Todd Hintze, Author at Everest Group

A Pig in a Poke: Trump Administration Policies Could Spell Trouble for Banking Industry | Sherpas in Blue Shirts

By | Banking, Financial Services & Insurance, Blog, Onshoring

Thus far, the banking industry has expressed optimism about the Trump administration’s policy announcements, particularly with respect to potential rollbacks of Dodd-Frank regulations. As evidenced by the positive upswing bank stocks have experienced since the election, the banking industry is thoroughly enjoying the prospects of reduced regulations, expansionary fiscal policy, corporate tax cuts, and increased infrastructure spending.

After suffering a decade of challenges and disappointing performance since the 2008 financial crisis, it is no wonder banks would revel in a swing of the pendulum. This euphoria, however, may be short-lived, because some of the potential policies being floated by the Trump administration – particularly as they relate to global service delivery models – have strong downsides that must not be ignored.

Chief among the downside risks is the Trump administration’s strong position on US job protection. The cost challenges of the last decade have necessarily led banks’ significant use of offshore labor for back-office business processes and customer contact-centers. In many cases, over 50 percent of the FTE involved in business processes and IT for US banks are in offshore locations. This significant workforce is at risk of becoming the next target for President Trump’s bully pulpit.

In addition, the proposed visa reforms and border restrictions will reduce access to skilled technical resources at a cost-effective rate. Or, as Everest Group CEO Peter Bendor-Samuel puts it, visa regulations mean less access to the same cheap labor. Combining that with the draw of Fintech firms fighting for the same talent, talent scarcity will have an overall impact on the ability for banks to compete in the ever more technology-driven arena of banking innovation.

Other risks aren’t as clear but warrant monitoring, including the potential that trade protectionism could ultimately lead to an overall slowing of the US economy, restrictions on the ability to freely move corporate resources internationally, and the tightening of foreign ownership rules.

Everest Group cautions organizations in the US banking industry not to buy a pig in a poke, that is, foolishly revel in the benefits of attractive policies without fully examining the impact of policies that may have damaging repercussions. At the very least, banking institutions should investigate the full scope of the political strategies of the Trump administration, consider the implications, and develop strategies to mitigate the potential downsides of those policies.

We invite you to view a recording of our recent eye-opening webinar hosted by Todd Hintze, Managing Partner, and Mark Lade, Associate Partner on how Trump policies and other growing protectionist policies will impact your operational strategy. You can also read their complimentary viewpoint on the topic titled Navigating the New World (Dis)Order – a must read about this disruptive topic.

Still Herding Cats: IT Governance and How Users Engage Cloud Services | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

End users. Can’t live with them, can’t live without them. When procuring new IT solutions – a new opportunity for them in a corporate environment—they often like quick, flexible, and cheap. When working with current IT models, they value secure, scalable, and bullet-proof. Over the years, successful IT leaders have learned to help guide (read: manage) them through those trade-offs in a well-defined and disciplined approach.

Then along came cloud. For many consumers, cloud offerings seem to provide all that they are looking for, without the bothersome trade-offs. They are being told public cloud offerings can provide quick, cheap, secure, and scalable solutions. The beachhead for this type of messaging is often found on the fringes of enterprise-wide applications – just out of the reach and influence of traditional IT governance.

Many IT leaders have been caught a little flat footed with the recent marketing of cloud services to their constituencies, with the looming question being whether they should annex public cloud solutions from under the “control” of centralized IT governance wherein IT has authority over what can be purchased and how it can be deployed. This concept is counter to the pervasive centralization that for years has been justified by reasonable arguments around security, leveraged spend, and internal efficiencies.

So, what is the role of IT governance in the procurement of public cloud services?

On one hand, empowering end users and small groups within the enterprise to make their own decisions can improve the agility of the organization. Users can augment the enterprise portfolio to better meet needs with publicly available solutions. Demand can be harnessed by capabilities in the marketplace and budgets, not by the capacity of internal IT. Organizations empower their employees to make business decisions everyday to meet the firm’s objectives, so why restrict their judgment when it comes to IT solutions?

