According to a recent survey from McKinsey, IT’s strategic importance is growing along with the dissatisfaction from business with its effectiveness. Most CIOs are familiar with the old 80-20 rule: 80 percent of your time and resources are spent on day-to-day operations and keeping the lights on, leaving only 20 percent for innovation.
As the role of IT continues to evolve from a system administrator to a strategic advisor and enabler, what are some of the key challenges and emerging trends facing CIOs in financial services? What lessons can we learn from CIOs in other industries?
According to the UK’s Financial Conduct Authority, the resilience of bank IT systems is set to come under the regulatory spotlight in 2014, with technology risk as a key area of focus. Major bank outages around the world are raising questions around the adequacy of current systems in handling a new era in digital banking. Many of the issues stem from a lack of flexibility from an increasingly complex set of systems, particularly around aging systems, “bolt-on” functionality and manual workarounds.
“Even as the business is beginning to look at IT as a strategic enabler that can help it gets it arms around these new technologies, IT is struggling to deal with an application landscape that is more complex than ever,” said Thor Olavsrud, Senior Writer for CIO Asia.
According to IBM, more than 60 percent of CIOs are focusing on improving the customers experience by focusing their IT organizations on new technologies and skills to reach the end customer.
“CIOs formerly were ‘masters of the back office’, making sure computers didn’t crash, networks were fast and supply chains didn’t lose products,” said Peter J. Korsten, Global Leader, IBM Institute for Business Value. “That’s all changed as much of the day-to-day functionality has been automated and mastered.”
Korsten notes that, since so many products rely on real-time information to perform, CIOs are being held responsible for products not functioning properly – and the performance of products is directly tied to customer satisfaction.
Rationalize and enhance
In its Application Landscape Report 2014, Capgemini’s Ron Tolido outlines a strategy to streamline and rationalize the application landscape by way of enhancing what’s already there. In the enhancement scenario, IT leaves legacy applications in place and wraps next-generation technology around them.
“Though the strategy is a pragmatic, relatively low-risk one that delivers quick results without massive change, it’s radical in the sense that it moves the focus away from rebuilding core applications to the outer layers of the application estate,” said Toledo.
Toledo also notes that such enhancement strategies would have been unthinkable by most CIOs just a few short years ago, but with mounting pressure from the business, CIOs are considering more radical measures.
We recently sat down with Barry X Lynn, technology investor/consultant and member of Zafin’s Board of Directors. Barry has over 40 years experience in IT and banking, building the first online banking system as CIO at Wells Fargo. In our next blog post, see what Barry had to say about his experience and his insights on the evolving role of the bank CIO.
For more information on how Product and Pricing Lifecycle Management can help deliver customer-centric innovation without replacing core systems, please contact us at email@example.com.
Look for more in our upcoming Fall 2014 CIO supplement of the Relationship Banker: Journal of Product and Pricing Lifecycle Management.