Transparency in Tech Spending

Transparency in spending corporate funds has been - until recently - "nice to have." The change from "nice to have" to "need to have now" has been well publicized, on the heels of fraud cases like those involving Enron and Worldcom, and it has crystallized in the form of the Sarbanes-Oxley Act of 2002.

Organizational Structure

Financial organizations have grown increasingly large and cumbersome as a result of mergers and acquisitions. In tandem with this, technology requirements have grown increasingly sophisticated and complex. As always, managers, operating within this environment, are required to balance their organizations' immediate technology requirements with their long-term strategic needs.

Mere intuition and experience are no longer sufficient, however, to ensure that these competing objectives are aligned when working in such a complex world. The absence of a framework to address the inherent conflict between short- and long-term goals and different business-area objectives can fatally impact the ability of Wall Street firms to create transparency in technology spending.

What is most important to a business-area managing director is unlikely to be the same priority as that which is most important to the enterprise CIO. And business-area CIOs may place immediate business-area needs ahead of the overall organization's stated technology architecture goals without considering the impact on the institution's long-term strategy.

Charles Handy reasoned in his article "Balancing Corporate Power: A New Federalist Paper" (Harvard Business Review, 1992) that, "If three functions are combined in one body, Governance, Management and Monitoring, the short term tends to drive out the long with month-to-month management and monitoring efforts stealing the time and attention needed for governance. The big decisions then go wrong."

Handy had insight into a problem that exists in many organizations today: Business managers want IT to implement what they are told to implement and do not necessarily see a synergistic relationship between IT and the business. This leads to difficulty in managing and tracking the technology budget; an inability to commit to long-term technology plans because they get circumvented; an unclear technology roadmap due to "islands" of automation; and unpredictable resource needs since planning is done "on the fly."

Without PPM governance and monitoring, these symptoms only get aggravated over time, and the potential for transparency remains limited. While Wall Street organizations have grown increasingly complex, so too have their IT projects. Below, we look at how three key attributes of particular relevance to Wall Street firms can add to a project's complexity and increase its ability to elude transparency: size, multiple business objectives and impact on more than one business area.

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