CIO Ian Alderton is banking on the future

By Mark Chillingworth 9th June 2016

Ian Alderton CIO. Picture by Harry Chambers

 The end of a role is often seen as an opportunity to look back and reflect. Ian Alderton has flipped the coin and is looking ahead at the growing number of opportunities financial services CIOs can embrace as attitudes, regulations and technologies open doors.

Alderton, a specialist in Corporate Banking (think of banking that deals with corporate and institutional customers) has recently completed three years modernising the technology of the Bank of Tokyo Mitsubishi (BTMU) in Europe.

“Banks are data services where data is their most precious asset. As such It is no longer enough to think of digital as a veneer to an analogue service – it has to be about changing the value chain,” Alderton says of how he had to energise and simplify the technology operations of BTMU to ensure it was ready to adapt to the changing banking landscape.

“I was given a mandate to change the value proposition across Europe creating a stable technology operation. So now it is nimble and effective and the organisation can tap into the technology capability to support and achieve its business objectives.

“Resilience has significantly improved and increased through the use of Infrastructure-as-a-Service (IaaS) and private cloud. That has improved the value technology delivers to the bank’s customers,” Alderton says at our meeting in Royal Exchange at the heart of the UK’s and Europe’s financial services community.

“There was a massive improvement in the maturity of the technology at BTMU, going from craftsmanship to industrialisation” the CIO says of how BTMU strode up the assessment levels of ITIL, the IT service management best practice guidelines. Alderton brought in a leading independent third party to assess the ITIL levels for BTMU, an industry benchmarking exercise both the CIO and business really value.

Comfy clouds

Over recent years the financial services community has begun to feel more comfortable with cloud computing, where as this author recalls hosting a cloud computing event for the CIO community four years ago and the summary from attendees ran along the lines over our dead bodies. Alderton laughs when I recall the story and says the acceptance of some, small level of risk in the use of cloud based technology services has been “the most comprehensive” change in the sector in recent years.

“Banks can now tap into that power and address any peaks in demand,” he says, explaining that cloud has won some hearts in banking for the technologies ability to help banks perform data intensive credit risk simulations in order to meet new global Regulatory requirements, such as Basel III, following the financial crisis that began in 2008. In a post 2008 Vickers Report world (set up by the coalition government in the wake of the financial crisis) banks today must now be rigorous in identifying risks and have strong contingency plans in place. Scenarios that place a high demand on the technology capacity of the bank and therefore prove the worth of cloud computing.

“You need an unlimited amount of capability to run these scenarios at the capacities that they demand, so options like the Amazon EC cloud are incredibly powerful,” Alderton says. The highly experienced CIO says investment banks, in his opinion, have been the banking pioneers of cloud usage, but every bank is different. Alderton has been CIO for corporate banking at RBS; CIO for corporate and investment banking at Wachovia Bank, part of Wells Fargo and had leadership positions with Prudential Financial, Rothschilds and Deutsche Bank.

“One of the big challenges is the capital risk models that must be maintained according to regulatory demands. By using an on demand cloud utility, banking CIO are only charged for the computing capacity used, meaning that significant capital costs are moved into much smaller variable operating costs that will mirror true business demand,” he says of how the increasing regulatory demands placed on banks have created a cloud technology innovation demand in the sector.

Cloud computing may be giving Alderton’s peers greater performance and shifting costs from capex to opex, but as CIOs in every sector know, it comes with a different set of demands.

“Where there is a big change in the banking sector CIO world is cyber-security, especially since we have seen a number of high profie cyber intrusions. Recent events have painted a very different picture of the cloud,” Alderton says of how all the recent cyber attacks were on in-house systems and not cloud based services. He says CEOs and transformational CIOs see cybersecurity protection as a much more layered approach, with cloud playing its part.

The CIO has exploited the potential of cloud computing in his recent role. Alderton sees the potential for Blockchain the permission free distributed database that creates a growing list of data records in a continually growing ledger that is hard to alter. “The real value is in cross border payments, a payment process that has been in place for 150 years and is based on the concept of “wire transfers” originally developed by telegraph companies. This opens up and creates transparency. Imagine that you need to wire money overseas to your family. Today this can take several hours or even days to move the money from your account to the destination account” he says. “With Blockchain you can create real-time transactions, with full transparency and tractability at low cost and it begs a question of the need for a central banking transfer organisation. For financial inclusion, Blockchain is a very positive trend.

