cio shaping the future of f

8/11/2019 Cio Shaping the Future of f

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2002 Deloitte Consulting. All rights reserved.

AFICIO NADOSChief Information Of cers:

Shaping The Future of Financial Services


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AFICIO NADOSChief Information Of cers:

Shaping The Future of Financial Services


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ITS MORE THAN JUST A CAR

Say the word a cionado and peoplethink of passion. For things likecigars. Or wine. Or even vintagecars.

But no matter what the source oftheir passion, a cionados approachtheir specialties with enthusiasmbordering on obsession. They delightin their chosen elds and they pur-sue a level of intimate understandingthat would boggle the minds ofcasual observers.

So it is with CIOs in the nancialservices industry. A cionados. Menand women who are driving funda-mental changes in the very structuresof their businesses. Having evolvedfrom yesterdays technology suppli-ers to todays information servicesbrokers, CIOs are bringing freshpassion, power and purpose to their

work.

And passion is needed. The role haschanged and CIOs are at a critical

juncture. A combination of nan-cial and organizational savvy with ainnovative approach to technology

will differentiate the strategists fromthe managers.


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TABLE OF CONTENTS

Passion Under Pressure .........................................................................1

The CIO as a Broker/Dealer .................................................................3

How. How. How. How. .........................................................................5

Organizational concertina ................................................................7How can I miss you when you wont go away? ....................................8

Optimum minimum ........................................................................9

Meet Miss Alignment .......................................................................10

Dear occupant .................................................................................11

Between a rock and a hard place.........................................................12

Mind the gap ....................................................................................13

Ch-ch-ch-ch-changes ......................................................................14

Passion, Power and Purpose ..................................................................15


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1 2

PassionUnder

Pressure

Its hard to say which came rstfor todays nancial services CIOs the passion or the pressure. But

whichever way you look at it, bothare pretty intense. On the passionside, the opportunities for innovationare limitless. For CIOs who revel inbuilding a better mousetrap, there isan endless supply of tools and enoughmice to last a lifetime.

But the pressure has been enormous,too. Merger integration. Straight-through processing. Strategiccost reduction. Retail branchrefresh. Technology optimization.Consolidation of customer touchpoints. Resilience. Continuousimprovement and six sigma. Plus inmany cases, failure in delivering truevalue relative to historically large ITspend.

It is against this backdrop that CIOshave had to build organizations thatcan respond to change, create value,and enable the strategic intent of theenterprises in which they operate.

It would be hard enough to do all ofthis in the best of times, but throw inan economy thats going down thetoilet and, well, that calls for passionunder pressure.


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The CIO asBroker/Dealer A CHANGING ROLE

Traditionally, the CIO has beenseen as a provider, or dealer oftechnology services. Be it applica-tion development or changes to thetechnology infrastructure, the CIOhas mobilized in-house resources tofacilitate business and technologydemands.

Times have changed. CIOs now havea myriad of different options open tothem in terms of meeting the tech-nology demands of the organization.From outsourcing to shared servicesand off shoring, the CIO is nowplaced in the role of a broker oftechnology capabilities, selecting thebest option for the speci c job.

This new broker role enables theCIO to be far more exible in meet-ing business demand. A CIO canassess the technology capabilities

of their organization based on thisnew mix of xed and variable costoptions. This maximizes the oppor-tunity to create a exible, nimbletechnology organization which canquickly match uctuating levels ofbusiness demand.

And so to the broker/dealer. Howdo you go about shrinking andgrowing your organization? Howdo you manage the risks associated

with outsourcing? And the oldfavorites, such as the proliferationof applications and underperformingtechnology investments, have notgone away. So, with the changingrole what is the agenda?


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When passion, power and purposeconverge, a nancial services CIOhas the opportunity to dramaticallyupgrade not only the performance

of the IT organization, but also theperformance of the entire enterprisesurrounding it. The former just hap-pens to be the most direct path to thelatter.

CIO a cionados in the nancialservices industry face four key ques-tions.

q How do we become client-focused and value-based?

q How do we create break-throughs in operationalexcellence?

q How do we ef ciently handlethe basics . . . keeping the lightson?

q How do we reposition for cost-effective and cost-competitiveperformance?

Because none of these questionscan be addressed without affectingthe others, CIOs also face the deli-cate task of managing the interplay

among the con icting priorities andtechnical requirements inherent ineach. From the growing pressures tooutsource and reduce costs on onehand to the escalating demands forresilience and business continuityon the other, CIOs are juggling anincreasingly complex set of variables with the enterprise itself at stake.

