IT Initiatives for a Challenging Market
April 28, 2008
Amidst write-downs, exiting executives and a murky outlook, financial firms are taking a cautious approach to information technology initiative planning and spending. Wall Street IT executives are dealing with unprecedented challenges that are forcing some firms to table or scale back efforts. However, investment and planning on many projects cannot be easily abandoned.
The initiatives listed below are based on results from discussions and surveys with capital markets IT decisionmakers. They are not necessarily those areas with the greatest amount of spending, but those that position institutions well for the future. They are vital to improve competitiveness, differentiation and align firms for future success.
IT executives require a basic framework to help navigate or prioritize projects during this challenging market environment. Given the uncertain economic outlook and its impact on technology planning, these initiatives should be compared to internal IT strategies and efforts to determine which best support business priorities, which have the most evolved plans at an organization and which have the most cross-functional buy-in.
Decisionmakers could also develop a "strength of solution" metric to guide investment decisions. An understanding of internal capabilities, business priorities and peer benchmarks can be leveraged to determine the effort and investment appropriate in each of these areas. Such a metric can help make decisions about cost-benefit trade-offs for solutions that support the business.
Though some firms have been reasonably unscathed by the credit crisis and liquidity fallout, others have been less fortunate and need to reevaluate their IT efforts. Both groups could benefit from understanding what peers are thinking and considering now and planning for in the future.
1. Information management. Liquidity fragmentation, algorithmic trading and regulatory initiatives have contributed to the onslaught of data that needs to be stored, managed and shared in a secure manner. Although information management is a massive undertaking its importance in capital markets cannot be overstated. In this environment, a holistic view of data is critical, given the growing traffic, sources and speed requirements, as well as the proliferation of different securities instruments. Reducing the complexity and improving efficiency begins with data management, cost containment and consolidation strategies. Firms are focusing on data center consolidation, virtualization and data-handling initiatives.
2. Business intelligence (BI). Managing data in a real-time environment is a perpetual challenge for capital markets firms. More agonizing is making sense of the deluge of data moving through the network. As costs for BI solutions fall, chief information officers are increasingly looking to transform this data into information that provides insights leading to business improvement. Increased use of BI tools is taking place in earnest. Capital markets firms are focusing their efforts on gaining maximum advantage through strategic application of BI capability. Areas of focus include analyzing and mitigating risk, and improving product development and product marketing, trading partner evaluation, supervisory capabilities and flexibility of data queries.
3. Service-oriented architecture (SOA). Much has been said about the mythical service-oriented architecture and approaches to get there. SOA enables end-to-end design and management, open standards-based components and a virtualized resource model. The costs and demands are often high, but more CIOs are making the commitment to realize a true enterprise view, reduce IT complexity, and automate and consolidate multiple processes through standardization, SOA projects and IT organizational structure.
