Globalisation has been hailed as essential for an efficient world economy, but this 21st century connectivity has facilitated the
world's current financial turmoil. What IT strategies should now be
given priority? In today's increasingly unified world economy, it's
increasingly difficult for countries to remain immune to problems
happening on the other side of the planet. This particular downside of
globalisation has been the platform for the current financial crisis
that was precipitated by the sub-prime mortgage crisis and resulting
credit crunch in the US.
"We are now discovering that when America's economy sneezes, the rest
of the world gets sick very soon," said Ross O. Storey, managing
editor, Fairfax Business Media, at recent executive briefing,
organised by CIO Asia, which examined the topic 'IT Globalisation
At the event, senior IT executives, from Progress
Software and Deloitte Consulting, shared their thoughts on Service
Oriented Architecture, Business Process Management, the Real-time
Enterprise and Business Visibility.
Storey said that, while the traditional response to today's global
financial woes would be to cut spending, delay projects and reduce
jobs, these moves could be long term mistakes for organisations. IT
departments have faced tightening budgets for several years and any
further cuts could "exacerbate rather than enhance an enterprise's
ability to ride out the current financial storm", he said.
"If enterprises take a more strategic view, then one argument CIOs
could mount is that now is precisely the time when IT budgets should
be increased, to maximise efficiency, productivity and profits for the
business," Storey said.
In these difficult times, Lee Dai, professional services director,
Asia, Progress Software, said that CIOs have to provide answers to
questions like: "What are we getting out of the systems that we have
purchased, what are we getting out of the databases and ERPs?"
All these systems had to work together efficiently and this was where
integration could enable the CIO to get a better view his existing IT
environment, added Lee.
Lightning fast business
The accelerating speed of business processes is also driving the IT
integration case forward. "Basically the speed of business is
increasing even in this downturn," remarked Lee. In the consumer PC
space, a built-to-order desktop now only took one day to be delivered
to the customer, compared to four weeks in the past.
"The fast changing pace of the business is another reason that is
driving everyone towards a better integration of technologies." In
such a challenging environment for IT, Service Oriented Architecture
(SOA) had come into its own.
SOA = Real Life
For senior IT executives to better present the case for investing in
SOA, Lee said SOA made sense and was here to stay because it resembled
daily and business services found in real-life.
"Life is actually full of services from calling from a mobile phone or
paying for purchases with credit cards," he said. "But we, as service
users, do not have to know what goes on behind the scene."
Lee maintained that JAVA has kept its popularity because, being
object-based, like SOA, it too closely resembled day-to-day activities
in people's lives.
"Because JAVA is real life, it looks at things as objects, just like
real life where everything is an object too. So is SOA, which I think
will be around for a long time too, because similarly, SOA mimics what
life is all about," said Lee.
"Basically what we are seeing is that SOA has replaced Enterprise
Application Integration (EAI) as the key means to carry out
integration and to align the business with IT," observed Lee. "You can
mix and match the services so that you can build capabilities for
business processes faster."
However, while SOA is quite well known in the Asia pacific, Lee said
many IT executives did not realise precisely why they needed SOA.
Often, he said, they can be confused by reasons offered to them from
vendors, leading to the cynical view that SOA stood for 'Snake Oil
"Service reusability is a reason that people talk about that can
reduce costs and make IT more efficient, but is this really true?"
said Lee. "I remember back in the days when I was selling EAI, the
same reasons were given as well, so service reusability is not a good
enough reason alone for me to do SOA."
Another common reason given for SOA adoption is that it offers a
distributed environment to match businesses that are spread out
geographically. "This is good too, but is nothing special about SOA
either. I can probably do the same with EAI. SOA is also modular and
"For example, if a C-level executive is asking you, 'why do you spend
half a million dollars on an SOA solution?' I hope your answers are
broader than these, or you could be in trouble."
BPM? Not quite there
SOA is often paired with Business Process Management. But Lee felt
that BPM technology has its limitations and might not be the panacea
that IT executives are seeking.
BPM is used to model business processes but Lee said that, in many
organisations, "you have a lot of unspoken and unwritten business
processes. People just know that when something happens they need to
do something else, they don't know all the processes that are
working," said Lee.
"So many big business organisations have a lot of business processes
that are probably not very well defined. This is the first challenge
Another test for BPM is that there could be vast numbers of business
process working within the organisation. "How many do you think you
can model with a BPM tool? The answer is not as many as you think."
Instead of attempting to define business processes, Lee recommended IT
executives let their own infrastructure reveal the actual nature of
their companies' business processes. To do that, employ business
process visibility or discovery tools to complement your BPM system,
Look forward, not backward
During tough times, Lee recommended that IT executives kept abreast of
technology and tools that were being developed.
"In such difficult market conditions, the general tendency is to cut
back and be more conservative. In fact these are the times that you
actually want to look at new technologies, because when things
recover, you can leverage on the lessons learned during the tough
times and be a step ahead of the competvition."
