AYESHA KHANNAtag:www.ayeshakhanna.com,2009://12009-05-06T00:05:06ZMovable Type 3.35How Pakistan Can Fix Itselftag:www.ayeshakhanna.com,2009://1.312009-05-06T00:01:01Z2009-05-06T00:05:06ZForeign Policy | May 5, 2009
By Ayesha Khanna and Parag Khanna
Pakistani President Asif Ali Zardari arrives in Washington this week at a tough time for his country. Gen. David Petraeus has stated that the next two weeks are crucial to Pakistan's survival, while counterinsurgency expert David Kilcullen has claimed that the country could collapse within six months. Indeed, Gen. Ashfaq Kiyani, Pakistan's Army chief of staff, could declare martial law imminently if his military's counteroffensives in the Swat region prove ineffective against the Taliban. But irrespective of whether the Army takes over yet again from civilian authority, Pakistan has been a failure for over a decade, and the essential prescriptions to restore the state apply to both the elected government and the military -- and preferably a coordinated effort between the two.
Ayesha Khanna is a partner at Fitzgerald Analytics, a strategic management consulting firm.
Parag Khanna is a senior research fellow in the American Strategy Program of the New America Foundation and author of The Second World: How Emerging Powers Are Redefining Global Competition in the Twenty-first Century.
Link to article:Click here]]>
Be Indispensable: Skills To Beat The Depressiontag:www.ayeshakhanna.com,2009://1.292009-02-18T01:50:39Z2009-02-18T01:53:51ZForbes | February 17, 2009
Switch on the TV, open a magazine, eavesdrop on a cocktail party conversation, and sooner or later you'll hear a self-professed expert tout either networking or résumé buffing as the key to success in the economic slump. But tweeting on Twitter or taking a tutorial on how to connect with people by talking sports will only get you so far.
If we're serious about preparing for tomorrow, the financial crisis reminds us of the importance of acquiring adaptive skills today in order to thrive in the industries that will come.
--Big Brother Is Back. President Barack Obama's $787 billion economic stimulus package, the largest in U.S. history, can have a more direct effect on your career than you might have thought. Every major consulting firm has been licking its lips at the prospect of advising the government. Why should you be any different? Develop and market your skills in the areas where the government is going to invest most. Where are those? To begin with, the plan outlines billions of dollars of public sector investment in transportation projects ($48 billion), education ($100 million), health care ($140 billion) and clean energy. Each will require varieties of both blue-collar and white-collar experience that many, many people have.
--The Gig Economy. Tina Brown, the publishing veteran who recently launched The Daily Beast, has been doing the rounds on CNN and elsewhere heralding the age of what she calls the "gig economy," where instead of having a job everyone just has a flurry of "free-floating projects," or "gigs." She fears this trend, for being a gigster is a difficult and a second-best choice for most. Either way, the structural shift toward providing modular services is clear. Incorporate yourself (as an S corporation or limited liability company, etc.), and start building your brand. Create a Web site, publish articles, circulate your credentials and learn to collaborate in virtual teams. Inoculate yourself against having your work outsourced by hybridizing, combining skills that make you both a generalist and a specialist at once, such as management and technology, or law and bioethics. Once markets pick up, the talent wars will start again worldwide, and those who have invested in brand management will command the highest fees for their services.
--Health Care. The entire developed world is aging, and Europe is growing old even faster than America. By 2030, more than 70 million Americans will be over 65. Already 25% of the federal budget is spent on health care, and Obama has promised to modernize the bloated industry. Thirteen of the 20 fastest-growing jobs in the U.S. from 2004 to 2014 are expected to be health care related. Don't run to med school--or turn the page--just yet, though. You can become a registered nurse in just two to three years, on average. If you're a software engineer, think about getting into automating health care business processes. Health-related work spans the whole supply chain--consulting, banking, equipment, insurance, and more. It can be the gift that keeps on giving, in good economic times and bad. Think about what a broad range of capabilities it really involves.
--Globalized knowledge. The credit crisis has inspired a return to regulation; Governments will monitor trade, investment and other points of vulnerability in an all too interconnected world. International law in trade, taxation and immigration will become very hot. So too will talent arbitrage, meaning high-end human resource management to move and manage skilled labor across firms and borders. Be willing to go where white-collar work is rebounding the fastest. Knowing emerging markets in and out will be a big help. If you're a political scientist or have done a Peace Corps stint or taught English or studied abroad, reconnect with your exotic past to advise firms on security and risk issues in Brazil, Russia, India, China and beyond.
--Green Capitalism. If you're passionate about recycling, now's your chance to make more than the 5 cents a bottle you can get at the local Food Emporium. Like health care, energy efficiency has moved from niche to mainstream, encompassing engineering, product development, non-profit advocacy, litigation, and a host of other areas. Obama has promised up to 5 million "green-collar" jobs in everything from research and development to solar-cell installation to building re-insulation.
--Genomics. A stream of steady breakthroughs will deliver jobs to thousands in health care, pharmaceuticals, genetic counseling and computational biology. Whether or not you've got a scientific or medical background, try to boost your marketability by adding genomic know-how to any expertise you have in software, management or statistics.
--Information Management. After its employees, a business's most valuable asset is its bits and bytes of data, and that's increasingly true even for bricks-and-mortar companies. Technology is the key to managing the tsunami of information. Strategic information management--data governance, business analytics, knowledge management, information technology infrastructure--are all getting hot as firms seek clarity in complexity. As James Canton claims in his book The Extreme Future: The Top Trends That Will Reshape the World in the Next 20 Years, knowledge networks will be the foundation of our future economy.
--Parlez vous? The languages of the future will be very much a function of the rising prosperity and populations of America's trade partners. If you're willing to be a global nomad, immerse yourself beyond your pidgin Chinese, Arabic or French to position yourself as a cross-border relationship manager. If you're using the downturn as an opportunity to enroll in law school, business school or pursue other education, try an intensive language course on the side. It's a great way to network, too.
So, yes, tweet away, but make sure you have more to say about yourself and your skills than will fit into a mere 140 characters.
Ayesha Khanna is a senior adviser at Fitzgerald Analytics, a strategic management consulting firm. She has worked for 10 years on Wall Street on technology governance and strategy initiatives, and is author of Straight Through Processing for Financial Services (Reed Elsevier, 2007).Link to article:Click here]]>
A Strategy for Obama's CTOtag:www.ayeshakhanna.com,2009://1.272009-01-18T03:05:02Z2009-01-18T03:08:05ZBusinessWeek | January 13, 2009
The incoming President has a prosaic wish list for his IT czar. Obama needs to adopt practices that work overseas and for business.
President-elect Barack Obama has promised to appoint the world's first governmental Chief Technology Officer (CTO). On its transition Web site, www.change.gov, the incoming Administration has published a list of goals for the soon-to-be anointed CTO: broadband expansion, boosting science/tech education, health-care computerization, patent reform, and e-government.
