As much as Chief Information Officers (CIO) and Chief Data Officers (CDO) would like to be perceived as revenue generators and growth enablers within their organizations, the reality is that they control and account for a significant proportion of corporate expense. At a moment when firms are embarking on data-driven transformation initiatives often in response to fears of disruption from AI and data-driven Fintech and big tech competitors legacy firms are facing a paradox of to be or not to be. For these firms, data transformation efforts are largely being funded under the auspices of compliance and cost reduction mandates. Although CIO’s and CDO’s aspire to be on the offensive in using data to drive revenue generation and business growth, it is defensive initiatives that are providing cover for forward-looking transformation ambitions and we aid organizations in this transformational missions. How does technology and data leaders ensure that non-revenue generating data-driven transformation efforts receive the ongoing commitment that are required to sustain these efforts? Simple in today’s context there are two critical business imperatives that are impacting corporations and provide the impetus for data transformation initiatives.
The first imperative is
- Compliance and Regulatory mandates.
The second imperative is
- Cost reduction.
Paradoxically it is these two defensive causes that are providing a CIO or CXO with the opportunity and mandate to embark on offensive data management and architectural transformational initiatives. This is required at this instance for equipping them for a better future from our experience.
The Cost Reduction Impetus When a company faces financial pressures which prompt cost reduction mandates, Information Technology is usually targeted to deliver significant cost savings. Unfortunately, it is too often transformational initiatives, such as data infrastructure and data architecture modernization efforts, that are among the first initiatives to be eliminated. These data transformation initiatives deliver a multi-year impact, but often without an immediate and definable return on investment (ROI). The net result is that organizations too often respond with a short-term view that undercuts their long-term interests. We can assist enterprises to better themselves on this front via our Strategic IT Consulting. What is the first thing that a CIO considers when asked to reduce expenses? Ideally, it would be to determine which systems and infrastructure they can eliminate along with the associated hardware, software, and personnel expenses. They would also want to explore how best to replace inefficient technology assets with new assets that are not only less expensive to operate, but also provide greater business flexibility and agility. We can assist Enterprises better on this front via our Agile IT audits. While almost all IT organizations operate redundant systems which they would like to consolidate, legacy systems they would like to turn off, and outdated infrastructure that are widely recognized as costing too much to run. Why then do so many organizations continue business as usual, finding elimination of redundancies extremely difficult to achieve? Perhaps the answer lies in the realization that undertaking these efforts requires investment and carries risk. When asked to cut costs, technology leaders are too often forced to reduce or eliminate transformational initiatives with less measurable near-term outcomes. The consequence is that organizations frequently sideline transformational initiatives which will deliver long term, sustainable benefits to the company – albeit not immediately.
Why is it so hard to eliminate or consolidate systems?
- Why do banks even today continue to maintain multiple checking account systems?
- Why does an insurance company run several claim systems for the same products?
Of course, there are potential technical challenges, such as particular software not working on a new operating system. And, there are always people issues, for example needing to train new staff that can be conversant in legacy environments to be effective with new systems and processes. Among the most significant costs for any upgrade effort are data migration, untangling of embedded business logic, and the resulting data integration efforts. What makes these data issues particularly challenging for companies is that they cannot be addressed by technology staff or outsourced contractors. They require business subject matter experts in domains such as product, sales, finance, legal, and operations. For example, when consolidating or migrating a system, decisions are required on items such as general ledger chart of accounts, customer account numbers, product identifiers, and operational processes. It takes high-level support to secure time and commitment from the corporate functions within which subject expertise resides where we have delivered significant business outcomes to our clients till date.
The Compliance and Regulatory Impetus
The second data transformation opportunity is triggered when new or enhanced regulations are enacted, or an important external business partner requires a change. Examples of some recent catalysts are the enactment of general data privacy regulations such as the General Data Protection Regulation (GDPR). In addition, when a firm belongs to an industry ecosystem, such as payments and medical claims processing, there are industry standards bodies that mandate changes to address new business requirements that must be satisfied. If you are a supplier to a market leading company like IBM, Walmart or Apple, there are evolving data and integration requirements expected of their partners. GDPR, in particular, has been a significant lever for companies due to the potential for significant fines, such as those recently imposed on Marriott and British Airways. Stringent data usage, retention, privacy and security measures are required as a part of this regulation. Developing these capabilities to satisfy these requirements is usually non-discretionary and involves significant business risk if not executed on time and effectually. Yet, compliance and cost reduction can be a CIO and CDO’s best friend if they are backed by subject matter specialists of which we like to call ourselves as experts in this field. Even leveraging cost reduction initiatives is enabling legacy firms to transform their data capabilities to achieve revenue generation and growth objectives. The window of opportunity for CIO’s and CDO’s however is to narrow the wheat from chaff by demonstrating quick wins resulting in measurable business outcomes thus establishing credibility, building momentum, and ensure lasting transformation, or the moment and opportunity will be lost. For organizations and enterprises seeking to embark on a data-driven transformation, the guise of regulatory compliance and mandated cost savings is providing a cloak for driving long-term business value where we can provide you the best in market tangible outcomes starting today. Register for an Enterprise Audit Starting Today!