What the hell is a terabyte anyway?

Executives at Canadian financial service firms surveyed by Deloitte & Touche LLP say IT managers need to do a better job of explaining the business benefits of technology and need to be more involved in business decisions.

Deloitte on Tuesday released a report, titled “Running IT as a Business,” which was based on interviews with 21 decision makers at Canadian banks, insurance companies and credit unions.

Eighteen said IT staff should be included in the planning process, and 15 said a “shared understanding of IT issues and performance metrics” would be helpful for senior managers trying to figure out how to reduce costs without sacrificing “critical” services.

Most of the executives surveyed were chief information officers, though Deloitte also quizzed senior vice-presidents and directors, said Terry Stuart, a Deloitte partner and the firm’s leader of national consulting financial services.

Deloitte said respondents to the survey, which took place both over the phone and in person between September and November, 2007, said IT staff need to define service offerings and measurements in business, rather than technical terms.

For example, Stuart said, explaining processing power by millions of instructions per second (MIPS) or storage capacity in terabytes may not be helpful to a business person.

“If you explain, ‘I’m storing a million customers’ five year history,’ I understand that. It’s based on how many customers I have, how much history I have, that starts to get it into more business consumable and business controllable terms …”

He added processing power could be explained in relation to transactions, rather than MIPS.

“Technology has historically done a poor job of that translation and linking to business value,” Stuart said. “People got excited about Web services and SOA computing. There are business values to that but the technology side of the house did not do a great job of articulating what those were.”

More Deloitte studies in ComputerWorld Canada

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The survey also found many IT projects had cost over runs and were not completed on time.

Though some experts recommend an “agile” approach to project management, Stuart said for financial service firms, this has to be balanced against the needs of proper governance.

“There are large bank projects, where you need to put heavy degree of governance and project management in place,” Stuart said. “There are other much smaller, much more contained initiatives that you can have a lightweight, more nimble methodology. Agile fits some types of projects, it doesn’t fit others. You have to adapt your IT governance approach to the problem at hand.”

In the Deloitte survey, 16 executives said investments in IT initiatives that do not align with business value are a waste of time, money and resources.

At recent a conference in London, England, a speaker said some securities trading firms spent large amounts on technologies that made online trading faster but had dubious value.

John Bar, research director at 451 Group, which hosted Enterprise Computing Strategies Summit, said reducing delays in electronic trading was vital but warned that traders were often spend disproportionately on systems and messaging networks at a cost far greater than the financial benefit gained.

“It’s important to be clever about how you invest in improving speed,” he told an audience of IT executives. “You need to know where any latency is coming from, and ask yourself if it’s serious. If it is, you can then identify the hot spots and optimize them.”

PJ Di Giammarino, chief executive at think tank JWG-IT Group, agreed that traders needed to make better plans before investing in technology. “If you spend for spending’s sake, and if you’ve got to be the fastest just to boast, it’s not going to work. You have to look at the value you’re getting back,” he said. “This industry wastes a lot of money on technology.”

But Hirander Misra, chief operating officer at alternative stock exchange Chi-X Europe, said the question over speed would not go away. “Traders feel they should be as close to the exchange as possible, and as quick with trades as they can, especially for high frequency players such as hedge funds,” he said.

“Each of their trades is becoming smaller because of algorithmic trading, so there are more trades in more areas, with more messages. That’s why they need to optimize speed.”

With files from Leo King

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