Infrastructure

07:00 AM
Tony Bishop
Tony Bishop
Commentary
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Bridging the Business-IT Chasm

As the new digital reality transforms every part of the financial services business, IT and the business had better get on the same page.

Financial services have a problem. As a new digital reality transforms every financial organization’s ability to connect, transact, collaborate, and support clients and partners, IT is becoming the mission-critical backbone of the business. The success of new business capabilities, products, and services is directly dependent on IT and its service delivery performance. Ultimately, IT’s delivery performance will determine both top- and bottom-line business growth.

The fundamental barrier to financial firms and their IT service delivery performance today is the lack of understanding of how the "day-in-the-life' of the business intersects and executes across the IT supply chain. The barriers caused by this "business-IT chasm" include limits placed on customer interaction, ineffective and inconsistent decision-making, slow reaction to market changes, and increased cost to do business.

The business-IT chasm typically happens at most organizations because of disconnected decisions and actions made by both business and technology leaders.

The business can be faulted for not providing the insight into how the business operates. For instance, IT is often left in the dark about how a day-in-the-life of the business operates. Often IT knows little about the full end-to-end execution path of a transaction or other business processes. Instead, each business function drives the application of technology, while IT folks build systems focused only on their areas of responsibility. This creates an incomplete view of business execution. For the best results, IT needs a complete view of the business process so it can achieve optimal system development.

IT organizations take this siloed input from the business and expand on the concept in terms of applications, data repositories, and infrastructure systems. Both a top-down and bottom-up conflict occurs. Application and data folks build their own vertically oriented capabilities. The infrastructure folks define and provision infrastructure based on their datacenter strategy of compute, network, storage, placement, power, cooling, and physical characteristics. This amplifies the silo disconnect, resulting in waste, quality of delivery barriers, cost limitations, and operational risk.

The strategy
An effective change strategy is to employ a common system thinking process conforming to day-in-the-life.

Specifically, how does the business originate, service, and fulfill the generation of revenue and servicing of customers? The dialogue needs to incorporate the definition of the value chain of the business and how various business processes transpire across this chain in a typical daily process.

Variations such a business calendar events, client behavior demographics, and wall clock changes must be identified and understood. As these points of view and understanding are gathered, it is essential to ensure that they are captured along with business driver linkages, key performance indicator identification, and any associated perceived deficiencies. Ensure all of this is accurately documented, reviewed, and signed-off by the business to help prioritize decision-making and support strategy creation.

Simply put, let's call this: “Know how you make money.”

Now the key is to not stop there. Business and IT need to then understand and correlate the runtime execution of the business processes across the IT supply chain. This means: How do transactions, service requests, fulfillment requests, marketing actions, content sharing, online collaboration, and financial and compliance reporting actually occur across the various components and processes of the IT systems located in the datacenter? So there is a parallel day-in-the-life execution model of IT that the business and IT must mutually understand.

We can call this: “Know what fulfills your money-making process.”

Once the day-in-the-life framework is defined and documented, it becomes critical that firms start to gather objective data on usage demographics (business and users using systems); performance demographics (how user experience performs across the systems and datacenters); economic demographics (which users on what systems consume what supply in what trended manner against what asset allocation/depreciation/acquisition strategy); system demographics (inventory, composition, inter-dependency, fungability); and IT standards demographics (application patterns standards, infrastructure pattern standards, deployment model standards, and systems management and monitoring practices). This should be captured in some kind of portfolio management system linking supply-and-demand behavioral models that have been captured through the process defined above.

Let's call this: “Know your supply chain components and usage.”

The next part of the day-in-the-life of the IT side of the house is conducting a capability assessment of the people and associated processes to build the supply chain, run the supply chain, and govern the supply chain. Here it is critical to profile, analyze, assess, and score on a competency, maturity, and alignment basis. Information gathered and scored here should include skills inventory, planning and design processes, build and operate processes, and govern and optimize processes. It is critical to get this current state documented and digitized to support critical decision-making and strategy planning.

Lastly, let's call this: “Know how you operate your supply chain.”

The four steps above provide the key linkages of a business value chain tied to an IT supply chain. This common dialogue and data collection creates a systematic approach to close the business-IT chasm firms face, while simultaneously enabling business transformation to support the new digital business paradigm.

The call to action
To some in the Wall Street & Technology community, the approach outlined above is a no-brainer. Others may believe it is unnecessary or not an effective investment of time. In either case, financial organizations are facing a digital revolution that will become a strategic lever of growth or a catalyst of demise. Organizations that employ a strong discipline and understanding of business value creation tied to IT capabilities will realize successful transformation strategies for their business and IT operations.

As Chief Strategy Officer at The 451 Group, Tony is responsible for integrating the firm's value chain to create maximum impact for its enterprise, vendor, and service provider clients. Additionally, he serves as co-head of newly formed 451 Advisors, a strategy, planning, and ... View Full Bio
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Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Apprentice
5/21/2014 | 5:50:10 PM
Re: Know the basics
I agree, it's up to the CEO and team to open the kimono, so to speak, to IT leaders and assimilate them. Not just for specific projects, but for always. Otherwise it's back to the default setting: silos.
Kelly22
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Kelly22,
User Rank: Author
5/21/2014 | 11:42:38 AM
Re: Know the basics
It is tough to believe that business and IT execs don't recognize the importance of their overlap, especially at a time when every part of the business depends on IT to thrive. I think your mention of customer service is also key; as tech-savvy consumers demand greater service, business and IT will need to collaborate in order to meet their expectations. 
Alison_Diana
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Alison_Diana,
User Rank: Apprentice
5/21/2014 | 10:33:17 AM
Re: Know the basics
IT professionals cannot thrive simply by knowing how to program, debug, or install. They have to learn the business in which they work, be it finance, insurance, or healthcare. Without this, they cannot communicate with their customers -- the end-users in the business units who bring in the income that finances the organization. It's incumbent on IT managers to empower IT pros to learn and for IT pros to learn on their own, too.
ChrisMurphy
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ChrisMurphy,
User Rank: Apprentice
5/21/2014 | 10:19:55 AM
Re: Know the basics
This chasm doesn't bridge itself. Executives have to force together IT and business decision makers who are at a level that is close to the business needs and pain points-- and then let those teams make decisions of what they need to do and let them do it.
RobPreston
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RobPreston,
User Rank: Apprentice
5/21/2014 | 10:06:48 AM
Re: Know the basics
The author states: "To some in the Wall Street & Technology community, the approach outlined above is a no-brainer. Others may believe it is unnecessary or not an effective investment of time." Those in the latter camp -- those who don't think it's worth their time to align technology with business goals, especially as they involve serving and delighting customers -- are doomed. In this day and age, it's hard to believe that individuals and companies still think that way. 
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
5/21/2014 | 9:13:55 AM
Know the basics
I used to be shocked at the number of IT workers who knew nothing about how the business operated (nor did they care to learn). I'm also shocked at the number of business users who dismiss or disregard technology, as if it is beneath their level or not important to the success of the business. I find this even today, when every part of the business depends on technology.


Getting to know as least the basics about how the firms makes money is important, in the same way that business users should have a basic understanding of the technology that supports them. No one is asking developers to come up with a trading strategy, and no one is asking a trader to write code. But, some form of basic understanding is needed.

 

 
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