“There is a perfect storm of business intelligence (BI), big data and new competitive and regulatory environments causing great change in financial services. Banks have options to buy, build or partner in all of these areas. Many have already bought disruptors, some are looking for an internal build and there is a growing number of partnerships. R3 is a good example,” Alderton says of the Blockchain consortium formed in 2015 by 42 major financial services organisations to research and develop Blockchain. R3 members include Barclays, Credit Suisse, Goldman Sachs, JP Morgan, RBS and UBS. Interestingly, Barclays and JP Morgan have considerable technology centres of excellence in the UK.

“A number of banks have already taken out Blockchain patents and the speed of market commoditisation is having a significant impact on CIOs. Customers always want instantaneous provision and the customer’s experience of using technology such as DropBox and iCloud has shaped their expectations of banking technology.”

Regulation banking

Sir John Vickers accused the Bank Of England, on the day this article was written, of not putting the full force of his regulatory suggestions into action. Whatever comes of that debate, it is clear talking to Alderton and some of his banking peers that regulatory compliance is a big part of their day job. Alderton describes how BCBS2329, which regulates the principles of data aggregation, means CIOs and their organisations have a responsibility to be accountable for the data they hold and who the data owners are. Alderton has written for CIO UK on how banks are data businesses and he believes these regulations will enshrine that position.

“The same rigour used for a physical asset like gold must now be used with data,”

“The same rigour used for a physical asset like gold must now be used with data,” he says of how important information and the teams that handle it have become in banks. The Dodd Frank Wall reforms in the US, and the Markets in Financial Instruments Directive (MFID) in the UK “are all about data, its regulation, risk, reporting, management and stress testing,” Alderton says of the world banking CIOs are preparing for.

“Banks are now hitting a new level of industrialisation of technology that will move away from analogue processes to a new digital infrastructure that will be optimised around social, mobile, data analytics and cloud as well as a very prescriptive regulatory framework.It is about how they can re-write some of their business models and exploit digital assets based on a new level of technology disruption and innovation.”


This article was first published in CIO Magazine on 9th June 2016

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Digital Disruption – Key Pillars for Success (Part 3)

In my last blog Pillars Three v1.1I discussed the key trends of
Digitisation and Digitalisation, and the process of exploiting digital assets to maximise new revenue and value opportunities. In this blog I will be discussing the key pillars for digital success:

  • Clear Vision & Strategy
  • Architect for Digital
  • Innovative & Agile Culture

The digital agenda is changing the very nature of business, making markets more dynamic and putting the customer at the heart of the organisation. It is no longer sufficient to digitise separate end to end value chains by applying a digital veneer to existing activities. Banks need to move from a product centred approach based upon physical distribution to a new customer centric structure based on digital distribution.

Financial services organisations should consider the lessons from the Telecoms industry where AT&T, a large scale government owned monopoly providing local telephony services in the US and Canada, was broken up in 1982 into 3 separate “NetCos” or baby bells. These individual “NetCos” are responsible for the underlying operation with the “ServiceCos” providing the service direct to the customers. In this model, banks would become “Transactional hubs” or “high cost processing platforms” with new  “ServiceCos” (or FinTechs) providing the service direct to the customers and effectively disintermediating the banks.

Banks are much more nervous about being left with high costs, highly-commoditised processes and not much growth” Morgan Stanley.

Fast forward to 2016 and banks are facing significant structural reform, such as Basel and Dodd Frank legislation, but at the same time have the opportunity to embrace the new digital eco system.

In this new digital ecosystem, commerce and future business success is highly dependent on 3 key pillars of a (i) Clear Vision & Strategy that is (ii) Architected for Digital from the ground up coupled with (iii)  an Innovative and Nimble culture.

1. Clear Vision & Strategy
A clear vision and strategy underpins the digital roadmap and is paramount in order to articulate how digital will support and enable business to reach its strategic goals and aspirations. This needs to be owned by the CEO to drive execution, promoted through opportunities such as digital visioning road trips, to secure buy in and commitment across and down the complete organisation.

