Let's take a journey back in time 20 years or so, to the good old days of large-scale IT projects. They tended to be four to five years in duration with a long payback period (probably five to 10 years), and cost anywhere between £20 million to £100 million. Some of these projects were successful, but many used up large amounts of resource and money and were never completed, so were either partially implemented or abandoned completely.
Therefore, is it any wonder that we now appear to have a new generation of technically savvy senior executives on both the IT and business sides, who have lived through that era and been negatively affected by it as a result?
A lot of these executives might accept that five years is too long a period of time in the modern era to be confident of any degree of certainty in the plans and products of an organisation. In addition, the pace of change in markets, economics and regulation, has been such that more and more companies have to operate on much shorter planning horizons. An operations manager who is tasked with taking his cost base down 10% per annum is now under pressure to deliver change on an 'in year' (or near to) basis, so traditional investment hurdle rates go out the window.
These factors are exacerbated by a significant increase in the technical knowledge and awareness of the average business user, as well as an increasing desire to take ownership and to drive their own projects even when IT is a major component of them. Business users have grown up depending on IT in both their personal and work lives, and as a result, they are far more demanding and aware of the benefits that good IT can deliver.
The impact of this new trend has manifested itself in a number of ways. In the past in many organisations, decisions regarding the selection of business applications would have been taken primarily by IT, albeit with some input from the business, especially in the early stages of the process. However, there is an increasing trend for the role of IT to change, whereby they act as the glue that holds together various discrete solutions that are needed by each business area. These solutions are often being implemented by project teams that are driven by the business, with an IT component sitting within the project teams but not leading the process. This has also led to a move away from a traditional waterfall process where requirements are tightly defined upfront and then developed by IT.
Agile groups of developers comprising both IT and business people (and assisted by intuitive and easily configurable design environments that lead to rapid, iterative developments) are more common these days. This approach can deliver incremental benefits in months rather than years, and is therefore extremely attractive to business executives with shorter term targets to achieve.
We are also seeing a shift away from proscriptive business applications that come with pre-ordained out-of-the-box functionality, towards more flexible approaches that deliver benefits in multiple phases of a project 1, each of which can be cost-justified in its own right. An example might be an insurer adding a claims management and optimisation layer on top of its existing legacy systems rather than ripping out the old system and replacing it with a new one. This approach is likely to result in a slightly reduced functionality and benefit proposition, but this is offset by a drastically reduced cost and time to implement. The resultant solution, although not perfect, still provides significant benefit and, crucially, in a timescale and at a cost that is more justifiable.
This type of proposition requires a completely different engagement strategy from the vendor community. It is no longer acceptable to simply push product features and functions to either the IT or business community and expect the client to work out for themselves how they might gain benefit from them. Vendors must have a real understanding of the particular circumstances, challenges and issues of each individual client, and be able to explain and cost-justify how that problem can be solved in the context of the vendor's solution. This requires a much more consultative and investigative approach from the vendor and a drift in skill sets from purely technical to a hybrid between technical and business skills. It is also more likely that when dealing with this type of potential client, that the first port of call is at the senior level of the business community rather than IT or procurement, as in many instances there is not a recognised project or articulated need in advance, as that evolves from the initial consultative engagement.
There is therefore a need to articulate technology solutions in the context of the business issues that are being addressed. The language used needs to change from 'content management', 'business process management' or 'case management' to something that is more identifiable in the context of the business problem in question and its solution.
In summary, while the business-led approach to IT has become firmly established within many organisations today, the shift towards a rapid, flexible approach to IT projects, while not without its flaws, is likely to become increasingly prevalent in the face of continuing economic pressures and immediate business needs, and with it a change in the way vendors must engage with clients.
At DST, we have already adapted our client engagement strategy in recognition of these trends. In addition, we are in the process of developing proposition capabilities that address a number of key functional areas of financial services organisations. These propositions include claims management, customer-centricity, client on-boarding (including KYC, AML, FATCA, etc), mortgage and loan origination, online applications and legacy modernisation. If you would like to talk about any of these propositions, please contact us using the details below.
1. "Smart Process Applications Fill A Big Business Gap", Forrester Research, Inc., August 2012, Andrew Bartels, Connie Moore
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