On the other hand, decentralizing IT decisions can bring about a host of issues that traditional IT governance handles well, e.g., architectural considerations such as interoperability, portability, security, and disaggregation of strategic information. With centralization, financial management can ensure the enterprise is optimizing spend, decommissioning underutilized services, and managing internal allocation models.

We believe the best course of action is to proactively define characteristics that a public cloud solution must have in order for the end user population to directly purchase services. One straightforward way to accomplish this is for the IT governance organization to publish a solution verification checklist. If the desired public cloud solution meets all the criteria on the list, the user has the authority to purchase directly from the cloud provider.

Examples of criteria on the “Yes” (the end user has the authority to purchase)/”If” (the proposed public cloud solution) list include:

  • Complies with the enterprise’s security requirements
  • Follows or preserves the business rules, business logic and data constraints pertinent to the information being processed
  • Preserves the integrity of the data and, if applicable, returns data to enterprise systems in an acceptable format and without data loss
  • Supports the integrity of the enterprise technical architecture
  • Does not sub-optimize the enterprise’s spend in any significant way
  • Does not require any resources within IT to support the solution
  • Fits within the acquiring entity’s budget constraints

Empowering users in this way, while not without risk, can enable the business in ways IT organizations often profess – speed being the primary. One of the emerging roles of IT governance is ensuring the enterprise’s needs are not compromised by the individual’s pursuit of cloud solutions. As we will explore in our next entry in this series, IT governance organizations have to find smart and sound ways to say yes, or run the risk of losing visibility into their users’ consumption of IT.

You Want the Cloud? You Can’t Handle the Cloud! | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

If you can’t measure it, you can’t manage it. This oft-repeated mantra is one of the many cornerstones of IT governance. It serves as a reminder of the importance of measuring those outcomes that matter. So what’s all the hubbub about cloud governance? It’s just another compute and software delivery platform, right? Governance is governance, right?

With the increasing adoption of cloud solutions, organizations are quickly discovering that the traditional application of supplier governance and measurements do not effectively translate to cloud solutions. For example:

  • Several cloud services do not offer traditional service guarantees –  e.g., accuracy, speed, fidelity, and availability –  or means to measure the desired outcomes
  • When service levels are offered, they are rarely customizable to the buyer’s needs, e.g., measurement period, or frequency
  • Cloud providers often do not support a joint governance model but rather put forward a take-it-or-leave-it solution
  • IT services are being purchased outside the IT organization by employees throughout the enterprise, causing a variety of internal governance issues, including:
    • Duplicate services creating increased costs and operational confusion with regards to solution performance and responsibility
    • New integration issues with current systems aren’t considered
    • Strategic data becomes increasingly disaggregated from central decision repositories

Compounding these issues is the emerging practice of best-of-breed solutions. These models, when successfully implemented, spread much of an enterprise’s application services across a broad set of suppliers. But, when you want to measure cross functional performance, say in order-to-cash, how do you actually do it?

With more service providers supporting your environment dictating their own service levels, when they are even available, and ringing a death knell to end-to-end service levels, what’s a governance group to do?

To answer this and related questions, our perception of governance must fundamentally change. For example, managing consumption of cloud services will have to be far more internally focused on managing end users. When employees can purchase services in the same time it takes to type sixteen digits, the IT organization and governance function will need the agility of a world-class athlete.

The newly required form of governance has to address multiple challenges, including:

  • Defining cloud computing use policies
  • Managing the organization to enterprise-approved use of a readily available cloud services
  • Removing barriers to computing needs to quickly enable compliant consumption of cloud services
  • Determining how and when services migrate from traditional to cloud environments
  • Shifting workload to quickly lower compute costs
  • Managing demand in a new world with practically infinite supply

Stay tuned as we continue the conversation in an effort to dive deeper and discuss these and other topics for governing the next generation of IT services.