According to Lee, businesses today are driven by events. "According to
research from Gartner, some of the large companies have millions of
business events per second. If you are a telco and one of your users
makes a phone call, then that is an event."
And organisations are using business intelligence to track events and
make business decisions. However, he said that most of these solutions
in the market were backward looking. But, with businesses needing
real-time information, making decisions based on historic data, was
like driving by looking in the rear view mirror.
"If you look at the financial companies in the world, all these
businesses were selling the Collateral Debt Obligations (CDOs) and the
subprime mortgages, just as housing prices were deteriorating," said
Lee. "What then happened was that buyers continued to make their
purchases not knowing that housing prices were dropping."
And it was not an event that happened over two weeks or two months but
something that had been going on over two to three years, according to
Lee. "The housing prices had peaked back in 2005 and have consistently
been dropping. While the prices were sliding, people were still buying
without knowing the actual trend."
"In some ways, the buyers were living in the past," observed
Lee."Looking at historic data to make major business decisions, may be
okay in certain times. But when times are changing, or when you are at
an inflection point for the business, it could turn out to be
There has even been an argument that, with a higher level of
analytics, financial services regulators would have had a better sense
of what global financial institutions had been doing, said Storey.
"They might have discovered the cash liquidity risks and prevented
what has happened," he said.
Real real-time business
"We're not saying that business intelligence is not a good way to go,
but you need real time business intelligence," said Lee. And one way
to achieve that was through Event Driven Architecture (EDA), he
"In financial services, if the broker is telling you trading activity
from an hour ago, I am going to ask him why is he giving information
that is an hour-old. I want the real-time data, not something that is
an hour-old or even five minutes-old."
With SOA in place, it fits very well for the real-time business, said
Lee. The next step would be the use of an integration backbone, like
the Enterprise Service Bus (ESB).
There is a convergence of services and events vis-à-vis SOA and EDA,
said Lee. "The adoption of ESB is going to help in the implementation
of large scale SOA/EDA infrastructure."
The next valuable tool was customisable dashboards. These serve to
visualise the 'need to know' data because "if you cannot visualise the
data, you cannot really know what is really happening."
According to Lee, tools enabling real-time business capabilities are
already in use in the market today. In the case of Progress Software's
customers, from the algorithmic trading sector in the finance
industry, the CEP platform was used for real time trading.
"They are basically looking at multiple data streams including NASDAQ
and news wires. Based on these data, they make real time decisions.
They also have a customised dashboard to show how much money you are
making and the current position within the portfolio."
Aligning business with IT
In CIO Asia's State of the Asian CIO 2007 study, the issue of aligning
IT and business goals was the stand-out management priority for 2008.
"This consistently rates as the highest priority for senior IT
executives in Asia," said Storey.
In the current increased pressure to cut costs and run the business
more efficiently, IT departments should start looking themselves as an
internal service provider with the various business groups as clients.
The IT division cannot be servicing all IT initiatives on a
non-chargeback basis. "In short, the IT department can no longer just
be a cost centre where you always have to beg for investment from the
CEO," said Atsushi Moriya, director, Japanese practice, Deloitte
With such a model, the IT department can operate as a business with
appropriate financial transparency and commercial discipline, while
also focusing on delivering cost efficient and competitive
services."You are selling your services and products internally, as if
you are the external vendor," said Moriya. However, he said, such a
trend has only been prevalent so far, among the American or
European-based firms, he observed.
Evolving to a chargeback model, IT departments should look at
attaining at least the level that is resource-based, suggested Moriya.
In such a framework, IT services consumption is traced by account
codes assigned to each user. Costs are traced to hardware rather than
Goals, goals, goals
In terms of setting out targets, Moriya recommended a concept where
the CIO would be working in alignment with the CFO. IT departments
would have to stock-take the valuable initiatives and projects, align
them to the portfolios, and then always map them to the enterprise
business functions, to get a clear picture of the contribution that IT
was making. For instance, cost reduction opportunities could be found
in the area of maintenance contracts. By validating inventory against
billings, up to 30 per cent costs could be shaved, said Moriya.
"Then set financial targets, value insights, then bring those back to
quantify the cost and the benefits, and summarise financial
implications," he said.
Moriya also recommended benchmarking IT initiatives. "There are always
such measurements in logistics, finance and sales," he explained. "We
should set KPI for IT initiatives and quantify IT services, so that
you can claim some extra performance, and inform the CEO or CFO about
Playing the long game
In today's difficult economic climate, Lee recommended IT executives
to get tough in the face of pressure. "Now is the time to start
looking at investing and paying attention to the new technologies that
are coming, because otherwise, when the economy recovers, one will
already be behind," he explained.
IT can become a valuable weapon against economic downturn, Storey
suggested. In CIO Asia's State of the Asian CIO 2007 study,
respondents listed "creating competitive advantage" as one of the main
impacts of IT on their enterprises, he said. "So now is the time to
make strategic investments so that one can position the organisation
better than the rest of the competition when the crisis recovers,"
said Progress Software's Lee.
Fairfax Business Media
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