Blade Watch

Finextra

Inflexible IT systems and bottlenecks in technology development are the two greatest barriers to innovation at European retail banks, according to research from Infosys. Meanwhile, a separate report from the Indian vendor reveals nine out of 10 US banks think IT is vital to innovation.

Working with the European Financial Management & Marketing Association (Efma), Infosys surveyed senior managers from 89 banks in 26 countries across the continent.

Over three quarters of those polled think the importance of innovation is high or very high for both growth and efficiency, yet just 37% say they have a clear strategy. In Western Europe less than 15% have a department responsible for coordinating innovation.

More than 80% of banks think IT is either important or very important for innovation but it is also seen as the biggest barrier. Inflexible systems and IT bottlenecks were cited as the biggest barrier, ahead of regulation and compliance and investment concerns.

It’s a number of things, the concept that is IT hasn’t moved on with the times, IT was happy ’selling boxes’ and doing IT support, the business were happy leaving it to IT, and there wasn’t specific innovation in terms of best practice, of cost clarity or compartmentalization, it was avoiding rocking the boat. As the technologies, the possibilities and the business requirements changed though, we started to ask the questions, but can’t we do this? To often to hear the answer, yes but that’s not how we do things hear, or yes but you will need to be on Windows 2000, NT4 doesn’t support that.

We need to do a few things:

• Change the nature of IT towards a service delivery and operating cost based mechanism to power the business in its revenue generation – choosing the option that is closest to the business need and the most efficient in terms of energy consumed and operational costs.
• Change the IT teams to a model which works best for your business with fewer management layers – the CIO just does not often hear what goes on until it is too late, or often is not aware of the issues that the guys on the ground are having because it is not in my interests to say it’s not working for my team as a manager.
• Evaluate what our objectives are, what our barriers to success are, and of key importance what our key systems and deliverables are. Once we have that we can then relate that to where we are with our technology today and where we want to go tomorrow.
• Evaluate what our IT is doing right and doing wrong – have we changed our teams (and possibly our structure) to be a 24/7 business or are we working on 9-5 with escalation for on call? As the systems get more complex, need to be more available, do we not need to look at things like data center tiering, like follow the sun support and the global windows server team, the global storage team rather than “London servers speak to London windows guys”, fine during the day but rubbish in terms of response and delivery at 3am.
• A change of mindset to the end users and the business units running their IT – we are now in the big boys IT league, if you want to run your application that is fine. The requirements are, that it can be virtualized, it can run in a Citrix/web/grid infrastructure solution, that is operating system and middleware independent. If  it requires legacy hardware with legacy operating systems and database, we either need to examine your business requirements and put in a replacement system, or we need to examine how important that requirement is to your business. We need in essence to bring an end to the marginal IT scenario, where one business activity requires a large amount of support and energy costs for relatively low revenues.
• Change our workflows and best practics, the way we log calls, how they get logged and what activities we take to resolve – an agreement on best practices to establish the minimum standards for support and the way forward in terms of reducing our costs. Simple concepts like lifecycles that are enforced, the end to legacy desktops running applications under someones desk, the end to running legacy systems when we can virtualize the hardware and reduce our power and hardware support costs.
• A move towards data center 3.0 where we move to virtualize the data center, the storage, the server and the network, where I can move workloads around the enterprise, where London can power New York, where if my batch is delayed, I can simply move part of the workload to my development data center, or the one in Hong Kong outside of business hours – the move to a fluid enterprise.

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