2. Architect for Digital
Today, Digital goes beyond mobile and the conventional mobile app. It requires the process of Digitalisation to change a business model and provide new revenue and value producing opportunities.

Digital and the ability to innovate at the core of the organisation is a critical skill set that will require new talents, pioneering capabilities and creative competencies.

Digitally Proficient Workforce
New digital skills will be required especially in new emerging technologies, such as data analytics and connected commerce (IoT). This will require investing in and up-skilling existing teams as well as bringing in skilled and focused expertise in to the organisation.

Arup the engineering consultancy famous for the Sydney Opera House and many of the world’s most iconic bridges is training 3,000-4,000 employees in digital skills.

Operating Model
Critical to success is adopting an agile and iterative operating model, transforming IT development to deliver the speed and agility business users require.

This should be underpinned by a flexible sourcing strategy to utilise increasingly commoditised technology services based on cloud technology, from multi channel commerce enablement and mobile payments through to customer journey analytics.

A streamlined digital operating model will require new governance frameworks to embrace all key business units and ensure that key risks are managed and mitigated efficiently. This will include appraising the risk from the wider technology ecosystem, managing new emerging opportunities and mitigating threats in a well informed and cognisant manner.

3. Innovative & Agile Culture (Digital DNA)
The new digital world is a multi mode, omni channel, multi device ecosystem where the customer is king and innovation, speed of delivery and quality is highly prized.

As part of its new Digital DNA an organisation has to think digitally first and foremost across all its key processes. To support this pace of change an organisation has to adopt an innovative and agile culture, underpinned by cross functional teams that can embrace collaboration and is willing to takes risks to build new capabilities at a faster pace.

In Summary
Digital is all about innovation to put the customer first and foremost at the centre of the organisation.  This can only be achieved by establishing a (i) Clear Vision & Strategy  (ii) Architecting for Digital from the ground up and building (iii) an Innovative and Agile culture.

If you are struggling to understand digital and how it impacts your organisation, please get in touch with me.

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Tel : +44 (0) 7702 777770

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Digital Disruption – Digitisation and Digitalisation (Part 2)

In my last blog MakeItDigitalI discussed a new wave of digital disruption where existing business models are being challenged by agile new disruptors that have been built for the digital age, putting the customer in charge, with social, mobile, data analytics and cloud technologies at their core.

In this blog I will be discussing the key trends of Digitisation and Digitalisation.

1. Digitisation
Many organisations are anxious to get ahead of the curve on digital which is changing the very nature of business and making markets more dynamic, putting the customer first and placing data at the heart of the organisation.

In reality there is no instruction book or  bible on best practice. Digital commerce implementations are dependent on a complex ecosystem of technologies, data, tools and vendors.

To date, many banks are focusing their digital initiatives on “Digitisation” :

Digitisation: “Moving what you did offline (analogue) to online (digital)”

Historically, this has occurred across 3 distinct phases and has mirrored banks internal core systems  by applying a digital veneer to existing activities in order to reduce channel costs and improve operational efficiency :

3 phases of Digitisation

  • 1980 – 2002 Payments, ATM cards and tele banking
  • 2000 – 2010 Access banking remotely 24 /7  improving convenience and cost efficiencies
  • 2010 – 2015 Full digitisation of  sales and after sales

Although worthwhile, digitisation of separate end to end value chains is no longer sufficient by itself to justify future digital investment.

2. Digitalisation
These early digitisation pioneers, have given way to a new wave of “Digitalisation” :

Digitalisation: “Process of exploiting digital assets to maximise business success”

Alternatively Gartner defines Digitalisation as “the use of digital technologies to change a business model and provide new revenue and value producing opportunities”.

New competitors are aware that they can offer customers a more convenient and less expensive proposition by exploiting new service models and industrialising digital assets such as data, cloud and mobile.

Technology is now being used at the forefront of the user experience increasing customer centricity as well as driving innovation in new Omni channel products and services.

This approach relies on offering new technical capabilities (APIs, apps, functionality and connectivity) that support a broader customer use case — one that extends beyond simple financial services transactions such as mortgages and savings.

