January 03, 2013

2012 has been an eventful year in capital markets. Amongst many other things, it’s been marked by some spectacular blow ups resulting from poorly released software. In fact, Wall Street firms don’t have a good track record when it comes to this, with releases frequently destabilizing systems, introducing new bugs and upsetting business operations. But this needn’t be the case. Taking a lead from the business to consumer (B2C) industry, and the development of DevOps in particular, can help overcome some longstanding issues.

At the heart of the problem in capital markets is the clash between IT Development and IT Operations, the teams charged with making and implementing new releases. The IT Operations team has a tough job. Its primary goals include software release, system stability, reliability, scalability, availability and support. It’s often a thankless task, but critically important. By definition, this team does not like change. The fewer software changes it needs to deploy, the happier it is.

On the other hand, one of the IT Development team’s primary goals is writing code to facilitate change and enable new business activities: developers are paid to make changes. So there’s a fundamental conflict here where team goals are not aligned. These problems are nothing new, but as capital markets infrastructure becomes more and more dependent on technology to become agile and maintain competitive edge, they are becoming magnified. This is where a look at the B2C industry can help.

In a B2C environment, instead of one-off, ‘big bang’ releases, organizations make numerous production releases per day. Each release has a smaller impact due to the smaller number of changes, meaning a release is not a big deal. Development and operations teams together respond rapidly to the needs of the business – and they need to: these industries are highly competitive, with lower margins and increasing volumes. DevOps is a new term that’s emerged from the B2C industry to describe this collaboration between development and operations. It allows operations to spend less time troubleshooting problems and more time designing how applications should be configured and managed.

As in the B2C industry, businesses operating in capital markets are experiencing declining margins, increasing volumes and have a critical need for efficiency and technology innovation. As a result, software developers need to build software that visualizes new business concepts quickly and efficiently. Once built, the same agility is required to bring the software to market, and to evolve it so that a firm keeps up with the latest industry developments.

The regulatory and compliance demands on capital markets firms are a good example of how DevOps can help here. New regulations keep coming into force; deadlines for compliance are forever looming. For a firm to respond effectively, business requirements need to be understood and the software to address them developed, deployed and released to production rapidly.

Regulations are often modified, however, and so formats need to be tweaked, new reporting tools created and corrections made. What should firms do – set off on another six month project to fix everything? Rather, it would be better if firms’ IT organizations followed a DevOps model, continuously evolving software and making small, incremental changes that are easy to develop, test and deploy.

DevOps has until recently been a grassroots initiative. But it should now be viewed seriously by IT management in capital markets firms as an effective approach to tackling the challenges facing their IT organizations. Just like in the B2C environment, capital markets software releases should be more frequent with smaller changes. This should result in less risk and more confidence that the blow ups that have been a feature of 2012 will be avoided.

—David Chapman, partner, Sungard Global Services