and communication, beacons are becoming more prevalent through the DOOH infrastructure with presence in taxis, retailers, buses, billboards, kiosks etc. We see this further with Google’s Eddystone beacons to create proximity-based experiences for consumers as an open beacon format for both Android and iOS. These developments have shifted the trend towards a creation of a new channel of personalisation based on precision of time, location and so context based digital advertising.

It’s an exciting time to be involved in DOOH innovation with great potential for media tech disruption, but with some significant risks for traditional players, some of which will struggle to shift their operating model and compete.

 

 

Extreme Outsourcing: Should companies just keep the tip of the iceberg?

Posted on : 30-09-2014 | By : john.vincent | In : General News

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Recently I’ve thought about an event I attended in the early 2000’s, at which there was a speech that really stuck in my mind. The presenter gave a view on a future model of how companies would source their business operations, specifically the ratio of internally managed against that which would be transitioned to external providers (I can’t remember exactly the event, but it was in Paris and the keynote was someone you might remember, named Carly Fiorina…).

What I clearly remember, at the time, was a view that I considered to be a fairly extreme view of the potential end game. He asked the attendees:

Can you tell me what you think is the real value of organisations such as Coca Cola, IBM or Disney?

Answer: The brand.

It’s not the manufacturing process, or operations, or technology systems, or distribution, or marketing channels, or, or… Clearly everything that goes into the intellectual property to build the brand/product (such as the innovation and design) is important, but ultimately, how the product is built, delivered and operated offers no intrinsic value to the organisation. In these areas it’s all about efficiency.

In the future, companies like these would be a fraction of the size in terms of the internal staff operations.

Fast forward to today and perhaps this view is starting to gain some traction…at least to start the journey. For many decades, areas such as technology services have be sourced through external delivery partners. Necessity, fashion and individual preference have all driven CIOs into various sourcing models. Operations leaders have implemented Business Process Outsourcing (BPO) to low cost locations, as have other functions such the HR and Finance back offices.

But perhaps there’s are two more fundamental questions that CEOs or organisations should ask as they survey their business operations;

  • 1) What functions that we own actually differentiate us from our competitors?
  • 2) Can other companies run services better than us?

It is something that rarely gets either asked or answered in a way that is totally objective. That is of course a natural part of the culture, DNA and political landscape of organisations, particularly those that have longevity and legacy in developing internal service models. But is isn’t a question that can be kicked into the long grass anymore.

Despite the green shoots of economic recovery, there are no indications that the business environment is going to return to the heady days of large margins and costs being somewhat “consequential”. It’s going to be a very different competitive world, with increased external oversight and challenges/threats to companies, such as through regulation, disruptive business models and innovative new entrants.

We also need to take a step back and ask a third question…

  • 3) If we were building this company today, would we build and run it this way?

Again a difficult, and some would argue, irrelevant question. Companies have legacy operations and “technical debt” and that’s it…we just need to deal with it over time. The problem is, time may not be available.

In our discussions with clients, we are seeing that realisation may have dawned. Whilst many companies in recent years have reported significant reductions in staff numbers and costs, are we still just delaying the “death by a thousand cuts”? Some leaders, particularly in technology, have realised that not only running significant operations is untenable, but also that a more radical approach should be taken to move the bar much closer up the operating chain towards where the real business value lies.

Old sourcing models looked at drawing the line at functions such as Strategy, Architecture, Engineering, Security, Vendor Management, Change Management and the like. These were considered the valuable organisational assets. Now. I’m not saying that is incorrect, but what often has happened is that have been treated holistically and not broken down into where the real value lies. Indeed, for some organisations we’ve heard of Strategy & Architecture having between 500-1000 staff! (…and, these are not technology companies).

Each of these functions need to be assessed and the three questions asked. If done objectively, then I’m sure a different model would emerge for many companies with trusted service providers running much on the functions previously thought of as “retained”. It is both achievable, sensible and maybe necessary.

On the middle and front office side, the same can be asked. When CEOs look at the revenue generating business front office, whatever the industry, there are key people, processes and IP that make the company successful. However, there are also many areas where it was historically a necessity to run internally but actually adds no business value (although, of course still very key). If that’s the case, then it makes sense to source it from specialist provider where the economies of scale and challenges in terms of service (such as from “general regulatory requirements”) can be managed without detracting from the core business.

So, if you look at some of the key brands and their staff numbers today in the 10’s/100’s of thousands, it might only be those that focus on key business value and shed the supporting functions, that survive tomorrow.

 

How should banks target technology innovation?

Posted on : 02-09-2013 | By : john.vincent | In : Finance

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We have written a lot about the pressures on financial service companies and how they are responding differently in order to adapt to these challenges (such as are the banks Too Big to Succeed?, how to manage Technical Debt and are they Missing an Opportunity with Bank Accounts). What we see is one common theme emerging – the need for banks, wherever they are, to continue to innovate in order to protect existing markets, build share in emerging ones and service their clients in a new more agile way.