The goals are well-intentioned. What is missing is an effective and efficient strategy. So-called "czars" have been appointed for drugs, the war in Iraq, the financial industry, and the auto sector—none of them have worked very well. The Obama team needs to be careful not to reinvent the wheel, focusing instead on technology lessons from the countries that have overtaken the U.S. already, the practices of companies that have top CTOs, and a flexible strategy for implementing policy across the sprawling federal government.
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Singapore and Estonia
The U.S. may be the first country to have a CTO. That doesn't mean other countries have not put in place effective tech leadership. In the past 28 years, Singapore has had six national plans that have progressively modernized the government infrastructure, starting from computerization of civil services to the current "Intelligent Nation 2015" or iN2015 plan, which in vivid detail envisions a future where every individual and organization has seamless access to technology.
By comparison, Obama's prosaic wish list is nothing to write home about—but his Administration can learn from Singapore's phased and segmented approach.
Even tiny countries like Estonia have emerged from years behind the Iron Curtain to quickly create e-government infrastructures that would shame the U.S. bureaucracy today. Indeed, Estonia has become an exemplar of e-government, where everyone votes and pays taxes online, not to mention pays parking tickets via mobile phones. The country's image as a leader in tech did suffer a blow, however, when Russian cyberwarriors hacked the government's electronic infrastructure in April 2007, bringing the country to a standstill: Even customers paying for milk and bread in grocery stores suddenly found that their bank cards didn't work. A deeply interconnected technical network is as valuable as it is vulnerable. Estonia is a valuable case study in how to protect oneself from the susceptibility of technology.
Detractors will be quick to say these countries are so small; it's far easier to have broadband penetration among Singapore's 4 million than the 300 million in the U.S. Scale does matter, but if the principles of technology reform are sound, then scalability is a question of time, not of possibility. Even China talks of building an information superhighway for its 1.5 billion citizens. The U.S. should have no less ambitious a goal. In economic theory, modernizing economies experience "catch-up growth" and quick, high returns from emulating and adopting high-technologies. America's CTO—like officials from the United Arab Emirates—should travel widely and send emissaries to gather lessons from others' experiences while taking note of their mistakes.
Digital Natives vs. Immigrants
Government-sponsored innovation is nothing new: The U.S. Defense Dept. created the Internet, and Japan's automobile sector grew according to a conscious government plan before becoming world-beating. But by and large, technology innovation now comes from the private sector, with the government playing catch-up. To paraphrase Marc Prensky's famous terminology, corporations are now "digital natives," while the government is a "digital immigrant," learning the new language of technology but retaining a heavy accent.
Who might assume the CTO role? Among the reported contenders are Hewlett-Packard CTO Shane Robison; Google Chief Internet Evangelist Vint Cerf; and Vivek Kundra, CTO of Washington, D.C. But plucking a well-known executive as the government's tech guru will not substitute for continuous public-private collaboration to ensure that innovations are adapted to the government setting. Areas where discussions would be especially useful range from building energy-efficient infrastructures such as green data centers and cloud computing to providing citizens online government services using Web 2.0 technologies.
New York Mayor Michael Bloomberg has launched an aggressive "customer-oriented government" initiative, led by Paul Cosgrave, CIO of the city's Department of Information Technology & Telecommunications (DoITT). In order to tackle poverty, the DoITT worked with Accenture (ACN) and Irish software company Cúram Software to roll out ACCESS NYC, a free online service that prescreens individuals anonymously and provides information on their eligibility for 21 different city, state, and federal programs. Consolidating the screening and application process for a range of programs into one online tool saves time and money for all involved, notably needy individuals.
Obama's education and health-care priorities for the CTO cannot simply be parceled out to various departments and agencies. The Administration will need to adopt an approach that can be spread across the government—using, for example, a so-called service-oriented architecture that would let the Administration roll out applications independently but using a common set of standards.
Visas and Green Cards
This approach would have helped avoid past mistakes. Take the disaster of FBI background checks for student visas and green cards. The current manual process involves poring over files and soliciting dozens of records from an array of departments by mail and fax, keeping applications stuck for years. Increasingly, disgruntled graduates depart for more welcoming countries like Canada, leaving the U.S. to suffer brain drain. But if police records and other files are stored in databases, departments can more easily integrate with each other and exchange data in a streamlined manner. Similarly, when someone is in fact a danger to national security, important information is not inaccessibly compartmentalized—such as when the 9/11 hijackers were being followed by the FBI yet were issued green cards by the Immigration & Naturalization Service.
Building technology around standard protocols helps in integration not only between federal departments but also, eventually, between state and federal departments, which are more often than not completely out of sync.
Far from being limited to domestic affairs, the CTO could well be a commercial diplomat, working with the Commerce Secretary to expand the country's edge in high-tech exports. The Defense Dept.'s creation of the Web was seized on by Silicon Valley, launching the sustained economic boom of the 1990s, which saw American tech companies reach the commanding heights. Now with tech exports from Japan, India, and others nipping at America's heels, strategic partnerships between the government and tech companies could become a pillar of foreign policy. The CTO's office can spearhead international road shows for innovative U.S. firms ready to export user-friendly e-government platforms. The U.S. may lag behind Europe and the Far East in some areas, but much of the world has yet even to get off the ground, meaning the CTO can play a crucial role in introducing American tech firms to emerging markets. This effort can take inspiration from Google (GOOG) and Microsoft (MSFT), which have multiplied their global customer base by adopting their products to foreign languages and cultures.
Beyond Obama's to-do list for the first American CTO, these guidelines will make the position more consistent with the modern-day definition of a CTO as the CEO's thought partner in mapping out a strategy for growth and operational efficiency. To start anywhere else would be to doom the CTO to an isolated, antiquated back-office IT role, dangerously incapable of enhancing American competitiveness in the 21st century.
Ayesha Khanna is a senior adviser at Fitzgerald Analytics, a strategic management consulting firm. She has worked for 10 years on Wall Street on technology governance and strategy initiatives, and is author of Straight Through Processing for Financial Services (Reed Elsevier, 2007). Parag Khanna is a senior research fellow in the American Strategy Program at the New America Foundation and author of The Second World: How Emerging Powers Are Redefining Global Competition in the 21st Century (Random House, 2008).Link to Article
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Codeless Quant Strategiestag:www.ayeshakhanna.com,2008://1.202008-09-02T23:30:36Z2008-09-02T23:31:10ZIn a hedge fund, a prop trading desk or any high geek power trading environment, there is a chaos that is by now familiar. It is hard to imagine a world in which PhDs in physics, mathematics and statistics are...
In a hedge fund, a prop trading desk or any high geek power trading environment, there is a chaos that is by now familiar. It is hard to imagine a world in which PhDs in physics, mathematics and statistics are not translating mathematical strategies into scripts and code libraries; where IT developers are not integrating them with the rest of the backoffice environment; where IT is not exerting time and energy to connect to and clean real time data; and where quants are then not testing and tweaking the model on simulated data sets.
