Has technology outpaced internal IT departments?

Posted on : 31-10-2013 | By : john.vincent | In : Data

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In technology we love to put a box around something, or define it in a clear and concise way. Indeed, it makes a lot of sense in many technical disciplines to do this, such as architecture, development, processes, policies, infrastructure and so on. We talk about “the stack”, or “technology towers“, or “Reference Architectures”…it provides a common language for us to define out compute needs. “This switch operates at layer 3 versus layer 2” etc…

In the same way we put our technology human capital into nice, neat boxes. Simple, repeatable stuff: 1) Open up Powerpoint…2) Insert SmartArt…3) Hierarchy-Organisation Chart…and away we go. CIO , next level… Head of Infrastructure, Head of Operations, CTO, Head of Applications, Head of Networks, Architecture, COO (can’t have enough of those)…

The general taxonomy of technology organisations has barely changed since the mid 1980’s and actually, until maybe the last 5 or so years, this has been fine. Whilst technology has evolved, it has done so “within the boxes”. We have gone through shifts in operating model and approach, from mainframe to distributed and back again, but the desktop, data, storage, server, mid range and so on services have remained and with it the support organisations around them.

However, things are somewhat different now. The pace of change through Consumerisation, Commoditisation and Cloud (the 3Cs) has redefined the way that businesses engage and capitalise on technology in work and home lives. At the forefront in comes down to three main business drivers:

  • Increased Agility – access to applications and service provisioning should be as close to instantaneous as the laws of physics will allow
  • Increased Mobility – the ability to access applications anywhere, on any device at any time
  • Increased Visibility – a rich data and application environment to improve business intelligence and decision making

To the end user, everything else is just noise. Security, availability, DR, performance, big data analytics…this just gets sorted. Apple does it. Amazon does it, therefore my IT organisation should be the same. In fact better.

So, how does the traditional IT organisation fit with the new paradigm? Well the 3c’s certainly provide significant challenges. The issue is that you have something that was previous contained within a silo now breaking down the barriers. Today’s compute requirements are “fluid” in nature and don’t fit well with the previous operating models. Data, once centralised, contained and controlled, is now moving the the organisational edges. Applications need to be accessible through multiple channels and deployed quickly. Resources need to scale up (and down) to meet, and more importantly match, business consumption.

How does the organisation react to these challenges? Does it still fit neatly into a “stack” or silo? Probably not. How many people, processes and departments does the service pass through in order to provision, operate and control? Many in most cases. Can we apply our well-constructed ITIL processes and a SLA? No. Can we scale quickly for new business requirements from a people perspective? Unlikely…

So what is the impact? Well, it wasn’t that long ago that CIOs spent much of their time declaring war on Shadow IT departments within business functions. With “Alex Ferguson-like” vigour they either moved them into the central technology organisation or squeezed them out, through cost or service risk.

However, it seems that the Shadow IT trend is back. Is this a reaction to the incumbent organisation being unable to provide the requisite level of service? Probably.

I guess the question that we should ask is whether the decentralised model giving more autonomy to business users, for certain functions, is actually where we should be heading anyway? Even within IT departments, the split between ownership, definition and execution of services has evolved through global standards and regional/local service deployment.  Now perhaps it’s time to go further and really align the business and technology service delivery with a much smaller central control of the important stuff, like security, architecture, under-pinning services (like networks), vendor management and disaster recovery.

And then there’s the question of who actually needs to run the underlying technology “compute”. The cloud naysayers are still there although the script is starting to wear a bit thin. There are very few sacred cows…can internal teams really compete long term? The forward thinking are laying out a clear roadmap with targets for cloud/on-demand consumption.

The old saying of “we are a [insert business vertical], not an IT company” is truer today than ever. It may be just that it took the 3cs to force the change.

Business IT Alignment and the 3 ‘R’s – Rationalisation, Regulation and Ring-Fencing

Posted on : 24-06-2011 | By : john.vincent | In : Innovation

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Delivering IT within Financial Services organisations doesn’t get any easier. Just as technology services look to simplify and commoditise through maturity and new innovation, along comes a whole bunch of hurdles to overcome driven by economic, social and political circumstance. For many years we have talked about the alignment of Business and IT but never before has it so been important to step up the engagement to a seamless, symbiotic relationship.

Organisational objectives such as Cost, Risk, Quality and Agility and the associated measurements thereof are scattered liberally in the SMART’s of support functions throughout the industry. And yet, couple that with what is often a disconnected business strategy and a culture of short-term meritocracy and it doesn’t take too much intellectual wisdom to realise that something needs to change. Sound familiar ?

