We've talked a lot about ‘applications', because that's the most obvious face of technology for many of us, but technology is about much more than that. Servers and systems are also important. These facets of technology change much more slowly because they don't have the same ‘retail' type pressures that applications do and because they are the backbone of what allows the application layer to work. The events of September 11, 2001 give a good example of how event-driven technology decisions are taken. While it wasn't surprising that one of the world's major banks had one of its primary mainframes in one of the twin towers; from where we stand today it is inconceivable that its disaster recovery mainframe was in the other one.
In New York today disaster recovery systems must be at least 35 miles away from primary systems. So, geopolitical issues affect how technology is deployed. In the same vein, ‘mirroring' of systems has increased significantly since 2001. It is not enough, in the wholesale banking industry, to be able to cut over to a disaster recovery site within 24 hours by switching servers, re-routing communications then bringing yesterday's back-up on line. Our 24 365 trading cycles mean that even 24 hours is too long and billions of dollars can be lost in that time.
So, in systems and communications, technology projects have focused to a large degree on improving resilience and making disaster recovery almost transparent to users. Naturally, when asking the question ‘When should technology be deployed', the answer would be ‘Before it is needed' especially in the circumstances described above. We need also to consider an effect, not mentioned so far - convergence. Convergence is the effect of bringing the way in which technology is accessed into a smaller and smaller number of channels. Yesterday, I could access my bank account using the internet by sitting at my computer. Today I can do the same thing on my mobile phone. In wholesale financial services, document management used to be a manual process and as such was possible with great effort. Now document management systems allow customers, the bank as well as third parties and regulators to access them simultaneously and with strong security. Also in wholesale, the growth of utilities in the form cross-border trading platforms demonstrates convergence.
Normally convergence is part of a cyclical effect also known as consolidation. A consolidation cycle will eventually fragment under market pressure. Nevertheless, the consolidation occurs because the market favours lower costs and large competitive organisations can buy up smaller players, keep their brand image and access a greater overall market share. Eventually consolidation breaks down because the niche players' skills don't match the larger organisation's ethos and the boutique or ‘souk' mentality reasserts itself. Convergence is different. First convergence has not yet shown any signs of being cyclical in nature. Ever since the first ape used a bone to kill its food, technology has converged with each tool being used to accomplish more than one thing. Second, convergence supports the consolidation/ fragmentation cycle while not being a part of it.
The impact of convergence on technology management is that it affects the choices available at any one time effectively restricting them. While this may be good for reducing costs, it places much more emphasis on disaster recovery in the back office while cutting off alternative routes to market. The corollary can be seen in the retail banking world with the reduction in branches for many banks in favour of automated teller machines (ATMs) followed by the increase in the use of internet banking. Outside the United States, which is still a cash-focused society,ATMs and branches will increasingly be seen as important but marginal.
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Note: This article was sent to us by: Justin D. Long at 01062010
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