The business of nancial servicesand the business of IT are rapidlybecoming indistinguishable from oneanother. And CIOs are straddling thisconvergence.

HOW. HOW. HOW. HOW.THE AFICIONADOS AGENDA

Keep the lights on

OperationalExcellence

Cost effective /cost

competitiveprovider

Client focused&

value based

CRM

CostReduction

IT ValueOutsourcing

OptimizingIT

Organization

Integration Architectures

Resilient

Infrastructure

PlatformConsolidation

TheCIO

Agenda


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How can you create an IT organi-zational model that can shrink andgrow, like a concertina, in response to

business demands without havingto restructure your organization everyother month? Focus on these threethings.

Resources. Get the mix right.Identify potential resources bothinternal and external for all therequired roles in your organization.Rely on external resources, especiallyin roles that do not create competitiveadvantage, so you can respond moreeffectively to changing investmentappetites.

Structure. Use your resourcesstrategically to identify where youshould operate with shared servicesand where decentralization would bemore effective. The organizationalmodel you choose can in uence howeasy it is to shrink and grow yourIT organization. A structure which

creates numerous organizationaldivisions has the potential for processbreaks and service disruption.

Governance. Work proactively tobuild business con dence throughincreased transparency. Designyour governance to involve seniorexecutives. Look hard at the decisionmaking style you utilize in the gov-ernance model. There are a numberof decision making styles that can beused ranging from business domi-nated to IT Monarchy. Tailor thestyle to suit the type of decision to bemade. Remember governance is keyto successful alignment of your busi-ness and your IT organization.

As you look for the right combina-

tion of resources, structure andgovernance, keep in mind how aconcertina can expand and contractin response to changing pressures andneeds. Its a good model for an ITorganization.

Done right, outsourcing creates thepossibility of agility and freedom ina world where little is predictable

except change. But done wrong,outsourcing can become a set of rustyhandcuffs or maybe even a ball andchain. As you consider outsourcingas an option for reducing xed costsand refocusing internal resources,here are four things to keep in mind.

Financing. Think creativelyabout how outsourcing deals are

nanced. There are many recentexamples of innovative nancingsolutions, such as securitization,that are generating additional valueon top of the traditional bene tsassociated with outsourcing. Challenge core vs. non-core. Whilethe core/non-core distinction makesintuitive sense, it doesnt always holdup in practice. Better to focus onoutsourcing those functions that aremodular and easy to specify.

Going offshore. Traditional risksassociated with off-shoring have beendramatically reduced in recent years.

Offshore nancial services opera-tions represent an opportunity tocrack into new markets and provideservices to other institutions in theregion.

Collaboration. Would you believeit? Some alliances and joint venturesare actually working effectively now,especially when partners both havean equity stake. One key to success isthe availability of mature technologythat enables coordination across theextended enterprise.

ORGANIZATIONAL CONCERTINA OPTIMIZING YOUR IT ORGANIZATION

HOW CAN I MISS YOU WHEN YOU WONT GO AWAY?

THE POWER AND POSSIBILITY OF OUTSOURCING

VIEWPOINT #2VIEWPOINT #1


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When it comes to effective CRMinitiatives, the analogy these days isto think globally and act locally.That means think enterprise-wide,

but implement solutions in bite-size,modular chunks to meet speci c cus-tomer management needs.

Until recently, you really didnt havethis luxury. Your only choice was toslog through monolithic enterprisesolutions that could take years toimplement.

Now there are modular architecturesand solutions you can choose fromthat give you the exibility to reallyact locally. The cost of entry islower, the customization potential ishigher, and the speed to value is whatyouve been looking for all along.

And dont forget, the way in whichyou implement CRM is just asimportant as the technology youchoose.

q Make sure you have a plan fordata and channel integrationissues.

q Choose vendors who under-

stand the industry work ow as well as the legacy data issues.q Develop a business case to sup-

port the investment and breakthe integration down into 100-day wins.

q Never lose sight of the purposeof CRM: to make your salespeople more effective.

CIOs today truly have the opportu-nity to build customized, modularsolutions that create strategic advan-tage . . . and thats where you shouldfocus your CRM energy.

