Scratch the surface of any financial services firm and you’ll find IT intimately involved, from basic processing to strategic decision-making.
IT accounts for US$900 billion of the global value of financial services, around 16 per cent of the industry’s capitalization, according to strategy and risk management consulting firm Mercer Oliver Wyman.
That technology involvement has been described somewhat differently to Calgary-based Bas Wheeler, now CEO of Celero Solutions, a joint venture between five prairie cooperative organizations. He recalls his boss telling him when he was CIO of a financial institution that IT is three-quarters of the company and 95 per cent of the headaches.
After staff costs, IT is probably the next biggest cost item in a financial institution. Keeping that cost under control while improving the business value of the IT investment is a constant struggle that may only get worse. Mercer Oliver Wyman claims most financial services firms today have neither the governance regime nor the execution capabilities to make innovative IT investments pay off or to successfully exploit emerging opportunities. Of those that do, surely some will be your competitors.
Now as CEO of an organization providing IT services to several hundred credit unions, Wheeler has developed some strategies for reducing the IT headache pain.
One is to manage expectations. This entails dispelling the notion of technology being black magic or even a magic cure. And, he says, it involves handling requests prompted by the “frequent flyer university” — reports in in-flight magazines of solutions that cut costs an amazing 50 per cent!
Another pain reducer is to have a plan and guidelines around what will/won’t be acceptable in a given environment, and to try to build standards and architectures that will support the institution in the long run. This is one of those alligator-infested swamp-draining challenges, but it is clearly essential to determine what architecture and infrastructure will support long-run goals while addressing short-term needs that don’t necessarily fit into the overall architecture.
That brings us to Wheeler’s third anti-headache pill: to get out in front of the business challenge. He believes business units and IT folk working together will avoid two unacceptable scenarios. One is the former deciding what they want to do and then turning to IT staff to support that and launch it tomorrow. The second is the IT department delivering technology and leaving it up to the business people to figure out how to get the benefit. Working co-operatively and earlier on in the process is critical to maximizing the business value of IT.
These and other strategies highlighted in this issue will hopefully help you make IT less of a big part of a problem and more a major part of the solution as you seek to improve the efficiency and profitability of your organization.