All this takes several months and that’s just to get a strategy approved. Next orders have be generated and executed, and that starts a whole new batch of work and stress: IT connecting back-end systems to order and execution management systems, middle office scrambling to make sense of risk, and quants chewing their nails about when the market will change and the model will have to be updated. The days when a strategy was a long-term alpha laying golden goose are over. Nowadays, a strategy is good on average for about 6 months till the market catches up, and lo and behold, the whole process starts all over again.
FAST FORWARD!!!
A platform exists that automates all parts of the workflow outlined above. It can handle and translate known datasets like Bloomberg, and Reuters, not to mention real-time low-latency tick feeds; it has a library of thousands of well-known mathematical models with which a quant can build any kind of factor based model, creating these models through drag and drop visual interfaces; it allows users to test this model on data sets (past, present and simulated future); and finally, it connects directly to an order management system. All this should take a couple of weeks! It might sound as close to reality as Virgin Galactic, but mind you, both are not as far off as they seem. And quant platforms that are codeless - allowing visual plug n’ play creation of alpha-generating strategies – and have a seamless workflow from market data source to trade execution, i.e. comprise a true straight through processing solution – are here today!
Aite Group published a report “The World According to Quants: Enter Alpha Generation Platforms" in July this year, which first brought some innovative and cutting edge new companies to the forefront. These include Alphacet, Deltix, and ClariFi, and 4th Story.
Their platforms are definitely worth checking out:
Alphacet: http://www.alphacet.com
Deltix: http://www.deltixlab.com/
ClariFI: http://www.clarifi.com/
4th Story: http://www.4thstory.com/
It’ll soon be time to update the Quant job requirement with “no coding experience necessary.”
The Rising Star of Alternative Betatag:www.ayeshakhanna.com,2008://1.192008-09-02T23:29:04Z2008-09-02T23:30:08ZThe investment community is beginning to question its habitual praise and compliments, not to mention the astronomical fees, showered upon hedge funds for providing alpha – returns generated not through systematic exposure to the market but through exploiting market inefficiencies...
The investment community is beginning to question its habitual praise and compliments, not to mention the astronomical fees, showered upon hedge funds for providing alpha – returns generated not through systematic exposure to the market but through exploiting market inefficiencies and skillful stock picking.
The idea is not new, but recently it has come to the forefront with full force. There is nowadays considerable debate raging on whether the alpha generated by hedge funds is actually alpha, or what is called alternative beta, i.e. beta generated through systematic risk exposure to non-traditional assets in the market. Alternative beta returns are achieved because risk premiums were rewarded, not because the hedge fund manager was able to arbitrage inefficiencies or pick stocks with unique skill.
Why does this matter? Alpha, beta, alternative beta … who cares as long as there is a return on investment? Well, in good times, everyone enjoys the party, but in bad times, investors are prickly when it comes to paying hefty hedge fund fees (usually 2% of assets under management (AUM) and 20% of profits) if there is evidence that the manager is not getting his/her returns through particular skill but through systematic and predictable methods. Granted, a return is still a return, but the question becomes, how much is it worth? Is it worth being charged 20% of performance in fees, is it worth not always getting your money out when you want it and is it worth facing minimal transparency into what is being done with your money (hedge funds are notoriously secretive)? Well, it is definitely not worth the fees, the illiquidity and the secrecy if that return can be replicated systematically through alternative beta.
What are these ‘alternative beta’ factors and how can one gain exposure to them? Hedge fund managers expose their portfolios to risk factors such as credit volatility, foreign exchange risk, event risk, small cap, and then use leverage to further enhance exposure to these non-traditional or alternative factors. Traditional managers meanwhile achieve beta by exposing their portfolios to traditional risk factors such as equity, credit risk, large cap and so forth. Is there a way to replicate systematic risk exposure to alternative beta factors, and therefore achieve hedge fund returns without hedge fund fees?
The three gurus of hedge fund replication techniques, Professors William Fung, David Hsieh and Narayan Naik, believe they can. Credit Suisse also believes they can, for it formed a partnership with them to replicate the risk and return characteristics of hedge funds strategies in March 2008. Credit Suisse belongs to a growing list of financial institutions that are looking to Fung, Hsieh and Naik for direction on how to use securities such as options, futures and ETFs to replicate hedge fund strategies.
It’s not easy to replicate hedge fund strategies, not least because these strategies are dynamic and change as the market changes. With alpha generating platforms like Alphacet, ClariFi and Deltix hitting the market, it may be more possible than ever before to quickly test strategies and bring them to market. One can very well expect a flood of alternative beta shops appearing on the horizon. If hedge fund returns can be replicated, the kingmakers will be separated from the wave riders, and the smaller universe of true alpha generating funds will become the new elite.
Good site for alpha, beta, alternative beta: http://www.allaboutalpha.com
Meta-ITtag:www.ayeshakhanna.com,2008://1.182008-07-28T17:26:34Z2008-08-21T16:00:53ZJuly 2008
A New Framework for Technology Strategy and Governance
By Ayesha Khanna
INTRODUCTION
Most organizations today continue to regard technology as merely a back-office cost center, a viewpoint that diminishes the breadth of IT’s impact on a firm’s competitive profile. In fact, increasing innovation in global markets requires that IT take a far greater role in helping the enterprise differentiate itself from competitors. To address this deficiency in the linkage between IT and enterprise strategy, this paper revisits the seminal paper by Michael Porter, “What is Strategy?” and proposes a framework called Meta-IT that would leverage IT as a partner in attaining competitive advantage.
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THE DISCONNECT: BETTER TECHNOLOGIES, SAME ISSUES
The world that firms compete in today in terms of markets, customers, and supply chains is drastically more competitive than a decade ago. Simultaneously, recent technologies such as Virtualization and Web 2.0 have the potential to help organizations navigate these waters deftly and leapfrog over their competition. But in most firms, business and IT have not managed to effectively form a successful partnership. In fact, they continue to dodge the same obstacles that have bedeviled IT services for decades with complaints such as business-IT misalignment, inability to prioritize projects, IT’s failure to be agile and innovative, and the continuing frustration with modernizing legacy infrastructure. Why does IT management fail in making the crucial link between business needs and IT services? Several key business challenges are worth noting:
* Globalization: New markets and consumers have appeared from China to Brazil, India to Eastern Europe, but pressure has commensurately grown for 24/7 operational connectivity and processing.
* Competition: Innovative rivals have emerged in all corners of the world.
*Profitability: Margins are falling as consumers increasingly expect free services—this requires conceiving new ways to generate profits while providing value-added services.
* Skills Shortage: CEOs of companies across the globe are vying for an elite group of skilled experts, and are struggling to develop their human capital and prevent the high turnover that has become typical in recent years.
* Cost Cutting: Except in the energy sector, most firms are bracing for a recession.
* Technological Advances: Staying on top of new standards, technologies, and frameworks are essential to retain an edge.
* Regulation: The U.S. credit crisis will likely result in a deluge of new regulations as financial markets seek to prevent future asset bubbles. Meanwhile, emerging markets will also formalize regulations to raise their legal and accounting standards to global levels.
* Client Expectations: Clients are more discerning of quality than ever before, and demand interactivity, real-time information, and superior quality interfaces from all their service providers.