So let’s look at some of the current challenges facing business and technology leadership.

1) Rationalisation – by definition “The process of reorganizing and overhauling a company’s operations, policies, and anything else needed to make the company more efficient”. Within FS we’ve been undertaking this for a number of years. Indeed, objectives have been set top down throughout the technology organisation with a year on year increase in weighting. Headcount has been reduced, delivery organisations merged, Capex spend limited, contracts renegotiated, services moved to “best shore” locations etc… However, this only goes so far before a new approach is required and of course, you can’t “shrink yourself to success”.

2) Regulation – as we meet with different organisations one thing is very clear – the increase in regulation and their impact on business and underlying technology services is a constant challenge for organisations. We’ve already been through numerous regulatory and compliance implementations in the past and it isn’t slowing down. We will need to understand the implications of Basel III, Dodd-Frank and FACTA ( Foreign Account Tax Compliance Act ), to name but a few. All of these are being introduced for good reasons and it is vital that the business and technology organisations are closely aligned to determine what are the key implications for systems and processes.

3) Ring-Fencing – it is a matter of opinion as to whether the Independent Banking Commission went far enough with its interim report around future requirements to segregate the business activities of investment and retail banking. What is clear is that again business and technology organisations need to jointly determine the impact now that it seems almost certain they will be endorsed later this year. In order to facilitate ‘retail ring fencing’ there will need to be significant operational and systems changes that would need to be undertaken by each individual bank. As the Commission sets out, there are some functions that should not be ring fenced (related to investment bank) and those that should (relating to retail banking) – the challenge is that there are many shared services across universal banks that service both these areas and would need to be separated if retail banking activities are to be ring fenced. The greater the costs and complexity of ring fencing operations, the longer such changes will take and the more potential for disruption to everyday banking services.

Many organisations will have advanced thinking on the 3 ‘R’s but it is worth taking time to consider certain aspects.

In terms of Operating Model, we feel that the following dimensions require special attention:

Business Alignment : is the model in terms of governance and process connected throughout the organisation to the business consumers of services ? Often we have committees for Run The Bank and Change The Bank investments, but do changes in business activities in terms of scope or volume have a predictability in terms of the associated changes ? Understandably there is a large amount of sunk or fixed cost but it is important that the actual “existence” of all technology assets is understood and coupled to business value.

Service Agility : how efficiently can services be reconfigured as a result of an external change in circumstance ? The focus around costs has led many Financial Services technology organisations to realign operational services from a vertical to horizontal model for internal synergies. Clearly some services are common and therefore this rationalisation move makes sense. However, there is also a risk of making any future Ring-Fencing requirements more complicated and costly. Considering the Business Alignment imperative in conjunction with Service Agility should be the cornerstones of future operating models.

Strategy and Architecture : all organisations have a strategic roadmap for technology and services. However, there are two important questions to ask. Firstly, how mature are we in terms of Enterprise Architecture and the governance thereof ? Often, EA is a pseudonym for Infrastructure or Application Architecture. True Enterprise Architecture considers all aspects of an organisations business activities and can drive innovation, reduce risk and deliver efficiencies if placed in close proximity to the strategic business model.

Secondly, how far out does the strategy look ? In a recent conversation a senior banking leader discussed the need for FS organisations to look much further ahead, akin to the way that Shell does it’s Scenario Planning. Is it feasible to look 5, 10, 25 years in advance ? Conventional wisdom says not in terms of technology… but by considering all environmental, political and economic influences and overlaying the technology aspects then the different paths can be drafted in terms of “Signals and Sign-Posts” for the future operating model.

Risk Management : Disaster Recovery and Business Continuity Planning are well embedded and typically mature with FS. The journey to Service Recovery is understood. However, similar to the Scenario Planning, an increased awareness and vision is required throughout the organisation in terms of the myriad of external impacts to the world we live in and subsequent organisational response. We don’t have to list the surprises of the past 5 years…can we predict what’s next ?

Sourcing : where are services sourced from, whether internal or external, is driven by a number of factors including culture, compliance, cost and innovation. As we think about a more long term and holistic operating model, not just about technology or operational services, how does the way we deliver services mirror the 3 ‘R’ influencers ? Shared Service models or Joint Ventures may be key providing they have the correct construct in terms of commercial, flexibility and partitioning of delivery. Technology advances can help in this, with cloud computing well on its journey along the “Gartner Hype Curve”. The ability to source services in a more on-demand / scalable way provide choices for application provisioning for business consumers, notwithstanding the well known attention areas.

In summary, perhaps it’s time to step back and think about the future. The 3 ‘R’s are, of course, only the basic foundations.