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Spotlight-blackInnovations in Trading and Technology (more stories)

04 November 2010

Operating with Surgical Precision

Smeaton explores how IT teams can act with flawless and effective surgical precision when seeking to cut costs while ensuring that the business is still supported and business apps, trades and transactions are not put at risk.

Surgeons don’t have it easy.  For the toughest operations they must make procedural choices that make patients better without causing any harm.  The wrong move and the patient comes out worse than before. But the right moves – born from knowledge, experience, and skill – can save and improve lives. 

IT teams are not tasked with saving lives. But they are tasked with saving companies money. And in this pursuit they too don’t have it easy. Often they face two conflicting imperatives when it comes to taking cost out of their operations.

The first is the usual mantra to reduce costs across the board, which inevitably kick starts a wave of horizontal initiatives to take out infrastructure cost. This can take the form of infrastructure optimisation via the “turn it off and see if anyone notices,” or virtualization strategy, through to the broader private cloud or “lift and shift” outsource strategies.

While these approaches have their merits, the challenge often comes from the competing imperative: ensuring that the business is still supported to the high levels demanded and that business applications, trades and transactions are not put at any risk.

This is where it gets ugly!

To truly understand risk and cost from a business unit or application perspective, it is impossible to separate the two things, yet this is exactly what the centralized IT governance model gives us – insourced or outsourced teams focused on horizontal infrastructure and vertical teams focused on interfacing with the business.

The vertical teams need to protect the interests of their business unit, so for them, business risk often outweighs the concerns of horizontal costs. Horizontal teams have to focus on the “take out cost” priority and therefore both teams end up at odds when the two imperatives collide.

So how do you solve this mess?

While we often see the fruit of this first wave of infrastructure consolidation and cost savings, we also find that the “what next?” question is often very hard to answer. If there is fat in the system, the first cut is often successful and low risk, but getting the next wave of savings is often fraught with danger. Taking out more and impacting the business is a decision few people want to make.

The challenge of finding this next wave of savings is often compounded by a lack of visibility on both sides. The horizontal teams have the horizontal data, the vertical teams have the vertical data, but getting that intersection is often too complicated, too costly and too time consuming.

Yet, visibility is exactly what you need if you are going to make a cut close to the bone.

Ever asked these questions...

“Can I double the number of portfolios through this system?”
“What are my pinch points if increase my volumes threefold?”
“Where do I have excess capacity?”

What if you could understand the digital footprint of a business transaction? Or profile the different demands that different types of users and counterparties put on your applications and infrastructure? Then you would be starting to get to the level of visibility you need to really answer those questions.

The irony is that all the data you need is already there, lying dormant in different silos around your systems. If you connect these dots, you can make sense of it all – and then you’ll have the comprehensive knowledge to act with flawless and effective surgical precision.

Spotlight-white-trans For more stories in the Innovations in Trading and Technology Spotlight Series click here.

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1 Comment to "Operating with Surgical Precision":
  • Missing
    shalom

    05 November 2010

    The problem with connecting the dots is that the data collected by the vertical teams usually has no way to link it to the data collected by the horizontal teams. The vertical teams are usually only measuring transaction counts. The horizontal teams are usually only measuring overall system utilization. It is rare that the transactions counts can be correlated with system utilization without collecting additional levels of detail. In essence, you are interested in using a model similar to Activity Based Costing. Most companies have problems switching to ABC because there is usually no way to tie the costs to business transactions. I have worked in organizations where this was done (uaully before the system was implemented). However, you will need a team of people with strong statistical, queuing thery and IT backgrounds in order to build the models and communicate with both the horizontal and vertical organizations.

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