* Green Infrastructure: Concerns about climate change have finally crossed a tipping point where all firms are judged on their eco-efficiency.
In this intensely competitive and unpredictable landscape, some new technologies and processes have emerged that can help organizations to confront these challenges. Foremost amongst these are the following:
* Service Orientated IT, which has accelerated the ability to reuse modular services and scale them rapidly to meet new business demand, leading to faster time-to-market and greater productivity for a base fixed cost.
* Real Time Infrastructure (RTI), which is the creation of a dynamic IT infrastructure that matches the demand for infrastructure resources with supply in real-time, thus enabling greater efficiency and higher utilization of the infrastructure. RTI employs the concept of virtualization which allows central management of diverse resources by inserting a virtual layer of abstraction between the end users and the resources.
* Web 2.0 and Social Computing, which affords companies a treasure of information and a set of creative, interactive tools that gives them insights into customer behavior and preferences.
* Data Governance Standards, which provide guidelines on the collection and organization of information which can be used to analyze business models, markets, and competitors more accurately.
* Agile Development Best Practices, which have transformed the whole lifecycle of application development into a series of lightweight and agile processes, and allow firms to move quickly to capture market share when opportunities arise.
According to Gartner’s 2008 Worldwide Survey of CIOs[1], 85% of CIOs realize the potential of IT to help firms meet today’s business challenges, and are looking toward “IT to make the difference in their enterprise strategy”. Yet many feel frustrated by their inability to propel IT to this stage because traditional IT management frameworks are not conducive to building IT and business partnerships. IT is still governed as a function separate from revenue generating units, instead of a holistic fabric that contributes to value creation. The Meta-IT framework attempts to correct this deficiency through its more holistic and enterprise driven model for IT governance.
THE META-IT FRAMEWORK
Meta-IT represents a new IT management framework and governance packaged into set of results-oriented best practices. Even though it is vendor neutral, it is not divorced from the technological capabilities that make the pursuit of business-IT alignment more achievable. The fundamental premise of the Meta-IT model is that IT management must be viewed holistically from the enterprise level, abstracted away from the conglomeration of software and hardware components. In other words, IT has to be viewed as more than the sum of its parts.
In his definitive paper "What is Strategy?[2]" Michael Porter highlighted that competitive advantage is a consequence of differentiating strategies, not operational effectiveness:
"Operational effectiveness (OE) means performing similar activities better than rivals perform them. Operational effectiveness includes but is not limited to efficiency. It refers to any number of practices that allow a company to better utilize its inputs, by for example, reducing defects in products or developing better products faster. In contrast, strategic positioning means performing different activities from rivals’ or performing similar activities in different ways."
Differentiation stems from making unique choices both in firm activities and in how the firm performs those activities. Firms must make certain choices vis-à-vis IT as well—choices that include but are not limited to management techniques, and software and hardware decisions. Historically, IT has oscillated between roles geared toward operational efficiency or effectiveness, but has rarely been elevated into a strategic positioning role (see Figure 2).This can be attributed to the fact that the average tenure of CIOs has for some time been limited to only a few years, mainly due to an inability of Executive Management to understand, assess and value the CIO’s role. As a result, CIOs were changed quite often as firms promoted CIOs to more prominent posts, or replaced them when their performance was dissatisfactory. This created an inherent instability in the principles by which the organization managed IT across departments. Each new CIO came armed with a set of initiatives that were promptly turned over by the next CIO, forcing IT managers in each line of business to become more independent and siloed, and less reliant on a holistic strategy.
Thus, IT never came into its own with a centralized coherent strategy: it was endlessly trapped oscillating between directives from department IT managers and the conflicting signals from different CIOs. As a result, there were some efficiencies and effectiveness but never to the degree which alignment within IT itself would create. Fortunately, CIO tenures have recently stabilized to slightly over four years[3], which points to both an appreciation of the CIO’s role, and to the opportunity for a new management approach such as Meta-IT to take root.
Meta-IT is able to help firms break out of a siloed approach to IT management, allowing it to unlock the full force of its potential as a strategic thought partner for business innovation. This is because Meta-IT is a governance strategy that enables IT to be an organizational lever by institutionalizing a set of holistic best practices based on latest technologies.
META-IT BEST PRACTICES
Meta-IT can be achieved through a set of systematically institutionalized practices:
1. RECOGNIZE IT’S VALUE: Acknowledge IT as Part of the Revenue-Generating Value Chain
Meta-IT calls for a new mindset that recognizes IT as part of value creation. Without this shift in thinking, IT cannot fully embody its expanded role as a thought and execution partner in mapping strategy, and creating value-added products and services for the organization.
2. ALIGN BUSINESS AND IT: Trust to Educate, Educate to Trust
The single biggest obstacle in forming a strategic business‐IT partnership is lack of trust—the belief that the other party just 'doesn't get it'. This calls for business and IT to educate each other on their respective goals and competencies in simple conceptual terms. Such discussions align business and IT priorities and efforts, create a shared sense of common objectives, engender trust, and stimulate innovation.
3. THINK LIKE AN INVESTOR: Understand the Economics of Supply and Demand
The most appropriate way of evaluating ROI (return on investment) on IT investments is by examining IT supply and demand, i.e. mapping business processes (that are weighted by their contribution to enterprise goals) to IT services. Inadequate staffing and skills often doom IT projects. Matching IT supply and demand prevents investments in low-value services, which deflect resources away from high-impact initiatives. Like any investment portfolio, IT services are retired when their ROI is low and ramped up when their ROI is high. This represents a fundamental shift in the rigor with which IT is viewed, and brings IT to the same scrutiny as business units, thus elevating it to the same responsibility and same benefits.
4. BREAK SILOS: Invest in a Portfolio of Common Services
Services are those software components that can satisfy more than one business demand, and the identification of these services is a key outcome of the business process mapping exercise. The set of reusable software services, such as data and computing services, form the foundation of Service Oriented Architecture (SOA), and facilitate rapid time to market for new applications. Together, they form a portfolio of common reusable technology services, which are regularly evaluated for their ROI.
5. BE EFFICIENT AND ECO-FFICENT: Construct a Real-Time Infrastructure Utility
Most firms find themselves in a constant cycle of energy waste and underutilization of resources, most visible in the hugely inefficient and costly data centers that are the hallmark of every large company today. Organizations need to manage their infrastructure like a utility, such as an electricity grid: a real-time infrastructure that is able to pool and direct resources to meet fluctuations in business demand. The technology for managing IT infrastructure like a utility is variously called grid computing, cloud computing, and virtualization. For example, instead of dedicating a server to each business process, virtual infrastructure management directs several lines of business to use the same servers, often leading up to fifty times the performance at one-third the cost.
6. EMPOWER IT PERSONNEL: Create a Product Management Environment
One of the best ways to empower the federation of IT staff is for the central enterprise team to create a product management environment. This is an environment where a network of developers can coalesce around a core set of guiding standards and products, where they feel empowered to be innovative and yet trust that they have the support they need. For example, common services developed by various groups can be placed on an in-house virtual shelf, where other developers can access them and receive instructions on their usage. Very quickly, this environment will begin to migrate the developer community toward reuse, which will result in cost savings and faster time to market when creating new applications.