Digitalisation has already disrupted digital wealth platforms with the advent of new platforms such as Nutmeg and Simple to enable people to manage their money and investments online. The rise of new robo advisors will further accelerate change in this sector.

In addition, consumers are now choosing to invest their savings into small businesses through crowd funding or peer-to-peer lending platform such as Funding Circle and Zopa.

3. Walled Gardens / Digital ecoSystems
Powered by extensive use of big data techniques, data analytics and massive data pools, new digital disruptors are creating new digital eco systems or walled gardens to further accelerate the customer proposition and potentially disintermediate existing players.

These new digital walled gardens, such as Alibaba, Alipay and MyBank, promote both increased customer lock in as well as locking out traditional financial providers.  As an example Alibaba via its Alipay alliance now controls 82% of China’s online payments.

MyBank, an Alibaba backed online bank, uses big data techniques and a data trove of 40 trillion retail customer records to generate a unique competitive insight using predicative analytics of customer behaviours, business sentiment and commercial risk exposure.

4. In Conclusion
Applying a digital veneer to existing operations to make the service more attractive to the customer, is no longer worthwhile in the new digital eco system.

Banks now need to fully exploit their digital assets and update their structure, services and products to remain competitive and relevant in the new Digitalisation ecoSystem.

In my next post I will discuss the key pillars for digital success.

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Tel : +44 (0) 7702 777770

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Digital Disruption (Part 1)

 1. Technical Innovation
For centuries banks disruptionhave been a strong force in driving technical innovation, from the development of the first credit card in 1966 followed by the ATM in 1967, through to the introduction of telephone banking in 1980 and faster payments in 2008.

Fast forward to 2016 and existing business model are being challenged by agile new disruptors that have been built for the digital age, putting the customer in charge, with social, mobile, data analytics and cloud technologies at their core.

These new digital disruptors can quickly build scale and often face fewer regulatory challenges than more established players.

2. Cost of Inaction
In this new digital world, the cost of inaction almost exceeds the cost of action.

The retail sector presents a cautious tale, for example Borders book stores (sales $3.3bn 2001) and Kodak (sales $15bn 1999) paid the ultimate price for failing to anticipate how digital could destroy well established business models.

Blockbuster famously passed on the opportunity in 2000 to purchase Netflix for $50m as it was felt that the on demand / streaming service was too niche, only to see Blockbuster’s eventual bankruptcy in 2010.

Having killed off the DVD market, digital continues to challenge the revenue streams of established cable and satellite providers as customers continue to “cut the cord” and stream TV content over the Internet.

Late action can be just as costly.  WM Morrison, the fourth largest grocery chain in the UK, did not introduce online shopping until 2014, forcing it into a costly shotgun wedding with one of its competitors, Ocado, for which it pays an annual fee of £45m per year.

3. New Wave of Disruption
While digital disruption to date has typically focused on the retail sector, new levels of digital disruption are being focused on the financial services sector. From new Robo advisors for Asset Management through to Online peer to peer lenders and payment platforms, the level of digital change continues to accelerate.

Increased competition from emerging peer to peer lenders, which were first established in 2004 to connect investors to borrowers online, continues to grow at a rapid pace. Organisation such as Funding Club and Zopa continue to challenge legacy business models, offering improved returns for borrowers and investors alike.

Peer to peer “marketplace Lending is in Liftoff, with a 123% Compound Annual Growth Rate from 2010-2014” Morgan Stanley June 2015

New digital disruptors are not weighed down by legacy infrastructure and higher regulation facing the more established players. Operating costs are significantly lower at  2% compared to 7% for traditional banks, enabling digital organisations to rapidly transform, grow and expand new business opportunities.

At the Gartner Symposium in Barcelona this year is was reported that digital organisations allocate a far higher proportion of their investment budget to Transform and Grow new business opportunities (25% / 25% respectively) when compared to a typical enterprise (13% /  20%) as shown in the following schematic:

4. In Conclusion
While digital disruption has been successful in breaking down the barriers to entry for new players such as peer to peer lenders and payment platforms, the question remains will established banking business models face a similar prediction as when Uber disrupted the 400 year old taxi market?

