Reviewing the IT landscape
All financial organizations are heavily dependent on IT systems. And in most cases, organizations have several systems, with a lot of connectivity, which create a large and complicated IT landscape.
Therefore, when implementing a new system, there can be several issues that need to be addressed. Because of the complexity, remaining issues and adjustments can be left behind resulting in a drop in the effectivity as the general overview is lost. This gives even more reasons to why cleaning up the existing system landscape is a part of reviewing the IT landscape.
By Kristian Vincentz Rygaard, Manager | 5th September 2017
The complexity of the existing IT landscape
As business evolve, new modules and functionalities are introduced.
Implementation of new modules and IT solutions is well handled by most organizations.
However, one task is often forgotten – decommissioning of legacy systems. As new solutions are introduced, more complexity is sometimes created in the existing IT landscape, and the overview and transparency of the system are lost. Existing solutions are made obsolete, but kept alive due to minor dependencies from other systems.
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The consequences of losing the overview
The complexity of resolving all remaining system issues and system adjustments are often left behind by the implementation project due to lack of time, or simply because they weren’t part of the business case.
This problem is often seen when organizations are trying to replace a home-developed system. These systems have often evolved over time, and have ended up solving several tasks, which can be quite far from the original scope for the system. These tasks cannot always be solved by the new system, and hence the old one is kept alive.
As this problem evolves over time the effectiveness of the different systems drops.
Over time, new functionality becomes available, which could shut down the old home-developed system. However, since nobody has the broad cross system overview needed to be able to highlight which systems that can be shut down, the necessary actions are not taken.
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As this problem evolves over time the effectiveness of the different systems drops.
The general overview is lost, and the departments responsible for handling the increasing complexity spend an increasing number of resources on the daily management of the IT landscape, and quick fixes are created.
Increased number of systems and integrations
In addition, the development of new business solutions and reporting is more time consuming, due to the increased number of systems and integrations.
Resources that could be used to create a better customer experience, are used for cumbersome and manual tasks with high operational risk, to keep the daily production running and produce the required reporting.
The costs of keeping parts of an old system
These costs are rarely part of the business case when implementing a new system.
The business case usually involves closing off an old system. But due to various reasons and adjustments in the implementation project, this goal is not always reached.
The cost of keeping 5 pct. of the old system alive can be very high, and the risk of not being able to close off an old system, when implementing a new one, should be taken seriously, and possibly be included when calculating the total cost of ownership of the new system.
Handling the problem
In the case above, the issue is addressed when implementing a new system.
However, in many organizations there would also be a business case of cleaning up the existing system landscape to close obsolete systems that are only used for a very small part of the daily business.
A cleanup project can be hard to address for a separate department.
However, no one has the overview of how these solutions are seen by other departments.
Since a single department seldom has the complete overview, or resources to step aside from the daily production, and review the way things are done. Most departments have an idea about which parts of the system that is most time consuming and ineffective. However, no one has the overview of how these solutions are seen by other departments.
Obtaining the resources and formulating the business case
To get a complete overview, an effort across several departments is needed. But in most cases the people needed to solve the problems are key personnel in their respective departments, and therefore hard to pull out of the daily work to fix the general problems.
It is also a hindrance, that it is hard to formulate a business case for the cleanup project, since it is hard to put a price tag on the usage of obsolete and complicated system solutions.
However, there is often a very strong business case once the cost of neglecting the investment in a Portfolio Management System and cost of running a fragmented IT infrastructure is estimated. Hence handling of these problems demands strong support from top management.
Optimizing the existing IT landscape
In the cases above, the business case lies in closing inferior and obsolete systems.
But sometimes a small system solves a very specific task very efficient, in which case it makes good sense to keep the system alive instead of trying to solve the same task in another system.
However, this does not mean that there is not potential for improvement. In these cases, the improvement can be obtained by securing that the different systems are connected in an effective way.
Where can CMP help
Based on a proven methodology, CMP can deliver a system review, showing costs and benefits of potential improvements in the existing system landscape.
The review can be isolated to a single system. However, to reach the full benefit, organizations will often have to analyze the full system landscape to highlight potential synergies between systems.
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Methodology
First phase of the system review is creating the overview.
Setting off in the organization’s strategic goals and business model, CMP identifies potential improvements and formulates a business case describing costs and benefits of the different decommission tasks identified.
Return of investment and a clear overview of the costs and benefits of the different initiatives are a key parameter in the analysis.
The next phase is implementing the results.
CMP’s detailed knowledge of systems and procedures, makes us capable of working across the entire line of business to create a full review, then helping clients get the full benefit of the review.
Benefits of the system review
Besides the potential reduction of the direct costs related to the daily usage of the system, there is a major hidden benefit generated from an improvement of the system setup and procedures. Obtained by having a simpler system landscape or via a better integrated IT landscape.
Improving the data structure, costs and performance
Better system usage and procedures often have the benefit, that data structure is improved, which is a major benefit in reconsolidation procedures and further reporting.
SEE ALSO: Do you understand the value of reconciled data?
A system review may not be the most thrilling of all tasks, but for those struggling with low performing and complex systems the benefits can be great, in direct costs, but also through the indirect benefits obtained by having an effective system landscape.
Kristian Vincentz Rygaard, Manager
Kristian has been working in the financial sector since 2008. He has a detailed business understanding of the internal processes and revenue in banking, and he has extensive experience with bridging Front, Middle, Back Office and Accounting.
He has detailed knowledge within management of financial products, with focus on the cross field between accounting requirements, market requirements and process optimization.
You can read more about Kristian and our other CMP consultants here
