How to Manage Your IT Spaghetti

Achieving digital transformation becomes more complicated in large banks which are siloed in nature, have evolved and grown through acquisitions and have many legacy systems – or IT spaghetti.

Maintenance of these IT systems consumes resources and budgets that can impede a firm’s ability to innovate, slowing down business transformation. So getting an accurate picture of your as-is spaghetti, or current architecture and business processes, is a critical first step.

Creating an accurate IT inventory has many benefits; the complexity and system dependencies become transparent, as does any duplication of systems. And the associated costs of those systems - from licenses to support contracts and internal staff required to keep systems running – becomes visible. Intelligent rationalization of systems can help to achieve considerable cost savings.

Freed up budgets can then be used for transformation programs. This is where it becomes important to have integrated enterprise architecture, portfolio management and IT planning capabilities. After all, having just rationalized systems and achieved significant cost savings, you don’t want to create a new layer of spaghetti or procure new systems when you already have those capabilities in-house.

Providing visibility and transparency across the business means that existing IT can potentially be re-used, creating cost savings both in IT expenditure and reducing project timelines due to avoiding lengthy procurement processes, installation, deployment and training. It also creates opportunities for standardization and closer alignment of business with IT.

And then there is operational risk management. Managing and controlling complexity and dependencies is an important aspect. But so is ensuring that license and contracts are in place and that all critical systems are able to be supported, with no major skills gap. Managing vendor risk and other third party risks are also important, especially with the rate at which Fintech firms are starting and failing.

At the start of the year the CFTC stated that cyber threats are the single biggest risk to the stability of global financial markets. Since then we have seen high profile cases of hacking including the Bangladeshi Central Bank, the Bitcoin exchange Bitfinex, and the anonymous group target banks, central banks and exchanges around the world. An accurate IT inventory becomes important in managing this risk; if you don’t know what systems you have or how they are interconnected then you can’t possibly hope to know their vulnerabilities. Nor can you perform adequate threat management or disaster recovery planning.

Digital transformation is about business transformation using technology, so the business and IT need to be aligned. Rationalization of systems cannot be performed without understanding the business processes that they support and the functional and non-functional requirements of the business. It’s no good standardising on a message bus technology without understanding the latency and throughput requirements of your trading desks.

Analysis and optimization of existing business processes can also help to achieve significant cost savings, process efficiencies, and improved customer experience, e.g. by reducing the time to on-board customers and providing the customer with the visibility of what stage their application is at. It’s important that this analysis and optimization is done collaboratively with visibility and transparency across all stakeholders including IT. Such process optimization could even lead to rationalization IT of systems or utilizing other existing systems, thanks to that well-documented inventory of IT assets.

Transformation is not one-time project, but a continuous journey to improve the business, stay competitive and relevant to your customers. So, although all these activities are a good starting point to begin transformation, they too should be applied on a continual basis. Otherwise you soon end up where you started – in a mess of IT spaghetti.