In my next post I will be discussing the key trends of Digitisation and Digitalisation.

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Tel : +44 (0) 7702 777770

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CIO Dialogue

November 2015

CIO Dialogue

Ian is excited to be confirmed as a keynote speaker at the leading CIO Dialogue conference on 2-3 November 2015.

Ian will be presenting a thought provoking session on “Cost optimisation in 2016: Creating long term sustainable value for your organization”.

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Ian Alderton finds a warrior instinct in banking at Bank of Tokyo-Mitsubishi

Bank of Tokyo-Mitsubishi has a set of values based on trust made in Japan is an exciting opportunity for technology leadership

By Mark Chillingworth July 28, 2014 CIO UK

Major business or national infrastructure projects require significant investment. Since the autumn of 2012, the Japanese banking sector has emerged as a key project finance partner, replacing European banks that are still struggling to recover from the credit crisis which severely damaged the world economy in 2008.

The Financial Times reported recently how engineering firm Hitachi, also from Japan, had won the bid to modernise the UK’s intercity rail network. Hitachi is the lead partner in a consortium that needed a loan of £2.2 billion for “upfront investments”, the financial news service reported. Of the nine banks lending to the Hitachi-led Agility Trains consortium, six were Japanese, including the Bank of Tokyo-Mitsubishi.

“That funding is part of a conspicuous trend of Japanese lenders returning to the offensive across the world, taking advantage of the weakness of US and European rivals constrained by the financial crisis and tightening regulation,” reported the Financial Times in October 2012.

Bank of Tokyo-Mitsubishi (BTMU) has been growing in the last two years and has increased its head count outside of Japan as it seeks to expand its global markets business.

BTMU is the largest bank in Japan by assets and expects half of its growth to come from the Asia Pacific region.

In Europe, BTMU has been growing, too. In November 2013, it became the first Japanese bank to open an operation in Turkey. London is the EMEA region headquarters and, as part of the growth, CIO Ian Alderton joined the bank 12 months ago. He told CIO UK about the cultural differences at BTMU and his business technology plans.

“The history of the bank goes back to the 17th century and today we’re an organisation of 37,000 global employees,” Alderton explains. “We’ve been in the UK since 1952 as the primary Japanese bank here and in Europe.”

Referring to the 2013 Turkish bank opening, Alderton says: “It’s our most significant investment and a big role for our technology team. BTMU is the first holly owned Japanese bank in Turkey – it’s part of our growth strategy to be at a central point between Asia and Europe.

“The regulators in Turkey are more proactive than in other markets, especially around technology and we have to host all our systems for the Turkish bank in Turkey. So it was a bank that was built all the way from the ground up,” he explains.

Alderton is an experienced banking-technology leader, having had senior positions within RBS and Wachovia Bank, where he worked with former Barclays CIO Anthony Watson, and his career has included leadership positions with Prudential Financial, NM Rothschild and Sons and Deutsche Bank. Moving to BTMU, the CIO has been struck by, and clearly enjoys, the cultural differences to doing business and operating a business at the Japanese financial services provider.

“For me, what’s refreshing is the trust that really shines through, down to how we operate with our customers, both internally and externally. It’s been an exciting journey over the last year since joining the bank, especially learning about how we conduct business.

“In most western organisations, the most important person in a major meeting sits at the top of the table. In Japanese culture the protocol is different. During meetings, guest have their backs against the wall and the most junior person sits near the meeting-room door. This goes back all the way to the days of the Samurai, who believed the most junior person is the most expendable and it ensures the guests have enough time to draw their swords!”

So far, Alderton’s first year at BTMU has been about ‘providing a clear vision’.

“I’m looking at the future potential of the technology organisation based on its trust and respect. We’re looking at how the technology is used and can be delivered more efficiently to enable the business to become truly global,” he says.

The CIO has a seven-strong management team who reports to him made up of Japanese and European staff.

“The team is trained with a deep understanding of the organisation, so we can focus on how we deliver,” Alderton explains. “It will be about how we develop the story and improve the collaboration and communications internally.”

As you’d expect, Tokyo is the major hub for the bank’s operations, including IT, with London – as well as being a hub for EMEA operations.