“Innovation” and “Agility” are words too often scattered liberally in corporate life through mission statements and strategic objectives…a strap line or comfort blanket for C-Level communities. Box ticked.

However, do we really consider the practicality of applying these in today’s environment? Do we modify and target based on situation? Important questions. Let’s consider further.

If we look at the mature financial markets there are a number of external pressures which influence and inform our ability to drive technology innovation. Here we see Risk and Regulation forming a large part of the technology discretionary spend, up to 60% some estimate. This naturally has a big impact on the investment portfolio and how much can be targeted for projects in the innovation category. Indeed, the impact is often disproportionate as resources in the compliance area, such as contractors and consultants, are often sourced from the premium end of the market, thus further eroding what remains. This is something that needs to be addressed, quickly.

Another factor affecting the mature markets is the continued pressure on costs and internal resource burden. Even if funding for nurturing innovation exists, the staff that understand the business AND underpinning technology often cannot be freed up from the day to day fight for survival (an example of where this is being addressed is at Aviva with the creation of their “Digital Unit”).

Contrast this with the start-up communities located close to the key financial hubs…here funding exists to focus solely on the new future technology innovations, such as mobile payments, big data analytics and data science.

In response to this, the larger banks are engaging with the start-up community to drive new technology, such as through the Fintech Innovation Lab – a 12 week programme running through to March 2014. Shaygan Keradpir, CTO at Barclays, said “The increasing role of technology in financial services is accelerating the pace and breadth of innovation and driving the kind of cutting-edge services which our customers and clients demand.”

By engaging in this way banks are more likely to have an agile approach to innovation to combat both their market challenges and not insignificant legacy infrastructure (indeed, only recently Barclays lost their key mobile guru behind PingIt to real-time mobile payments start-up, Zapp).

Switching to emerging markets, a different approach to how technology innovation is approached needs to be considered. Here growth is a priority…in South Africa 67% of the population do not have bank accounts. This represents a huge opportunity to both on-board and drive innovative solutions in a different way. Indeed, Standard Bank has implemented a system with local stores acting as “access agents” to provide South African clients access to bank accounts for deposits, withdrawals and money transfers. They are currently opening at a rate of 5000 accounts every day.

Again in Africa, it is predicted that countries such as Nigeria, Kenya and Tanzania will be at the forefront of mobile banking and payments. In fact, whilst they have been under developed from a banking infrastructure and telecommunications perspective, this is expected be a benefit as competition enters the continent and drives mobile platform innovation without the burden of legacy investments.

It is interesting to watch how technology innovation differs from market to market and country to country. Awareness of this, targeting the innovation portfolio and truly understanding agility are key.

Preparing for the emerging upturn

Posted on : 31-07-2014 | By : jo.rose | In : Innovation

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In this article, we consider the timing of the upturn and the implications for the type of change activity to be planned for and some key principles that help ensure success.

I thought I would start with a few sobering statistical observations: Post the 2007-2008 crash, the Gross Value Added by Financial Services and Insurance to the UK economy fell to below that of manufacturing and retail. Further, since GDP bottomed out in 2009, Financial Services output has generally failed to keep track with both GDP growth and other services output. Unsurprisingly, as the crash unfolded, participants in the industry decimated their change budgets as part of wider belt tightening measures.

More recently, official statistics point to the downturn being well and truly over.  However, are the effects of the crash still in evidence in respect of change investment confidence?

We would assert that many companies within the Financial Services industry remain uncertain about their medium term economic prospects as evidenced by a focus on investment in non-discretionary change, such as regulatory requirements, M&A integration, Business-As-Usual maintenance and on smaller scale efficiency or client improvements.

We appear to be sauntering, tentatively up to a turning point in the industry. The latest CBI / PwC Financial Services survey clearly shows optimism, employment and business volumes up across the sector, despite headwinds regarding banking capacity, regulatory and risk management investment, consumer distrust of debt and increased competition from new entrants and as a result of the internet.

As a result there will likely be some relaxation of change budgets, but from a much shrunken base. In the face of increased demand but probably only modestly increased budget, the requirement to invest wisely is more pressing than ever. This means doing only the right things and doing them well.

With a view to the future and a likely phase of modest economic growth, what additional considerations are there for change investment?

With reference to the latest CBI / PwC Financial Services survey, competition has emerged as the primary expected constraint on business growth over the next year. The business environment remains uncertain and so revenue growth will be both difficult to quantify and near impossible to ensure. This suggests investment priorities should be towards reducing the cost base where the impact upon the P&L will be easier to quantify and more realistic to achieve.

Nevertheless, the upturn means that investment in new sources of revenue will need to be made. However, given the business case uncertainty involved, it will be essential that any investments have measurable targets, are aligned with clear strategic goals and have strong sponsorship and accountability.

