IBM Survey Results:
Financial Services IT Service Management Strong in an Uncertain Economy
Industry Solutions: Financial Services Sector Blog
By Mike Zelle, Market Segment Manager, Financial Services Sector - Tivoli Software, IBM
IBM conducted a global survey of CIOs and other IT investment owners during December 2008 and January 2009. In these ‘uncertain economic times’ the results are very interesting from a Financial Services IT point of view.
Key survey results
The current economic and market conditions these organizations face have had a significant negative impact on enterprise budgets. But IBM’s survey showed the opposite to be the case for IT budgets.
• The vast majority of IT decision makers (85 percent), in financial services and across all industries, reported budgets remaining flat or changing only slightly
• 9 percent of those in financial services reported significant budget reductions
• 21 percent indicated that they were increasing their investment in IT
• 6 percent of financial services organizations indicated they would be significantly increasing their IT budgets in response to current economic and market conditions.
IBM believes that these IT investments are continuing because these companies recognize that IT services can not only help the enterprise as a whole to operate more effectively and efficiently but also provide competitive advantage. These businesses have realized that just cutting costs within IT has limited business benefit and introduces unacceptable levels of risk to the entire organization that depends on the quality and reliability of IT services for efficiency, compliance, security and even competitive differentiation. If IT is 10 percent of the operational expense of a financial services business, cutting IT by 50 percent will yield only a 5 percent reduction in business operational expense, but will most likely unacceptably expose the other 90 percent of the business to significant new problems, risks and competitive disadvantage.
Financial services organizations were also disproportionately more likely than other industries to also expect IT to be an innovator, to research and recommend enterprise strategic objectives, to identify opportunities for innovation and to develop new business areas or services.
Financial Services IT priorities to support business requirements
The most commonly reported financial services priorities impacting IT investment plans were:
• Improving access to and leveraging customer information
• Improving efficiency / reducing costs of business activities
• Increasing customer retention.
Mandatory programs / projects that must take precedence:
• Compliance is a more pressing concern for financial services than it is for any other industry, with 88 percent of projects in this area continuing, expanding or being initiated.
• Systems management ranks as high as compliance, which is understandable given that the business infrastructure that is required to enable market survival for today's financial services company is increasingly an integrated digital platform of IT-enabled business services.
• These activities also explain why technology virtualization and storage consolidation, at 78 percent and 72 percent, are also high on the list, coming only after security. A scalable and manageable IT infrastructure is required to provide the resilient basis for quality services.
IT Service Management is the key priority
Smarter management of IT services is the top business-driven priority for IT. Service management builds on foundational capabilities—security, compliance, managing IT systems, and virtualizing and consolidating the physical infrastructure—that provide the basis for the reliable IT services required by the business.
Service management projects continued, expanded or initiated as a consequence of the economic and business environment was 68 percent—ahead of technology areas such as server deployment, mobility and network convergence.
Conclusion and recommendations
According to the results of the IBM study, IT leaders in the financial services industry are reprioritizing IT projects to focus on optimizing IT-enabled business processes. Accordingly, once they have met urgent requirements in areas such as compliance, systems management, virtualization/consolidation and security, they are investing in smarter management.
This business-driven approach to service management emphasizes the role IT services can play in improving the efficiency and effectiveness of the organization as a whole rather than on the type of cost-cutting within IT that can produce negative and unacceptable business risks.
The study results point to the following key recommendations:
• Improve the quality and reliability of IT services that process financial transactions, provide integrated access to and leverage customer information, improve customer loyalty and retention, enable workforce productivity and support compliance.
• Prioritize smarter ways of doing things through service management and technology consolidation.
• Revise measurements and reporting to provide more visibility to process performance, quality of service, outcome metrics, costs, and business value.
• Change the focus from technology and optimized subsystems to optimization of IT-enabled business activities. This includes building out the digital platform of the business and improving the ability to manage it as the new business infrastructure.
• Apply some investments to tactical quick wins—but also work toward eliminating service-quality inhibitors through longer-term strategic initiatives.
For more information:
• Whitepaper: IT service management in an uncertain economy: Resetting IT priorities in the financial services industry- ftp://ftp.software.ibm.com/common/ssi/sa/wh/n/tiw14033usen/TIW14033USEN_HR.PDF
• Pulse 2010 The Premier Service Management Event- http://www-01.ibm.com/software/tivoli/pulse/
February 21-24, 2010 MGM Grand, Las Vegas
Mike Zelle is the market segment manager for the financial services sector for Tivoli Software at IBM.