Evolution or revolution?

By Ian Clover

Reducing cost, growing the business, keeping the lights on and improving customer retention – all tasks your average CIO must undertake. But with tighter regulation and greater need for business intelligence, has the CIO’s role evolved into a different beast altogether? Ian Clover reports.

The modern CIO: a job made easier or more difficult by technology? Certainly, the pressures a CIO is under have evolved unrecognizably in the past decade, but has the recent consumerization of technology made it easier for them to justify the work they do to the business, or does the fact that everybody is a little bit tech-savvy these days make the CIO's job harder?

Such issues are at the forefront for most CIOs, particularly those working within the financial services industry. The very notion of customer service has been transformed following the widespread adoption of smartphones and the all-pervading reach of the Internet. Couple this with the damaging financial crisis and the resultant regulations cast by the government, and CIOs find themselves caught in the middle, juggling business objectives, adherence to new regulations, tighter budgets and the constant challenge to meet the needs of an ever-more mobile, always-on consumer.

But although the daily duties and pressures may be different, has much else changed? Hasn't it always been the case that a CIO was charged with enabling and empowering, to ensuring the business could perform to its best ability in the most efficient and cost-effective manner? The pace of change has increased noticeably, but has the direction and end destination remained the same?

"I think it's always been the case that the CIO has to have a business hat on and has to be seen as a partner to the business," says Malcolm Eylott, Senior Vice President and Global Head of Operations and Technology at TD Securities. "The CIO cannot get into a master/servant relationship. People sometimes talk about businesses being clients of technology. They are not clients. If they were, they would take their business elsewhere on occasion, but they are not. The CIO has to have a true partnership with the business."

It is hardly revelatory to remark that the CIO of a business must work with their fellow executives towards one common goal, but industry talk in recent years has almost hinted at an irreversible shift in this relationship. 'Keeping the lights on' has clashed with 'doing more with less' as business needs have contradicted the true capabilities of a number of CIOs who have been restricted by the true economic reality.

"With the market downturn over the past few years, businesses have been holding back on their initiatives because the economics just haven't been there," asserts Eylott. "The investment dollars were not made available, so there was all that demand being bottlenecked and pent up."

Eylott believes that we are now on the cusp of the recovery, and the CIO's role will once more become easier to define as soon as fluid liquidity returns to the sector. "Markets are now starting to pick up, firms are starting to invest again and you've got this deluge of work that's been bottlenecked ready to pour forth."

Regulatory pressures

Returning confidence and fatter funds come with a caveat. TARP regulations may have bailed out many of the larger financial institutions, but it did so with a number of provisos. Equally, Obama's more recent Dodd-Frank reform has levied even greater control and regulation on the banking industry, leading to greater transparency and accountability in the sector. This is great news for the consumer and ostensibly great news for the industry, but it means greater scrutiny throughout.

"The market's pickup is coming at the same time that the regulators are coming at us saying: 'By the way, the stuff that went on over the past two or three years we weren't really happy with, so you better smarten up your act, tidy things up, get a handle on access control, data security and data governments,'" says Eylott. "Then in addition to this, many dealers' risk models are going to need to be revamped, because with the previous models, nobody was able to predict what happened."

Regulatory pressures are one thing; business pressure is something else entirely, and the modern CIO is feeling the squeeze from both sides. "While the regulators are saying you've got to do this and this, the business is also saying: 'It's about time we did this and this," explains Eylott. "So it's all coming together at once, and the CIO is caught in the middle, trying to balance satisfying regulators, satisfying the business partners and also managing a budget". No wonder there is this sense that the role of the CIO has diversified in recent years.

Consumer pressure

The recent economic turmoil was unprecedented in living memory, and its outcome is set to have a debilitating effect on the financial industry's ability to self-regulate in the near future. Despite this, a CIO should be able and dextrous enough to navigate a path through the regulations in order to reach a satisfying outcome for the business. Likewise, additional business pressures are par for the course for a CIO - learning to work outside of one's comfort zone in order to assist the business needs should soon become second nature for all progressive CIOs.

However, there is one pressure that CIOs in the financial sector have never felt so keenly, and that is the pressure coming directly from the consumer. The increasing 'consumerization' of technology has brought the customer closer than ever to the business, and the pressures and challenges this new world order brings have never been faced, on a wide scale at least, by those working within finance IT.

"People in general are becoming more savvy around technology and what it can do for them," says Eylott. "Customers now have a much better idea of what their expectations from technology are, and I think that many businesses have caught on to this idea. So partly due to frustration around delivery and execution, some businesses have hired more technology-savvy individuals to deliver the right initiatives to maximize their technology investments. This will be one of the biggest changes for IT departments in the near term - the business is now going to be almost as interested in what technology can do for them as the technologists are."

There's more, too. With more stringent regulatory pressure and a greater urgency to deliver sharper service to a savvier consumer base, many businesses are adopting business intelligence (BI) strategies to help manage and analyze their key performance indicators.

"Financial institutions want better information metrics and data around their products," says Eylott. "The regulators are saying: 'If you're not measuring it you're not managing it.' And they're quite right, and more and more CIOs find themselves setting up BI demos for the regulators."

With good BI being a world away from bad BI, it is important for CIOs to carefully consider their BI strategy if they wish to extract data that is useful to the business. "There are many people that don't understand the power of BI or a good management information system (MIS)," says Eylott. "In the right hands, this information can identify business projects that are misfiring or exposing you to unnecessary risk. It can also identify opportunities to automate processes, cutting out errors and saving valuable time and money."

Those 'right hands' are increasingly falling within the domain of the CIO, turning the juggling act they are already performing into an even more elaborate merry dance for the business. The role of the CIO has most definitely evolved in recent years, but better tools and technologies, a greater business interest in IT and tighter regulations should be viewed as enablers of, rather than barriers to, good CIO practice.