“I have a solid reporting line to the global technology organisation in Tokyo and have weekly scheduled meetings with the EMEA CEO,” Alderton says.

Technology strategy renewal

Financial services CIOs face a user base that demands the latest technologies as a result of their consumer experience and from what they see being used in other less highly regulated sectors. But the regulations are important and place a degree of restriction on the adoption of new technology in the sector.

“We’re looking at virtualisation, infrastructure-as-a-service, software-as-a-service and desktop virtualisation as well as the private cloud. The opportunity is there, it’s about understanding the risks, so we may well reach a hybrid solution.

“I really want faster provisioning as well as increased resilience and believe that virtualisation will increase the uptime of our services,” Alderton explains.

“We’re also going through application rationalisation and reducing the size of our data centre footprint. Staff at BTMU understand the importance of data, so bringing their own devices is currently not supported or demanded.”

Alderton is an advocate of the important role that data and information needs to play in modern banking.

Viewing banks as being ‘in the money business’ is old-fashioned thinking.

“Financial organisations are understandably thought of as being in ‘the money business’ – but in reality, they’re actually in ‘the data business’.

“Banks are only now coming to the realisation that data is their biggest asset in the new digital economy.”

In our interview at BTMU’s UK headquarters, Alderton explains that his bank knows their customers very well, but across the banking sector, customer knowledge is an untapped opportunity.

“For BTMU, it’s all about – can we offer the customer ideas before they realise they need what we’re proposing? Business intelligence and information management are the engines to communicate and collaborate with the customer more effectively,” he says.

As the Financial Times analysis shows, Japanese banks “appear robust” – as they avoided the mistake of investing in securities which has caused so much damage to western banks – and have succeeded in building strong balance sheets. BTMU and others are lending to real tangible assets such as Hitachi’s UK rail infrastructure development deal.

Reuters report that outstanding bank loan levels in Japan have fallen by 13.9 percent – a figure that most banks in Europe or the US probably envy.

With his focus on the opportunities offered by information and a very clear enthusiasm for the thriving culture of BTMU, Alderton is ideally placed to be on a fascinating journey as BTMU and Japanese banks begin to emerge as key players in global project finance.

This article was first published in CIO Magazine on 28th July 2014.


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Reducing Enterprise Costs (Part 3)

In my previous 2 blogs on the Key Priorities For The CIO of Tomorrow I discussed Increasing Enterprise Growth and Delivering Operational Results.

In this blog I will be discussing Reducing Enterprise Costs.

In the aftermath of the credit crisis, businesses have suffered a series of major shocks from the Euro zone crisis, such as a challenging credit environment and a lack of market liquidity, significantly impacting business confidence.

Combined with continuing uncertainty, the ability to reduce enterprise costs is now firmly entrenched as the number one priority to re-position and invigorate today’s organisations for success in a new economic landscape.

In the current environment, I.T. is a critical catalyst for reducing enterprise costs. With this comes new challenges and tensions. The technology platform has to be flexible and agile, supporting reduced business costs while at the same time enabling the enterprise to emerge stronger, fitter and leaner for the challenges ahead.

Market trends indicate that the number of companies now cutting costs has climbed to over 50% of organisations, where the magnitude of cuts is often in excess of 20%.

With this comes the critical constraint of how to meet the demand for improved business performance, flexibility and agility while at the same time reducing costs?

In my experience this can only be achieved by seeking out significant and sustainable cost reductions through a process of:

1. Cost Compression
2. Optimisation
3. Re-architect and Re-platform

1. Cost Compression, aka Minimisation
The first step of the process focuses on the quick wins for dramatic cost compression. From renegotiating vendor contracts through to optimised processes to reduce enterprise technology expenses.

This is often achieved by focusing on reducing sales and servicing costs by introducing customer segmentation based on profitability and value, through to industrialising high touch processes through the introduction of self-service digital channels.

New levels of industrialisation can be achieved through the use of new technology, from standardising enterprise applications, such as CRM, through to redesigning IT processes to make use of commodity based SAAS and cloud based technology.

