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Recession blues - reinforcing need for CIOs to focus on agility

CIOs in the financial services industry series number six. Written by Stuart Phillips, MD of MagmaTec.


Johannesburg, 05 Nov 2009

2009 has been a challenging year for CIOs all over the world. And for a while, South Africans were revelling in the prospects that we'd avoided the full impact of the recession tsunami. Unfortunately, the impact of globalisation meant a different reality awaited us.

This year has taught us many lessons, but these two challenges are unanimous among CIOs as those that contributed most to the success or failure of their operations:

1. This year has seen unprecedented cost pressures placed on IT departments.
2. The rate of change required by companies to remain competitive and successful increasingly places pressure on the role that technology needs to play to ensure this happens.

CIO agenda for 2010, beyond

The combination of recessionary and competitive pressures will continue to drive the CIO agenda for the next few years. In the financial services industry specifically, the level of automation required across the entire value chain means that the CIO's role in enabling business agility is significant, and it's therefore no surprise that financial analysts track the movements of CIOs and CTOs in listed companies. All these pressures have meant that "agile" has fast become the most touted buzzword of 2009.

The CIO has a dual challenge: to keep the business changing and adapting using systems and technology platforms and processes to get ahead and deliver shareholder value and wealth; and secondly, to do this under severe pressure to reduce costs. As you would guess, there is no quick fix, however, we believe there are two main areas that CIOs need to focus on if they're to shift their organisations to ease the burden and achieve greater results. The answers lie in the development processes and systems architecture, both of which are enablers of rapid ongoing change.

Development processes as enabler of change

This is not about the latest agile methodology, but rather the new paradigms and philosophies underpinning the move to agile methodologies. If these are not understood and embraced by a critical mass of senior people in both IT and business, any move towards an agile methodology will fail.

Key elements of these philosophies include:

* The need for a high trust relationship to develop between all parties involved in the development process. The estimation and expectation-management difficulties in coping with rapid ongoing change need to be acknowledged, and the agile development teams need to move beyond the "blame game" that gets played in traditional waterfall approaches. Ongoing changes to requirements are embraced by the process as normal, and in fact, desirable, not seen as "scope creep" and "project plan deviations".

* Technical debt and quality debt are terms referring to the longer term impacts of short-term sacrifices or poor decision-making; for example, when functionality requirements are prioritised over system architecture quality in the delivery debates, creating a situation where longer term delivery capability (or "longer term capability to change") is compromised. The process needs to recognise that in many cases, scope reduction needs to be sacrificed for quality improvement, even considering the rate of change, a typical system is going to be around for many years. Many companies have managed to implement continuous integration solutions, yet compromise on the implementation of automated unit tests, and as a result, negate many years worth of quality guarantees for the benefit of short-term functionality.

* The previous point needs to be supported by a firm understanding from the business of system ROI, and at a much more granular level than previously evaluated. In theory, each new function or service should be evaluated for the return it's generating for the business, and while this is sometimes difficult in practice, a more granular approach enables better trade-off possibilities when it comes to functionality and quality - whereas with waterfall approaches, an all-or-nothing mindset often prevails.

The key take-out from the above for the CIO is that it is her role to ensure that the required process changes are evangelised, especially to senior business sponsors. Getting the buy-in from these key stakeholders is a large part of the journey to success.

Systems architecture as change enabler

The second leverage point in the face of rapid ongoing change is that of architecting systems for change. While many argue that this aspect should stay within the realm of a CTO rather than a CIO, it is critical that both agree on the key aspects. The CIO's role is to evangelise the key architectural principles to the senior business sponsors in an accessible language, and to tie in the relationship between business solutions architecture and systems architecture (and the need for agility in both).

As an example, it is of limited benefit for IT to introduce a services-oriented architecture (SOA) if the business is not thinking of designing its offerings or final products as services. Business services should tie into the technical architecture from design, implementation, measurement and management perspectives.

A properly implemented services architecture from the business level down provides the potential for real business agility, whereas an IT driven SOA implementation rarely delivers significant business value.

CIOs will be forced to pay close attention to the move towards development processes and systems architecture that support rapid change. Many have already started on the journey, but as with any change requiring a paradigm shift, the journey towards agility is fraught with challenges and setbacks, and requires both courage and skill to implement in concert with a solid understanding of where the business is going and how IT can facilitate this success. CIOs have a significant role in bringing about the required changes to organisations, especially the changes required in the way business and IT work together. It is also clear that while certain themes and best practices are emerging, each organisation needs to map out its own path. The organisations that succeed will be significantly better placed for sustainable competitiveness, than those who decline to take the journey.

MagmaTec will host a CIO's breakfast in Cape Town, on 24 November 2009, on the topic: Agile: Promises & Lies. For more information, e-mail Stuart Phillips at stuartp@magmatec.co.za.

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Editorial contacts

Kerryn-Leigh Anderson
Zenkai Communications
(+27) 82 457 7236
Kerryn@zenkai-comms.co.za