Piecemeal Approach to Hosted IT will Haunt Firms through Lost Productivity
Take a look at the inner workings of any modern enterprise, and there’s a good chance you’ll find IT silos – islands of departmental data only loosely connected across the organisation. Such isolation presents a potential regulatory risk and undermines the rich productivity gains that digitisation should be driving across commerce, and yet these silos […]
Take a look at the inner workings of any modern enterprise, and there’s a good chance you’ll find IT silos – islands of departmental data only loosely connected across the organisation. Such isolation presents a potential regulatory risk and undermines the rich productivity gains that digitisation should be driving across commerce, and yet these silos are becoming ever more commonplace.
Whereas ten years ago the primary cause for disjointed IT was the existence of outdated legacy systems within operations, now it is the advent of hosted independently-sourced solutions that is driving compartmentalisation across the IT landscape. With some options coming out of operational, rather than capital, expenditure, departmental heads have empowered themselves to take the matter of updating their processes and software into their own hands.
This empowerment has bred productivity gains, as departments have acquired best-of-breed functionality from systems to support their specific needs. Front and back office operations – from finance and business development to HR, logistics and marketing – have been invigorated by the introduction of solutions specifically implemented to fill operational gaps; address deficiencies and bottlenecks; and allow functionality which had been on managers’ wish-lists for a decade.
Unfortunately, these upgrades have often been made without consideration for the rest of the organisation. This narrow-minded piecemeal approach will return to haunt organisations across most sectors in the years to come, if the issue is not addressed on a company-wide basis.
The dangers represented by such silos are already becoming apparent within many firms: Reliability of data, in particular, is becoming ever more important for both regulatory and operational reasons. But if customer information is stored separately by each department that needs it, the numerous versions which a company possesses can gradually digress. In the case of a financial services organisation, for example, a loan approval department may end up holding a different set of data on a client than the online banking platform. The eventual outcome could range from frustrating or embarrassing the customer, to incurring bad debt and regulatory sanction.
At the very least, such a situation is highly inefficient from a business perspective, and an obstacle to good customer service. There are also cost implications in time and money: Time, because it is harder for employees who require data to access it; and money because the charges for storing and processing data are not inconsiderable, particularly given increasing regulatory and security requirements.
Therefore, as digital transformation is helping businesses to address individual operational problems, the time has come to reassess the approach and ensure that the entire information ecosystem is supporting the greater demands of internal and external customers.
Executive leadership must acknowledge that digitisation alone will not enhance information flow, innovation and productivity, unless there is a clear enterprise strategy to ensure information is made available and can be freely interchanged. Without this, content fragmentation is likely to accelerate, creating further challenges to aggregating, connecting and managing the flow of digital content.
There are inherent challenges for businesses looking to safeguard the efficient and secure access to enterprise-wide information, while retaining the benefits of a distributed approach to technology. One approach that is working well for an insurance client currently in a process of change and growth, is to encourage departments to first seek a solution to any IT need they have from one of a ‘family’ of trusted providers.
In this scenario, it is crucial to work with partners who are committed to ensuring the best for your company: whereas some IT providers will be inclined to make a sale of their own software at all costs, others will be happy to recommend a ‘friend’ from the trusted business family, where they feel that their rival can provide a more suitable product.
At the same time, this ’friends and family’ approach encourages supplier firms to work together on inter-operability and connectivity issues, and to adapt their own products, where necessary, to ensure a solution that is both bespoke and easily integrated into a wider corporate system. With such an approach, all the core systems can be hosted under a single roof – our client works with five core suppliers – and the momentum is towards further integration, not divergence, as each new applications is added.
However, even with such practices, institutions of any size can end up running hundreds of applications. It is essential to link those data repositories and ensure that they are accessible to all potential users, with as much ease as possible. This can be accomplished with an enterprise information hub: a unified information platform, which facilitates an end-to-end view of the organisation’s entire ecosystem.
Such a hub is a valuable tool for management and a driver of innovation, as it is used to speed feedback times and analyse data on whole-company performance. It is also invaluable when it comes to increasing efficiency and diligence at the ‘coal face’, by allowing all documents to be viewed on a single platform or device.
As digitisation drives further changes in years to come – some not yet conceived or planned for, the ability to integrate new systems and view operations holistically will be crucial, if organisations are to fully realise potential gains and remain efficient.