7. CREATE TRANSPARENCY: Measure Performance and Conduct Forensics
Systematic ways of monitoring the performance of IT are enabled by utility computing or real-time snapshots of IT utilization. There exist in the market today analytical tools that map IT usage to business processes, providing insight into whether IT is directing its efforts in line with strategic goals. In addition, they allow rapid investigation of root causes when problems occur and quick readjustment of resource allocation if wasteful consumption of services is identified.
8. SUSTAIN IMPACT: Build Skills through Education and Training
The only way to sustain the impact of current development and to continue to plan for the future is to build skills through education and training. Educating Operations on how to handle problems through simulated exercises, for example, is critical for maintaining the value proposition of a product or service. CIOs also have to look beyond the capabilities required today and plan for future skills. Having an adaptable workforce is now considered an essential capability for CEOs. More than half of the CEOs interviewed in a recent IBM study indicated that “the inability to rapidly develop skills is a primary workforce challenge”[4].
9. ENCOURAGE OWNERSHIP: Institutionalize Incentive Structures
In order for IT to rise to the occasion and take ownership of IT’s new expanded role—and accept the accountability that accompanies this ownership—it will have to be given incentives both in terms of recognition and reward. Incentive structures will have to be built along two dimensions: calibrating bonus structures to IT’s contribution to profitability; and aligning remuneration with use of Meta-IT principles, e.g. providing reward for efficient leveraging of existing IT as much as for creation of new modules.
10. VISUALIZE THE FUTURE: Use Playbooks to Imagine Scenarios
The ability to capture and analyze massive amounts of data is an extremely powerful capability that was not previously available to CIOs. It allows for the creation of playbooks whereby executives can evaluate strategies under different market scenarios and calculate the IT resources that will facilitate these strategies. IT can thought-partner with business units on which options to pursue by providing quick insight into IT capabilities currently available to service different scenarios scenario, and the time it will take to build new capabilities if needed.
11. DELIVER RESULTS: Plan Strategic Solutions with Short-Term Benefits
Businesses need to continue to operate daily, even as they plan for longer-term strengths and capabilities. The Meta-IT model is a results-based framework that emphasizes short-term delivery of high-quality results. New technology frameworks such as Service Orientated Architecture (SOA) are structured for such an approach. In SOA, even legacy components can be reused as the firm moves toward modernization, illustrating yet another example of how technical innovation can enable managerial best practices.
12. EVOLVE CONTINUALLY: Adopt an Iterative Approach
Businesses are not static: they are constantly responding to changing market conditions and evolving in response to competitor innovations. Thus, IT also has to continually collaborate with business to review the IT portfolio and ensure that it’s aligned with and providing input into the latest vision and direction of the organization.
LEARNING FROM SUCCESS STORIES: THE CASE OF WACHOVIA
The best way to prove a hypothesis is to test it, and even better, to have the evidence based on the testing someone else has already done. Does the Meta-IT approach work? While there are several examples of successful strategic use of IT in silos within an organization, one firm has particularly shown the benefits and value of using the right technologies the Meta-IT way: Wachovia Corporate and Investment Banking Technology (CIBT) division.
In 2004, Susan Certoma was hired as the CIO of Wachovia CIBT division with the explicit mandate to transform the organization into one of the leading investment banking divisions in the market. Even though Wachovia was the fourth-largest bank in the country, it lagged behind its competitors in its investment banking division and stood at an unacceptable position of No. 14. Certoma noticed that even though there were nine lines of business, each competing in different markets, they were using the same kinds of technology services. The lack of standardization amongst these services, however, meant that each line of business was creating its own set of software applications, often using servers, computing power, and code redundantly. The cost inefficiencies were astronomical.
Certoma decided that instead of finding specific answers for each line of business, her team would look at the infrastructure of the investment bank in a holistic manner and identify common services that could be leveraged across lines of business. “As part of our SOA strategy, our goal is to provide a single infrastructure that will provide multiple services that can be very differentiated based on each of our businesses,” she told Wall Street & Technology in an interview[5]. For this purpose, she hired Tony Bishop as director of product management, and they set out to transform Wachovia to become a serious competitor in the investment banking space.
What followed were four years of an effort that won Wachovia accolades and awards for innovative and transformational activities, including InfoWorld’s “Top 100 IT Project Awards” two years in a row for its Service Oriented Architecture & Utility Computing projects. These projects enabled $50 million in new revenue and $100 million in cost efficiencies (for an investment of $20 million over two years). Wachovia achieved this success by applying principles which fall under the realm of Meta-IT best practices.
With an elite team of experts, Certoma’s group spent several months working with business units to understand Wachovia’s business model and enterprise growth strategy. They then mapped all the required business processes (demand) to IT services (supply). Wherever they noticed that a service could be used for more than one business goal, such as information management and desktop modules, they earmarked it as a common service. The team then created a product management environment where a core set of reusable services were made available, and coupled it with a virtual grid infrastructure which provided lines of business computing and processing power on demand.
Wachovia thus entirely restructured the way technology was created, valued, and utilized in the bank, resulting in several advantages for the firm including:
* Differentiation: Wachovia’s Meta-IT philosophy paid off when it was able to differentiate itself from its competitors. In 2006, CIB’s global financial institutions group won three multi-million dollar contracts, partly because they were able to show streamlined technology architecture and processes that could be easily integrated with clients[6].
* Agility: Wachovia was able to leverage common services to quickly enhance enterprise strategies to respond to market demands. For example, one of CIB’s groups wanted to develop an “equity desktop”, which would allow bankers to trade equities and run portfolio analytics. Usually, creating a new equity trading application would take about six months to a year. However, several components identified during conversations with the business were already available as common services, and were leveraged to create the new desktop in just three months, giving the bank a significant me-to-market advantage.
* Innovation: The new infrastructure fabric built by Certoma’s team won it the No. 8 spot in Information Week’s Top 500 IT Projects since it improved business service levels (100x) and reduced transaction costs (30x), paying for the investment in less than nine months. The benefits directly led to the creation of more innovative business products. Wachovia’s Equity Structured Products unit, for instance, had plans to offer new derivatives products to its clients. Traditional Excel-based risk calculators would take anywhere from 30 minutes to several hours to calculate volatility metrics, which was extremely frustrating since it directly affected the business’ ability to sell and monitor new products. All that changed with the new infrastructure fabric, which powered a ‘volatility surface’ service that was able to generate risk metrics under different scenarios within minutes.
* Eco-fficiency: Wachovia had pledged to reduce its greenhouse gas emissions profile by 10% by 2010.[7] Since one of the largest consumers of energy at any organization is IT, the bank looked to IT to help in this cause. The CIBT unit led the way by consolidating its infrastructure and overlaying it with a virtual grid that could serve computing power on demand to business units. The team was awarded Network World’s “Enterprise All-Star Award” for successfully consolidating infrastructure and applying “green” computing strategies to achieve a project ROI of 300% (50 applications over 300 servers were reduced to 50 shared/allocated servers).