We would always advocate two broad principles to underpin any organisation’s change programme:

(1)       Sort out the macro agenda first. There is no point ensuring you are super efficient if you’re actually doing the wrong thing. It’s critical that the strategic agenda of the organisation can be traced down to every aspect of the change portfolio, however technical the change may appear at first glance.

(2)       Every aspect of the change portfolio should be owned by an internal customer. Those responsible for delivery aren’t great sponsors because they inevitably have to second-guess the needs of the business or function they are serving. Even overtly technical changes such as network resilience or data architecture improvements really should be owned by the business functions that rely on them.

In our experience, most of the good behaviours you need from an organisation derive from these two principles of operation, but few organisations fully observe them. Taking the time to consider business ambitions over, say, 3 years and to gain the buy-in to every aspect of the change portfolio really pays dividends in the longer term.

In summary, an inoculation plan for uncertain times should include:

  1. Define Strategic Plan: Ensuring the organisation has a clear sense of growth ambitions and business targets to act as focus for all organisational activity. This means having a clear understanding of how strategic targets will be achieved within every department and ensuring those departments have the process and infrastructure capacity to meet anticipated demand.
  2. Go for efficiency: Targeting operational efficiency as a means to maximising profitability. Given increased competition, asset growth by organic means might be difficult to achieve, so operational efficiency, whether it be through outsourcing, industry collaboration, reducing the product mix or process improvement should be on the agenda.
  3. Ensure delivery effectiveness: Having determined what market segments to target, speed to market, as determined by product development processes and infrastructure implementation needs to be optimal. Are contributing departments integrated and working as required?

Although easier said than done, these things can all be achieved through a combination of strategic planning, capability improvement and robust policy implementation.

Thanks to Graham Dash at Luminosity Services for this viewpoint.

If you would like to debate or add to any of the points raised in this article, feel free to get in touch through any of the communications channels below.

Email: graham.dash@citylsl.com

LinkedIn: graham dash

 

Graham is a Director of Luminosity Services Ltd, founded in 2009 to provide specialist consulting services to asset and wealth management companies, investment banks and the organisations that service them. Our leadership team, comprised of Graham Dash and Syd Wilkinson, have more than five decades collective experience in change management, most of it in leadership positions in tier 1 banks, asset managers and consultancies. Our specialisation is “change” – the ability to plan, manage and deliver business improvements. Please visit our website for more details.

Smartphone Wars – Android firmly in front

Posted on : 02-09-2013 | By : jo.rose | In : Innovation

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At the beginning of 2013 we published our 10 predictions for the year. At numbers 9 and 10 they included:

  • Samsung/Android gain more ground over Apple – “we already have seen the Apple dominance, specifically in relation to the Appstore, being eroded and this will continue as the potential of a more open platform becomes apparent to both developers and users of technology”.
  • The death knell sounds for RIM/Blackberry – “not much more to say. Most likely they will be acquired by one of the big new technology companies to gain access to the remaining smart phone users”.

Not everyone agreed (surprising in our view regarding Blackberry…) – but we thought that with the recent media focus now was a good time just to cast a few further thoughts.

A few weeks ago IDC published their worldwide phone tracker stats including the smartphone OS shipments (see below)

 

So, it looks like the Android is unstoppable at the moment with a 73.5% increase in the year to 2Q13, now commanding some 79.3% of the market. Whilst “technically” they were outperformed by Windows phone with 77.6% increase, the volumes pale in comparison.

On the mobile handset side, Samsung was the largest vendor in the world by a huge margin according to IDC’s data. The South Korea-based giant shipped an estimated 113.4 million cell phones worldwide in the second quarter to take 26.2% of the global market, up from 23.9% in the same quarter last year (Nokia retained the No.2 spot, but it handset shipments dropped 27% to 61.1 million units).

Apple sold 31.2 million iPhones last quarter which according to IDC represents 7.2% of the mobile handset market in Q2 (up from Apple’s 6.4% market share in Q2 2012).

It is rapidly becoming a two horse race, with Android representing more units in the last quarter than the entire smartphone market in the same quarter in 2012!.

Can IOS keep pace? On the current evidence it seems not. They are, however, still a long way ahead of the pack of which Windows phone seems the only credible each way bet.

So, on to Blackberry. BB10 hasn’t been the success that they desperately needed and will give the Windows Phone platform a boost. Indeed, as I write this article the rumour doing the rounds is that T-Mobile are stopping sales of Blackberry 10 devices in store and will offer online only…another blow.

Bert Nordberg, ex Sony Ericsson CEO and now on the board at Blackberry, is helping to shape the strategy going forwards, which includes operating as a more “niche maker of mobile hardware” and selling off certain assets. He recently told The Wall Street Journal “BlackBerry has cash and it has no debt, so I’m sure that we’ll piece something together”.

Not the most resounding endorsement or encouragement for Blackberry employees. The For Sale sign is firmly up…but the question is who will buy?