Leveraging new technology to stay competitive
To compete in digital markets, organizations need to be able to operate at the accelerated pace this entails. This means being able to launch and scale a new product or service quickly, and also being able to perform frequent updates and upgrades to existing products and services. It means understanding customer needs, expectations, behavior and preferences, and being able to quickly translate these insights into new features, tailored pricing, personalized offers, and new revenue streams.
To compete in digital markets, organizations need to be able to operate at the accelerated pace this entails. Ian Cox, CIO columnist, advisor, and blogger
Some financial sectors are already facing the threat of disruption as start-ups look to use technology to create new business models, products, services and experiences. It is only a matter of time before the asset management sector faces the same challenge. The early signs are there: big data, social tools, and analytics are being used to track sentiment, develop and test new products, analyze scenarios, and increase the accuracy of forecasting.
Technology-enabled self-service solutions supported by mobile apps are enabling a new breed of low-cost platform. And robo-advisers along with other applications of artificial intelligence are gaining momentum. To remain competitive in the face of this revolution, asset management firms need to embrace digital. They need to focus on their customers’ needs and identify opportunities to use technology to enhance their existing products, create new offerings and enable new business models, and they need to be capable of moving quickly; digital markets do not wait for companies to catch-up.
The challenge of agility
Operating at the speed of digital places new demands on the organization’s technology platform and on its IT department to exploit technology to create value, and to do it quickly. Leveraging concepts and methodologies, such as design thinking, Agile and DevOps, allows IT departments to take a more customer-centric approach to designing, building, supporting, and enhancing solutions, at a much higher speed than has traditionally been the case.
But how does the need for speed and agility affect the overall direction of technology within the organization? An IT strategy typically takes a 3-5 year view of the organization’s technology requirements in line with the long-term vision and business strategy. However, given the dynamic nature of digital markets, it is becoming increasingly difficult for organizations to define, and more importantly, stick to a long-term strategy: So how do you create an IT strategy that is aligned to the business strategy when that business strategy and hence the organization’s technology requirements are changing on a regular basis?
But how does the need for speed and agility affect the overall direction of technology within the organization? Ian Cox, CIO columnist, advisor, and blogger
The agile IT strategy
To confront this apparent dilemma, IT executives have been searching for a new approach to strategy development, an approach that can cope with the changing priorities and technological requirements of the business. Agile is such an approach, and applied to defining a strategy, it enables the IT department to align the technological infrastructure and tools with business needs, and to support an organization operating at full speed.
The seven steps involved in developing an agile IT strategy are:
1. Identify the business capabilities that will be needed over the period covered by the organization’s current strategy and vision.
2. Develop a high-level technology vision that describes the key features or characteristics that the organization’s technology platform must have in order to support the organization’s strategy.
3. Agree the planning horizon to be covered by the technology strategy (organizations faced with fast changing markets may need to work on a 6-12 month horizon whereas companies in more stable markets may select a 12-24 month planning period).
4. Determine the business capabilities that will take priority during the agreed planning horizon, and assess the gaps between the current and required level of each business capability.
5. Identify and prioritize the technology initiatives required to address any gaps between the current and required level of the priority business capabilities.
6. Develop a roadmap showing those initiatives that will be delivered during the agreed planning period.
7. Repeat steps 3-6 towards the end of the current planning horizon. Repeat steps 1-6 whenever the organization’s vision and strategy is updated.
A close working relationship between IT and the rest of the business is essential to successfully adopting the agile approach to defining IT strategy. As with Agile development in general, it is essential that the new approach is properly implemented within the organization and receives the necessary resources and time for it to be successful.
Where an organization identifies the need for large or long-term projects (e.g. those that last longer than the agreed planning horizon), these should, wherever possible, be broken down into distinct and discrete stages that correspond to a planning period. Each stage should deliver a working and usable solution that realizes value for the organization. It should also be possible to stop or delay the project after each stage if other priorities that need to be addressed in the next planning horizon are identified. Hence, committing to the next stage of a large project should not automatically commit the business to subsequent stages of the implementation.
The long-term view
So, an agile IT strategy ensures that the organization’s technology capability will continue to be aligned with the business even though it may be changing priorities on a regular basis. But it also gives rise to an important operational challenge: How to ensure that, despite frequent changes in direction, the result will be an integrated, scalable, resilient and secure platform that meets the long-term needs of the organization as well as its short-term demands?
Architecture has a key role to play in addressing both the short- and long-term needs of the business. The organization’s long-term vision should be used to develop one or more target architecture models or scenarios. The IT department should also develop a set of architectural principles and standards that, along with the target models, can be used to guide day-to-day decisions as well as discussions with the rest of the business about how to meet the needs of each planning horizon.
…whilst business priorities and needs may change, all technology decisions are being made on a consistent basis and with a target architecture in mind. Ian Cox, CIO columnist, advisor, and blogger
This will ensure that, whilst business priorities and needs may change, all technology decisions are being made on a consistent basis and with a target architecture in mind. It should also be noted, however, that the architectural models, principles and standards should be used to inform decisions only. In other words, if meeting a business need requires overriding a principle or standard, then this should be a decision made collectively by the relevant stakeholders after considering the benefits, risk and longer-term implications of doing so.
Building the right type of IT department
This is not only about technology, however; IT executives will have to establish and maintain a department with the requisite people and competences following processes, which are consistent with an agile IT strategy.i
In terms of the IT department, this means identifying the core competencies that it ought to have and, as far as is possible, focusing all of the departments resources in these areas, as this is where it will add the most value. As well as a base set of competencies such as architecture, data management and project management, which every IT function will need to support an organization in the digital age, this may also involve other competencies such as app development, that are considered to be core to the business in terms of differentiation or revenue generation.
All other activities should be outsourced, or acquired from suppliers and partners to ensure the IT function can focus on its core competencies and hence respond quickly to the changing requirements of the rest of the organization.
Rising to the challenge
In the same way as it has transformed other sectors, digital will change the asset management industry. It is a question of when, not if, this happens. And technology will be fundamental to the transformation. Asset management firms that can use technology to transform how they operate and to enable new products and services will succeed in the digital world.
About the author
Ian Cox is a thought leader in strategy, digital, and the role of the CIO and IT. He is also the author of the books, Disrupt IT and Digital Uncovered. In addition to writing and speaking about business and technology issues, he works as an adviser to boards and executives across a range of industries and as a mentor for IT leaders.