In one of the biggest examples of standardisation and virtualisation to date, BBVA, the Spanish bank, migrated all of its 110,000 employees across 26 counties onto Google Apps to drive increased efficiency and innovation for its global workforce.

These opportunities need to be prioritised according to their potential returns and risks and will typically enable organisation to realise savings in the range of 10% – 20%.

2 Optimise
The second step is to Optimise – to make current process better, faster and cheaper. By making effective use of technology assets, through rationalisation, simplification and automation, organisations can be migrated to a lower cost base to dramatically improve their operating margins and overall profitability.

By reducing operating complexity, such as consolidating and rationalising servers through to standardising and industrialising operating systems, organisations are better able to respond to new challenges and growth opportunities.

New tools such as virtualisation enable organisation to drive greater levels of optimisation through a process of standardisation. By eliminating processes that add little value and outsourcing non-core services, organisation can reduce overall fragmentation, complexity and waste throughout the enterprise.

At the recent FS Tech 2013 awards, the Solstice Programme from Lloyds Bank was recognised as one of the largest network optimisation programmes to date, driving greater levels of efficiency and optimisation, through a process of standardisation, consolidation and industrialisation of enterprise infrastructure.

During the optimise stage, organisations can often achieve cost reductions in the range of 15- 30%, enabling the organisation to be successfully position itself for the third and final phase.

3. Re -Architect and Re-Platform
The third and final stage is to Re-architect and Re-platform the technology proposition. Only by addressing the legacy of aging technology can organisations truly drive strategic and structural cost reduction.

Ageing technology consumes a disproportionate amount of energy, effort and cost thereby depriving the organisation of the very ingredients it needs to flourish. Legacy technology should be reengineered for the future. Mainframe platforms should be retired and ageing core banking platforms should be replaced. In addition, enterprise wide processes such as CRM and document generation need to be restructured to drive new levels of integration, automation and efficiency.

Only by rewriting legacy platforms and restructuring enterprise wide technology can organisations be in a position to drive sustained strategic and structural cost reduction.

This new wave of IT enabled cost reduction will create organisations that are lean and adaptable. These organisations will be built on a platform of sustained strategic and structural costs reduction, driving new levels of competitiveness and benefits to the wider enterprise.

In today’s new world it will be the leaner, low cost, organisations that will survive.

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Tel : +44 (0) 7702 777770

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Biting The Bullet – Delivering Operational Results (Part 2)

In my first post in the series of Key Priorities For The CIO Of Tomorrow, I discussed Increasing Operational Growth.

In this post I will discuss how organisations need to bite the bullet and transform their complex and highly inter connected enterprise architecture to deliver increased operational results.

2. Delivering Operational Results
In today’s world, enterprise technology is typically over complex and inter twined with intricate processes. In a challenging landscape where wholesale replacement is not feasible, changes are bolted on decreasing channel efficiency, driving up operational costs and introducing increased risk of IT failures.

Overall, the complex and inter twined enterprise architecture restricts an organisations ability to breathe and successfully serve its customers, shareholders and the wider economy.

Cross Enterprise Process Efficiencies
A recent Gartner survey identified that :

“Enterprises realise on average only 43% of technology’s business potential”

Furthermore, typical business as usual activity consumes up to 70% IT budget just to maintain the status quo.

Today’s organisations need to exploit new and powerful synergies across the complex enterprise architecture through a process of specialisation.

Transformed Infrastructure
One of the early pioneers in this field were energy companies with vast high voltage infrastructure assets, connecting the length and breadth of the nation.Through a process of specialisation, new synergies were exploited by transforming their infrastructure assets to deliver a new nationwide data network, at minimal incremental cost, by transmitting data over the existing power network.

Similarly large telcos are continuing to transform their infrastructure. In a world where traditional voice calls are declining, telcos are moving from the analogue and cash world to the new digital economy through a process of specialisation. One of the biggest assets owned by the telcos is their billing relationship with the customer. This represents a significant commercial opportunity for telcos to establish new and exciting propositions, such as mobile payments and mobile wallets, potentially disrupting established payment providers.

Japanese telecommunications organization NTT DOCOMO successfully exploited its billing pedigree and created a critical mass of 35m users for its mobile wallet by leveraging existing customer billing relationships.

