Blade Watch

Finextra

The reluctance of banks to place innovation at the centre of their strategy is partially a result of pressure from governments, regulators and consumers, which is making some firms risk-averse and “creating a culture of introversion and inflexibility,” according to Richard De Lotto, principal research analyst, Gartner.

“The predominant view of IT is that it is only useful for cutting costs so tactical thinking about automation and rationalisation overwhelms longer-term decision and strategic plans and goals,” he says.

Check out this article talking about banks being reluctant to try new technologies, it’s an interesting read, there is a mixture of reasons for aversion to change. People don’t tend to like change anyway, but there can so easily be the mindset of don’t change something that is not broken, the unexpected, coupled with organizational issues around ownership, budgets and control. The old way of doing business, of IT providing servers, network and storage, gives individual business units control, allows them to clearly see that server17 is used for risk calculations, nothing else, that it is left alone until they ask for something to be changed. The problem is, the individual business unit cost mentality and aversion to risks costs us more in operational costs and inflexibility, that when front office is busy, I cannot simply allocate more resources to it because back office own their back office servers, their storage and connections.

Only as we start looking at ‘IT as a business’ can we start looking at two things the greater good economically and operationally, combined with business flexibility.  Only then can we be seeing what it is we are spending our money, do we see that Bob from accounts spent $400 on memory for his four year old HP pc because he didnt’ want to spend $400 capex on a new machine.

We need to break down the costs, the support structure and move to a lowest overall cost concept, anything out of warranty replace, no questions, no debate, combined with virtualization of the infrastructure and the application.

We can still provide each business line with its own infrastructure, its own 72GB SCSI disk in its own server in its own cabinet, but from a cost standpoint, from a transaction cost is that what we want to do? Do we not want to be moving to more dynamic technologies, more dynamic ways of running IT? Should we not be sharing resources where we can, operating internal clouds and looking at the application map rather than deploying the same solution regardless of the business requirement – Fred from accounts wants to host a web site gets a DL380 when what he actually needs is some cpu time, a few hundred megabytes of disk space and an ip address on anyone elses server?

We have commoditized the IT, the server, the network and the storage which is a good thing for the end user, it gives flexibility and affordability. Now the next step is to take these concepts into the enterprise, coupling with tiering of the application to the point where we have the value concept:

• Tier1 – always on – in the always on data center, on the always on infrastructure, possibly grid or virtualized, using redundancies and failover technologies/best practices – world ending, corporate web site/trading system down.
• Tier2 – always on with high availability and failover services in slightly less redundant and expensive data centers – back office processing/end user disruption, semi world ending.
• Tier3 – always on but with resilience, if the service goes down, it impacts, but it is not world ending.
• UAT/Dev – this can be as important as Tier1 in terms of development time and time to live, the business constantly want innovation, enhanced functionality, bug fixes, more power, more of this stuff, therefore a development system outage might delay onboarding that new platform, adding more functionality or platforms for end users – how do we benchmark the importance of this in the scheme of things. Do our applications not define our business, services and pricing mechanisms?

I wonder though two things, do we not need more:

• Follow the sun/follow the moon concepts – use the technology we have more effectively, and switch it off when we don’t need it – have the application and the data center follow the sun, or have the data center powered wherever it is cheapest in terms of power?
• More personalized, more regionalized services in the financial services industry, have we not moved to the commoditized computer says no type solution only to find that we might be moving back again? People like the human touch, the local branch to speak to people, we can remove that to a certain extent – is this not where kiva/zopa come into play?

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