Digital transformation is becoming a necessary investment and culture shift for CIOs. However, embracing digital transformation can be a challenging, expensive, and time-intensive process. It’s hard to know which decisions will not only have a positive impact on IT but will also translate to the rest of the business without insights from reliable and comprehensive data sources. Having full visibility into all technology spend is the best way for organisations to understand where they get the most value out of IT services. In turn, they can reallocate run the business budget to grow the business and invest in innovation to meet consumer and market expectations for evolution.
Through my many conversations with CIOs at the leading banks in the European market, I have learned some key areas where CIOs at financial institutions in particular can focus to drive successful digital transformations.
More cost efficiency = more innovation
In the same way a restaurateur has to have a complete view of his spend across waiting staff, raw ingredients, overheads and delivery services, to be able to manage the cost per cover, the IT department needs a holistic view of a business’ IT spend. Not just across on-premise infrastructure, but also over public cloud services and private cloud resources.
Gaining this level of transparency can help to identify areas where costs can be cut – this could be anything from employees being on the wrong mobile phone plan (and subsequently running up huge charges while roaming), to a business realising the true cost of lighting a data centre around the clock and making a decision to turn the lights off during the hours where it is used the least. In some cases, cutting those costs can lead to millions in savings.
But gaining this granular level of visibility into cost and usage can be challenging as it’s often spread beyond traditional IT teams or purview and throughout different business units; for example, marketing is one of the biggest offenders of spinning up unapproved cloud services.
There is a solution. Companies can get this important visibility by leveraging Technology Business Management (TBM). TBM is a discipline which aligns the value of IT services with the cost to produce them. When done correctly, TBM allows CIOs to move away from an archaic Excel spreadsheet set up, with different costs saved and managed in different documents, to using a real-time platform, which enables a single, transparent view of technology costs, consumption and performance across the enterprise.
Senior stakeholder buy-in
The world’s largest building society, Nationwide, is using TBM to maintain the high level of customer service that has enabled it to challenge far bigger UK banks for consumers’ business for years. Increasing consumer demands for improved mobile and online services saw a drive from within the business to invest in developing technology which would serve these needs.
As this was a demand arising from a specific area of the business outside of IT, it could be a challenge to find and manage the appropriate funding to develop the new technology for consumers. Using the transparency offered by TBM, it became much easier to illustrate to the various business units where there was IT spend which could be better allocated to innovation.
The modern CIO is a fundamental player in a business’ leadership team, and is key in helping the rest of the business to understand the crucial role that technology plays in this software era. In this position, CIOs have a responsibility to make technology costs visible to stakeholders in a way that they understand. In a landscape where financial institutions are having to meet constant demands for innovation from an array of sources, only with widespread senior stakeholder understanding and buy-in can a firm truly make a united decision on how to allocate funds to encourage a performance-based culture.
From back-office to revenue generator
RBS is another example of a company embracing TBM to remain competitive. Like Nationwide, RBS wanted to put the focus on the customer and the employees who serve them. Key to this was embracing technology as an innovation and growth engine, not just a back-office function.
Ninety three per cent of RBS’ payment transactions are directly facilitated by technology. This wide scale use of technology meant that gaining a holistic view of all IT spend was key to ensuring that costs were being managed efficiently and identifying where spend could be freed up for digital innovation. To date, RBS has managed to use this strategy to remove 20 per cent of IT’s annual budget, while simultaneously exceeding customer expectations for exceptional service.
This shift in approach to IT is key for any company in the financial sector. No longer should IT be viewed as a cost centre to simply facilitate the operations of other business units. Instead, it should be valued as a partner in revenue-generation across the business. Doing so, as in RBS’ case, can lead to efficiencies at such scale across the business that IT spend can be reduced and reallocated.
A holistic view for faster innovation
It’s an interesting time for technology in the financial services industry with the rise of digital banking, the appearance of innovative new systems such as blockchain and the onset of new regulation. But keeping apace with these developments requires a closer eye on IT spend than ever before.
Using TBM to manage technology costs is a chance to digitally transform using existing funds and to demonstrate which aspects of IT aren’t delivering the results required, reallocate resource as appropriate, and present senior stakeholders with a substantial argument for investing in other services which appeal to consumers’ incessant thirst for new technology. Financial companies who do this stand to keep up with the ever-evolving technology trends in the industry and strengthen their own position and capabilities.
Colin Rowland, Senior Vice President EMEA, Apptio
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