CIOs today nd themselves strug-gling to cope with the proliferationof computing systems under theircontrol. Despite limited staff and

tighter budgets, your IT organiza-tion must keep all systems on track- managing an increasingly complexinfrastructure while also provid-ing higher service levels and greatersecurity. And to top it all off, thereare increasing pressures to outsourceand be done with it. The voices areloud, the short-term savings are real and the pressures are more intensethan ever. The good news is most ITOrganizations have the skills toundertake signi cant consolidationefforts in-house. Organizations areexploring the concept of managed

services which will require a majorchange in how you think about andimplement services. Not everyone

will be happy - demands for newsystems and increased availability,resilience and recovery have to begrounded in a true understanding of

bene ts delivered. And youre goingto have to entertain alternative models

with much more cost-effective pro les, while accepting business trade offs that

you can live with.

Effective consolidation will requirethe IT organization to embark ona journey of ruthless simpli cation(standardization) and virtualization inorder to drive up levels of utilizationacross all assets (hardware and soft-

ware, people and information) What can you do now?

q Wage war on JBOD (Just aBunch Of Disks). Device-attached storage is one of thelargest impediments to achievinga low cost exible structure.

q Avoid multiyear contracts for

commodity resources like storageand bandwidth.q Legacy applications - wrap them,

kill them or deconstruct them.Put the game plan together andleverage new technologies whereyou can.

DEAR OCCUPANTGETTING MORE VALUE FROM CRM

BETWEEN A ROCK AND A HARD PLACE

BREAKTHROUGHS IN PLATFORM CONSOLIDATION



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While business continuity planninghas always been on the minds ofCIOs, the events of September 11th

catapulted the issue to the top ofevery executives agenda. And in theaftermath of the attacks, CIOs arerealizing that some of the greatest vul-nerabilities lie outside traditional datacenter recovery.

The real challenge is to develop andimplement a comprehensive BusinessContinuity Management programthat supports corporate risk toler-ance across the extended enterprise.Success depends on:

q Developing plans at a process,not a department level.

q Focusing on people withinthe organization - they are acritical element of your abilityto recover.

q Actively involving businesspartners in the planning pro-cess.

q Ensuring business continuityplanning is a key agenda itemfor senior executives.

So when youre thinking aboutresilience and business continuity,dont focus exclusively on the boxes.This is not about putting in an extraroomful of servers across the river. Itsabout people. Its about intellectualproperty. Its about making sure yourextended IT organization is preparedfrom top to bottom

You know the problem: a prolifera-tion of platforms, ubiquitous legacysystems, new products, new architec-

tures and evolving business processes all left over from the e-boom. Andnow theres an onslaught of new tech-nologies from web services to gridcomputing and more.

Getting it under control demandsintegration architectures. Heressome of their key characteristics:

q Loosely coupled and service based so the complexity of underly-ing implementations is hidden.

q Business process aware withbusiness activity monitoring tomanage, optimize and providevisibility into business pro-cesses such as STP.

q Providesdata management andaredesigned for maintenanceto provide consistent viewof information and providestandards-based interfacingapproaches.

q Incorporatesarchitectural governance , through processdiscipline and life cycle man-

agement to achieve businessbene ts.

You know all this, right? But untilnow, you probably havent been ableto get it done in a cost-effective way.So heres the good news: the coretechnologies have nally matured tomake integration possible. The majorsoftware vendors have stopped ght-ing with each other and have begunsearching for common ground. Andthe economics are beginning to makesense as individual business units areactively encouraged to share costs.These new realities mean integrationarchitectures can start working foryou now.

MIND THE GAPRESILIENT INFRASTRUCTURE AND

BUSINESS CONTINUITY

CH-CH-CH-CH-CHANGESTHE ROLE OF INTEGRATION ARCHITECTURES



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What a great time to be a CIO to bepowerfully leading the way as the linebetween the business of nancial ser-vices and the business of informationtechnology blurs. Indeed, the deci-sions you make as a CIO today reallyare decisions about the future of theinstitution you serve and represent.

And even as you work to capturemore value from earlier investments,the demands for tangible returns andcompetitive advantage from newprojects will only increase. Armed

with practical knowledge about what works and supported by a hostof new technologies and practices CIOs are bringing new passion,new power and new purpose to anindustry in transition.

This book presents eight importantthreads that are emerging as prioritiesfor CIO A cionados in the nancialservices industry. Wed love to hearyour thoughts about them andabout other key initiatives you con-sider important.

For more information please contact:

Americas : Peter [email protected](212) 618 4501

Europe : John Reeve

[email protected]+44 207 303 3000

Asia Paci c : Jenny Sutton [email protected]+81 3 5521 5555

Hidenori [email protected]+81 3 5521 5555

Passion,Powerand

Purpose


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Global Of ce Address:1633 Broadway, 35th Floor, New York, NY 10019-6754

www.dc.com

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