THE NEW CHANGE AGENTS
Implementing the Meta-IT framework requires an elite team of experts well-versed in technology management, business domains, and the latest innovations in technology implementation. But just as importantly, it requires each of them to be change agents—individuals committed to a new wave of thinking even in the face of the organizational resistance. Organizational resistance is an unfortunate but common phenomenon whenever innovative processes and technologies are introduced in firms with an entrenched corporate culture. Change agency is thus the single most valuable trait in a Meta-IT team.
Listed below are essential traits that should be used as criteria when putting together this team:
* Change Agency: First and foremost, the team must be comprised of change agents committed to leading the transformation of the organization. For this they must possess leadership skills, emotional intelligence, and the ability to work with the organization through its resistance to achieve adoption of new paradigms. It requires them to have clear and strong understanding of Meta-IT best practices, and to convincingly and clearly draw line-of-sight between the Meta-IT approach and business results.
* Management, Business, and Technical Expertise: Technology managers, business domain experts, and senior IT architects form the core of the Enterprise Meta-IT team. They not only bring superior knowledge of latest technologies and business models, but they are adept at simplifying complex concepts and communicating their benefits to the rest of the team.
* Relevant Experience: Ideally, team members must have experience institutionalizing the Meta-IT approach for an organization. While it is rare to find such people, the value of their experience is priceless in terms of knowing what works and what doesn’t.
* Dedicated to Finding Best in Class for You: The Meta-IT approach does not exist in isolation: it is an agile framework for firm-wide partnership. The team is therefore sensitive to charting the most appropriate path to Meta-IT given a firm’s particular history, business model, and corporate culture.
* Ability to Communicate and Educate: Essential to change agents is the ability to constantly educate and empower others to partake in organizational transformation. It is an essential skill that each member of the team must possess, since they will again and again find themselves in the position of having to explain and persuade traditional managers of the strategic value of the Meta-IT approach.
Providers of Meta-IT
Today’s IT teams and consulting firms are not equipped to be change agents—they have neither the thought leadership nor the expertise for Meta-IT initiatives. Thus, there remains a veritable gap in the market for the kind of forward-looking and holistic approach advocated in this paper. For now, Executive Management will have to cherry pick a team of in-house experts and/or consultants to create the Enterprise Meta-IT team. One firm which is emerging as a market leader is Adaptivity, a consulting firm formed by the team that led and jump-started Wachovia’s successful transformation. Given its extensive experience and relevant expertise, Adaptivity’s team has devised a number of frameworks that align with Meta-IT best practices. Adaptivity’s proven track record for being effective change agents and the approach that it has developed for Meta-IT shows the demand for such advisory.
Three examples of how Adaptivity incorporates key principles of Meta-IT effectively highlight how to incorporate these principles into concrete implementation plans.
Service Orientation of IT: Adaptivity utilizes innovative techniques for aligning business and IT, emphasizing theimportance of every aspect of IT as being a service which is flexible, dynamic and consistently aligned with enterprise goals. It is the first step in their five-phased methodology called ADIOS (Align, Design, Integrate, Operate, Sustain), in which each phase is tailored to fit the unique circumstances of an organization.
Quality of Experience (QoE): Adaptivity’s QoE maturity model is premised on the belief that cost efficiency and service quality must be balanced in order for any technology approach to be sustainable, and have continued business buy-in. For this purpose, they employ a systematic investigative exercise which gives them insight into an organization’s holistic IT infrastructure. This information allows them to create a system which dynamically allocates infrastructure resources as needed, thereby preventing waste without compromising service quality.
Fit-for-Purpose: The Fit-for-Purpose design methodology includes creating an inventory of all IT services and understanding how how their quality is affected. The requirements for achieving quality service are then mapped to the supply of infrastructure resources available in the organization. Using virtualization platforms, Adaptivity is then able to show how supply can dynamically be fitted to demand, resulting in an optimized energy footprint.
CONCLUSION
The Meta-IT framework is a holistic view of IT as a partner in enterprise strategy and requires a fundamental shift in how the role and value of IT is traditionally perceived. Without it, successfully leveraging technical frameworks and best practices to compete in global markets will be next to impossible. The Meta-IT framework is implemented using a set of best practices, and can be facilitated by a team of business and technology experts who are proactive change agents. Case studies such as Wachovia prove that if undertaken correctly, these best practices directly translate into increased profitability, better resource management, and IT’s stronger participation in revenue generation.
REFERENCES
1. The Gartner EXP report "Making the Difference: The 2008 CIO."
2. Michael Porter, “What is Strategy?” Harvard Business Review, November/December 1996.
3. Gartner EXP, "Making the Difference: The 2008 CIO Agenda."
4. IBM Global Business Services "Unlocking the DNA of the Adaptable Workforce: The Global Human Capital Study 2008.”
5. Maria Walken, “Susan Certoma Takes Wachovia to the Next Level,” Wall Street & Technology, July 26, 2007.
6. David L. Marguluis, “Banking on SOA” Infoworld.com, July 17, 2006.
7. Stacy Collett, “Top 12 Green-IT Users: No. 12 Wachovia Corp,” Computer World¸ February 15, 2008.
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Straight Through Processing for Financial Servicestag:www.ayeshakhanna.com,2008://1.152008-02-24T17:50:42Z2008-04-15T18:17:49ZElsevier | November 2007
Straight Through Processing (STP) is the name given to the automation of all processes related to the trade lifecycle of financial securities, including equities, fixed income, and derivatives. In the current market environment, business success is increasingly difficult without the benefits of IT systems which ensure accuracy, speed, and secure connectivity at all stages. This is as relevant to broker-dealers who are providing trade execution services, to marketplaces that are creating electronic interfaces for clients, to buy-side institutions that are searching ways to improve returns on their portfolios: all players are affected one way or another by the drive towards increased automation and scalability in a global 24*7 trading environment.
Straight Through Processing for Financial Services by Ayesha Khanna is only comprehensive guide in the market that addresses the holistic needs of an STP infrastructure. It answers questions such as: What are the current trends in the market and how is the trade lifecycle affected by these trends? What are the key technology solutions available to solve business requirements and how can one choose the best solution given a particular problem? What are the laws and regulations that are relevant to implementing an STP environment for the securities industry?
The book will be useful to anyone interested in technology solutions for automating and streamlining securities operations, including senior management responsible for trading, risk management and technology operations, business analysts, technology managers, strategy consultants, and IT developers.
Table of Contents:
Chapter 1: The Business Case for STP
Chapter 2: The Trade Lifecycle
Chapter 3: Service-Oriented Architecture
Chapter 4: Industry Standards
Chapter 5: Connectivity
Chapter 6: Data Management
Chapter 7: Reconciliation & Exception Handling
Chapter 8: Regulatory Compliance
Chapter 9: Business Continuity
Chapter 10: Virtualization & Grid Computing
Appendix: The Securities Industry
Order the book here.