NTT DOCMO’s mobile wallet, or Osaifu-Keitai as it is known locally, provides identity card, loyalty card, public transport ticketing as well as electronic money by transforming its commercial assets to deliver highly competitive and compelling operational results.

New Operational Opportunities
Only by transforming existing enterprise assets can organisations exploit new synergies and drive new levels of operational results through a process of specialisation. Where power companies and telcos have led, other organisations now need to follow.

In the next blog, I will discuss the third part in the series –Reducing Enterprise Costs.

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Key Priorities For The CIO Of Tomorrow (Part 1)

Consumers are driving the digital economy and mobile revolution, requiring a new level of customer experience and service.

At the same time, the current low interest rate and low margin environment is stagnating growth requiring organisations to aggressively look at new ways to increase their top line revenue growth and bottom line earnings.

In a recent report from Gartner, the top business priorities for 2013 were identified as :

1. Increasing Enterprise Growth
2. Delivering Operational Results
3. Reducing Enterprise Costs

In this first of a series of key skills for today’s CIOs, we discuss Increasing Enterprise Growth.

1. Increasing Enterprise Growth – Next Generation Remote Banking Solutions

In an environment where revenue growth continues to be sluggish, clients are demanding innovative products and greater service. Customers have now come to expect a digital approach to conducting business that is online, mobile, social and real time.

Banks have to respond by focusing on Next Generation Remote Banking Solutions to drive new forms of customer engagement and experience, such as personal finance management and self service capabilities. These new innovative services will deliver increased customer confidence and loyalty while at the same time accelerating the reach and market penetration of new digital banking services.

Furthermore, the next generation of Remote Banking Solutions will offer increased operational efficiencies and effectiveness. From new forms of client engagement, such as new self service channels, through to streamlining the user’s cross channel digital experience, reducing operational costs and driving bottom line earnings.

Only by developing the next generation of Remote Banking Solutions, to drive customer engagement, customer experience and financial efficiency, can banks truly deliver new forms of enterprise growth.

In the next blog, I will discuss #2 – Delivering Operational Results.

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The Rise of The Digirati – A new form of Digital Maturity

In a world where the pace of change is accelerating, a recent report from Cap Gemini ( ), identified the creation of a new class of digital organisation, the “Digirati” that are leading the new digital economy.

Digirati organisations were identified as significantly outperforming their industry peers:

• The new Digirati were 26% more profitable than their industry counterparts.

• They generate 9% more revenue through their employees and corporate assets

• In addition, Digirati create 12% higher market valuations than their peers.

Digital Maturity
What is unique about the Digirati organisations, is that they have developed a new form of competitive advantage in the form of digital maturity or DNA. The report goes on to identify that this new digital DNA has been created as a combination of two separate capabilities – Digital Intensity and Transformation Management Intensity, as shown in the following schematic.

Digital Intensity is the investment in technology enabled initiatives to change how the company operates from customer engagement initiatives, such as location based marketing and social media through to internal operations, such as optimised pricing and real time monitoring.

The second dimension is Transformation Management Intensity, creating the leadership competencies, culture and capabilities to drive large scale digital transformation across the whole organisation. This consists of shaping the vision of the future organisation and joining up disparate and disconnected digital silos, such as a marketing, customer on boarding etc into a unified digital organisation

These organisations have successfully evolved their digital DNA, through a combination of Digital Intensity and Transformation Management Intensity, successfully changing customer engagement models and business operations to drive increased completive advantage.

Companies recognised as having a high level of Digital Maturity, such as Zappos, American Express and ZestCash, have built their success on a number of customer facing processes, such as Social Media, Customer Experience and Operational Processes to define their digital vision and transformation journey.

For large organisation, this can represent many millions of pounds to both top line earnings and bottom line revenue growth.

In a world where there are no digital signposts to follow, the majority of successful stories focus on fast moving start-ups such as Instagram and Piterest.

More established organisations are now starting to respond. Out of the digital haze a new form of organisation is emerging – the Digirati, an organisation that can holistically build new forms of digital DNA, transforming customer engagement models and operational processes, to consistently outperform its industry peers to deliver new forms of digital productivity, profitability and proficiency.

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