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Financial Technology Book Seriestag:www.ayeshakhanna.com,2007://1.32007-07-01T15:30:00Z2008-04-15T18:18:05ZElsevier
Complete Technology Guides for Financial Services is a series published by Elsevier, a leading publisher of scientific and technical books. With finance becoming increasingly dependent on technology, this series is the first of its kind published to bring the two together in a clear meaningful way for business and technology managers to understand the issues and solutions that are facing them today.
Elsevier is world leading, multiple-media publisher of scientific, technical and health information products and services, with 7,000 employees in 73 locations around the globe. Publisher of more than 20,000 products and services, including journals, books, electronic products, services, databases and portals serving the global scientific, technical and medical (STM) communities. Elsevier is part of the Reed Elsevier Group plc, a leading international publisher and information provider.
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SERIES EDITORS: Ayesha Khanna and Jurgen Kaljuvee
Books in the series:
* Introduction to Financial Technology by Roy S. Freedman April 2006
* Electronic and Algorithmic Trading Technology by Kendall Kim June 2007
* Straight Through Processing for Financial Services by Ayesha Khanna November 2007
* Asset & Wealth Management Technology by Ayesha Khanna Forthcoming March 2009
META-IT BEST PRACTICES
Meta-IT can be achieved through a set of systematically institutionalized practices:
1. RECOGNIZE IT’S VALUE: Acknowledge IT as Part of the Revenue-Generating Value Chain
Meta-IT calls for a new mindset that recognizes IT as part of value creation. Without this shift in thinking, IT cannot fully embody its expanded role as a thought and execution partner in mapping strategy, and creating value-added products and services for the organization.
2. ALIGN BUSINESS AND IT: Trust to Educate, Educate to Trust
The single biggest obstacle in forming a strategic business‐IT partnership is lack of trust—the belief that the other party just 'doesn't get it'. This calls for business and IT to educate each other on their respective goals and competencies in simple conceptual terms. Such discussions align business and IT priorities and efforts, create a shared sense of common objectives, engender trust, and stimulate innovation.
3. THINK LIKE AN INVESTOR: Understand the Economics of Supply and Demand
The most appropriate way of evaluating ROI (return on investment) on IT investments is by examining IT supply and demand, i.e. mapping business processes (that are weighted by their contribution to enterprise goals) to IT services. Inadequate staffing and skills often doom IT projects. Matching IT supply and demand prevents investments in low-value services, which deflect resources away from high-impact initiatives. Like any investment portfolio, IT services are retired when their ROI is low and ramped up when their ROI is high. This represents a fundamental shift in the rigor with which IT is viewed, and brings IT to the same scrutiny as business units, thus elevating it to the same responsibility and same benefits.
4. BREAK SILOS: Invest in a Portfolio of Common Services
Services are those software components that can satisfy more than one business demand, and the identification of these services is a key outcome of the business process mapping exercise. The set of reusable software services, such as data and computing services, form the foundation of Service Oriented Architecture (SOA), and facilitate rapid time to market for new applications. Together, they form a portfolio of common reusable technology services, which are regularly evaluated for their ROI.
5. BE EFFICIENT AND ECO-FFICENT: Construct a Real-Time Infrastructure Utility
Most firms find themselves in a constant cycle of energy waste and underutilization of resources, most visible in the hugely inefficient and costly data centers that are the hallmark of every large company today. Organizations need to manage their infrastructure like a utility, such as an electricity grid: a real-time infrastructure that is able to pool and direct resources to meet fluctuations in business demand. The technology for managing IT infrastructure like a utility is variously called grid computing, cloud computing, and virtualization. For example, instead of dedicating a server to each business process, virtual infrastructure management directs several lines of business to use the same servers, often leading up to fifty times the performance at one-third the cost.
6. EMPOWER IT PERSONNEL: Create a Product Management Environment
One of the best ways to empower the federation of IT staff is for the central enterprise team to create a product management environment. This is an environment where a network of developers can coalesce around a core set of guiding standards and products, where they feel empowered to be innovative and yet trust that they have the support they need. For example, common services developed by various groups can be placed on an in-house virtual shelf, where other developers can access them and receive instructions on their usage. Very quickly, this environment will begin to migrate the developer community toward reuse, which will result in cost savings and faster time to market when creating new applications.
7. CREATE TRANSPARENCY: Measure Performance and Conduct Forensics
Systematic ways of monitoring the performance of IT are enabled by utility computing or real-time snapshots of IT utilization. There exist in the market today analytical tools that map IT usage to business processes, providing insight into whether IT is directing its efforts in line with strategic goals. In addition, they allow rapid investigation of root causes when problems occur and quick readjustment of resource allocation if wasteful consumption of services is identified.
8. SUSTAIN IMPACT: Build Skills through Education and Training
The only way to sustain the impact of current development and to continue to plan for the future is to build skills through education and training. Educating Operations on how to handle problems through simulated exercises, for example, is critical for maintaining the value proposition of a product or service. CIOs also have to look beyond the capabilities required today and plan for future skills. Having an adaptable workforce is now considered an essential capability for CEOs. More than half of the CEOs interviewed in a recent IBM study indicated that “the inability to rapidly develop skills is a primary workforce challenge”[4].
9. ENCOURAGE OWNERSHIP: Institutionalize Incentive Structures
In order for IT to rise to the occasion and take ownership of IT’s new expanded role—and accept the accountability that accompanies this ownership—it will have to be given incentives both in terms of recognition and reward. Incentive structures will have to be built along two dimensions: calibrating bonus structures to IT’s contribution to profitability; and aligning remuneration with use of Meta-IT principles, e.g. providing reward for efficient leveraging of existing IT as much as for creation of new modules.
10. VISUALIZE THE FUTURE: Use Playbooks to Imagine Scenarios
The ability to capture and analyze massive amounts of data is an extremely powerful capability that was not previously available to CIOs. It allows for the creation of playbooks whereby executives can evaluate strategies under different market scenarios and calculate the IT resources that will facilitate these strategies. IT can thought-partner with business units on which options to pursue by providing quick insight into IT capabilities currently available to service different scenarios scenario, and the time it will take to build new capabilities if needed.
11. DELIVER RESULTS: Plan Strategic Solutions with Short-Term Benefits
Businesses need to continue to operate daily, even as they plan for longer-term strengths and capabilities. The Meta-IT model is a results-based framework that emphasizes short-term delivery of high-quality results. New technology frameworks such as Service Orientated Architecture (SOA) are structured for such an approach. In SOA, even legacy components can be reused as the firm moves toward modernization, illustrating yet another example of how technical innovation can enable managerial best practices.
12. EVOLVE CONTINUALLY: Adopt an Iterative Approach
Businesses are not static: they are constantly responding to changing market conditions and evolving in response to competitor innovations. Thus, IT also has to continually collaborate with business to review the IT portfolio and ensure that it’s aligned with and providing input into the latest vision and direction of the organization.
LEARNING FROM SUCCESS STORIES: THE CASE OF WACHOVIA
The best way to prove a hypothesis is to test it, and even better, to have the evidence based on the testing someone else has already done. Does the Meta-IT approach work? While there are several examples of successful strategic use of IT in silos within an organization, one firm has particularly shown the benefits and value of using the right technologies the Meta-IT way: Wachovia Corporate and Investment Banking Technology (CIBT) division.
In 2004, Susan Certoma was hired as the CIO of Wachovia CIBT division with the explicit mandate to transform the organization into one of the leading investment banking divisions in the market. Even though Wachovia was the fourth-largest bank in the country, it lagged behind its competitors in its investment banking division and stood at an unacceptable position of No. 14. Certoma noticed that even though there were nine lines of business, each competing in different markets, they were using the same kinds of technology services. The lack of standardization amongst these services, however, meant that each line of business was creating its own set of software applications, often using servers, computing power, and code redundantly. The cost inefficiencies were astronomical.
Certoma decided that instead of finding specific answers for each line of business, her team would look at the infrastructure of the investment bank in a holistic manner and identify common services that could be leveraged across lines of business. “As part of our SOA strategy, our goal is to provide a single infrastructure that will provide multiple services that can be very differentiated based on each of our businesses,” she told Wall Street & Technology in an interview[5]. For this purpose, she hired Tony Bishop as director of product management, and they set out to transform Wachovia to become a serious competitor in the investment banking space.
What followed were four years of an effort that won Wachovia accolades and awards for innovative and transformational activities, including InfoWorld’s “Top 100 IT Project Awards” two years in a row for its Service Oriented Architecture & Utility Computing projects. These projects enabled $50 million in new revenue and $100 million in cost efficiencies (for an investment of $20 million over two years). Wachovia achieved this success by applying principles which fall under the realm of Meta-IT best practices.
With an elite team of experts, Certoma’s group spent several months working with business units to understand Wachovia’s business model and enterprise growth strategy. They then mapped all the required business processes (demand) to IT services (supply). Wherever they noticed that a service could be used for more than one business goal, such as information management and desktop modules, they earmarked it as a common service. The team then created a product management environment where a core set of reusable services were made available, and coupled it with a virtual grid infrastructure which provided lines of business computing and processing power on demand.
Wachovia thus entirely restructured the way technology was created, valued, and utilized in the bank, resulting in several advantages for the firm including:
* Differentiation: Wachovia’s Meta-IT philosophy paid off when it was able to differentiate itself from its competitors. In 2006, CIB’s global financial institutions group won three multi-million dollar contracts, partly because they were able to show streamlined technology architecture and processes that could be easily integrated with clients[6].
* Agility: Wachovia was able to leverage common services to quickly enhance enterprise strategies to respond to market demands. For example, one of CIB’s groups wanted to develop an “equity desktop”, which would allow bankers to trade equities and run portfolio analytics. Usually, creating a new equity trading application would take about six months to a year. However, several components identified during conversations with the business were already available as common services, and were leveraged to create the new desktop in just three months, giving the bank a significant me-to-market advantage.
* Innovation: The new infrastructure fabric built by Certoma’s team won it the No. 8 spot in Information Week’s Top 500 IT Projects since it improved business service levels (100x) and reduced transaction costs (30x), paying for the investment in less than nine months. The benefits directly led to the creation of more innovative business products. Wachovia’s Equity Structured Products unit, for instance, had plans to offer new derivatives products to its clients. Traditional Excel-based risk calculators would take anywhere from 30 minutes to several hours to calculate volatility metrics, which was extremely frustrating since it directly affected the business’ ability to sell and monitor new products. All that changed with the new infrastructure fabric, which powered a ‘volatility surface’ service that was able to generate risk metrics under different scenarios within minutes.
* Eco-fficiency: Wachovia had pledged to reduce its greenhouse gas emissions profile by 10% by 2010.[7] Since one of the largest consumers of energy at any organization is IT, the bank looked to IT to help in this cause. The CIBT unit led the way by consolidating its infrastructure and overlaying it with a virtual grid that could serve computing power on demand to business units. The team was awarded Network World’s “Enterprise All-Star Award” for successfully consolidating infrastructure and applying “green” computing strategies to achieve a project ROI of 300% (50 applications over 300 servers were reduced to 50 shared/allocated servers).
THE NEW CHANGE AGENTS
Implementing the Meta-IT framework requires an elite team of experts well-versed in technology management, business domains, and the latest innovations in technology implementation. But just as importantly, it requires each of them to be change agents—individuals committed to a new wave of thinking even in the face of the organizational resistance. Organizational resistance is an unfortunate but common phenomenon whenever innovative processes and technologies are introduced in firms with an entrenched corporate culture. Change agency is thus the single most valuable trait in a Meta-IT team.
Listed below are essential traits that should be used as criteria when putting together this team:
* Change Agency: First and foremost, the team must be comprised of change agents committed to leading the transformation of the organization. For this they must possess leadership skills, emotional intelligence, and the ability to work with the organization through its resistance to achieve adoption of new paradigms. It requires them to have clear and strong understanding of Meta-IT best practices, and to convincingly and clearly draw line-of-sight between the Meta-IT approach and business results.
* Management, Business, and Technical Expertise: Technology managers, business domain experts, and senior IT architects form the core of the Enterprise Meta-IT team. They not only bring superior knowledge of latest technologies and business models, but they are adept at simplifying complex concepts and communicating their benefits to the rest of the team.
* Relevant Experience: Ideally, team members must have experience institutionalizing the Meta-IT approach for an organization. While it is rare to find such people, the value of their experience is priceless in terms of knowing what works and what doesn’t.
* Dedicated to Finding Best in Class for You: The Meta-IT approach does not exist in isolation: it is an agile framework for firm-wide partnership. The team is therefore sensitive to charting the most appropriate path to Meta-IT given a firm’s particular history, business model, and corporate culture.
* Ability to Communicate and Educate: Essential to change agents is the ability to constantly educate and empower others to partake in organizational transformation. It is an essential skill that each member of the team must possess, since they will again and again find themselves in the position of having to explain and persuade traditional managers of the strategic value of the Meta-IT approach.
Providers of Meta-IT
Today’s IT teams and consulting firms are not equipped to be change agents—they have neither the thought leadership nor the expertise for Meta-IT initiatives. Thus, there remains a veritable gap in the market for the kind of forward-looking and holistic approach advocated in this paper. For now, Executive Management will have to cherry pick a team of in-house experts and/or consultants to create the Enterprise Meta-IT team. One firm which is emerging as a market leader is Adaptivity, a consulting firm formed by the team that led and jump-started Wachovia’s successful transformation. Given its extensive experience and relevant expertise, Adaptivity’s team has devised a number of frameworks that align with Meta-IT best practices. Adaptivity’s proven track record for being effective change agents and the approach that it has developed for Meta-IT shows the demand for such advisory.
Three examples of how Adaptivity incorporates key principles of Meta-IT effectively highlight how to incorporate these principles into concrete implementation plans.