Ghost-written article for Cisco Systems EMEA.
Published in Retail Banking magazine, UK, October 2003.
There were several set backs along the way – 9/11 most notably – but it is now almost safe to conclude that the travel industry is well on the way to embracing internet protocol (IP) as a quasi-industry standard for IT operations. Major global airlines are migrating their internal networks to IP, the major airline alliances are using IP as a commonality to enable inter-organisational communications, and the internet itself has rewritten the rankings of organisations within the travel industry, as well as creating whole new industry sub-sections.
What can this possibly have to do with retail banking? Well, the impact of the internet on the air transport part of the travel industry in particular has quickly demonstrated those areas where IP can be harnessed to reduce costs, improve operational efficiency, and enhance customer service. By default, it has also determined where IP is not suited. The main issue that determines this in the travel industry also determines it in the retail banking industry.
That issue is simply that there is still only a relatively small proportion of the travel market that will purchase a package holiday or flight online. Despite everything you’ve read or heard, high street travel agents are not going out of business, and they never will. The reason for this is two fold. Firstly, certain types of customer will always prefer face-to-face contact with the seller when making a purchasing decision. It feels more tangible, more ‘proper’, and with a particular person and location associated with the transaction, the customer feels more comfortable because a method or recourse, should something go wrong, is much more obvious. In this case, the quantity of people booking online will not change until the demographics of the target market age with time. The fact is, the younger you are, the greater the proportion of your life has been spent in the presence of the internet, and therefore the more comfortable you are with it.
Secondly, certain types of transaction are inherently complicated. A round-the-world trip using different airlines from different alliances, an expedition that – literally - required planes, trains and automobiles, or a solitary journey where the customer cannot specify either the departure or return date would be examples. This would give even a seasoned IP expert or systems integrator a run for their money, and where the customer is concerned, the human need for reassurance that everything has been booked correctly may require something more tangible than an e-ticket or a pop-up window stating, “Complete. Return to homepage?”.
Humans do not and, in fact, cannot cease this pattern of behaviour when they leave the travel agent having booked their holiday, and head for the bank to get their foreign currency. It’s of little surprise then that according to Datamonitor, in spite of online banking, telephone banking, and mobile payments, 79 per cent of European consumers prefer physically visiting their humble local bank branch over any other channel. Retail banking and travel are very similar in this respect, and it is likely that the more expensive the transaction being made, the more likely the customer will require face-to-face contact. Think about it at a personal level – if you wanted to arrange an overdraft or a loan, wouldn’t your first instinct be to meet the bank manager in person? To a lesser extent, the last time you had a cheque for a sizeable sum to pay into your bank account, did you trust the express pay-in envelope? Or, like me, did you queue in the bank, despite it taking a large proportion of your precious lunch hour, because you felt more comfortable seeing it passed over the counter than sitting at the bottom of a perspex box fixed to a pillar somewhere? Face-to-face contact is still essential where a large or complex transaction is concerned. For some people, such contact is essential for all transactions.
This is a headache for the retail banking industry. Despite investing in online banking, neither the cost of staffing a branch can be reduced nor the efficiency of it increased while customers still prefer to use the branch to any other channel. The most pessimistic banker might decide that IP had nothing to offer the retail banking industry because of this issue, but that is not necessarily the case.
One just needs to turn the problem on its head. Rather than just trying to harness the internet as a method to get customers to complete transactions themselves, IP can be used to improve the efficiency of not only one branch, but all branches in a banking empire. Once one has the opportunity to think about it, the fact that bank branches all over Europe are crammed with impatient customers in their lunch hour is actually a blessing in disguise. After all, how many organisations would love to be able to predict where their customers will be and when, so that promotional offers could be targeted at them? The fact that in retail banking the target customer is most likely to be inside a branch, presents an opportunity to communicate with them. The personnel each customer is exposed to within the branch offers another opportunity for that bank to differentiate itself through provision of superior service. Even the kiosks within the branch could offer revenue opportunities for the bank from third parties, a means to promote complimentary services, or the beginnings of CRM with a personalised experience for each individual.
From the customer’s point of view, imagine approaching the till merely to pay that same cheque in, but then being informed by the cashier that your mortgage quotation was ready to be collected. At the same time, you’re reminded with the gleeful news that there are now only two monthly payments left on the loan you took out 18 months ago (meaning you might be able to afford that skiing holiday after all), and that if you were to open a joint account with your fiancé rather than just having separate accounts, you’d both get a better rate of interest anyway. Before you leave, you’re also given the opportunity to have a quick chat to the manager about that long-term savings plan you’d telephoned a bank branch 50 miles away about earlier in the week, which you’d completely forgotten about.
Conversely, imagine operating a bank where particular products or services could be offered just once to a customer most likely to need it, with a greatly increased possibility of the service suiting that customer and therefore a successful sale. Imagine also that no selling time was wasted – ever. Your marketing department or their local branch targeted customers individually, rather than in a slapdash group of people of the same age, disposable income, or postcode. Also, particular products or services were discussed once and once only with each customer, and at the right time – no, “Didn’t you call me about this last week?” or, “You were supposed to get back to me about this a fortnight ago!” responses. All this is entirely feasible through IP.
So, how would IP let the cashier know about all the banking needs of an individual customer rather than just the one need they have at that moment in time? If your organisation is going to embrace IP, then the return on investment will be greater if the quantity of places where IP reaches can be maximised. Put simply, if your bank’s call centres and branches are both running on IP, then there is no reason why the information used by either party cannot be shared. All in all, this means the customer’s local branch will know when the head office has contacted someone regarding a new promotional offer, or in response to a request for information from that customer. Similarly head office will know how quickly the customer responded by visiting their local branch, what questions they asked, and how the eventual service was tailored when the sale was closed. This is just one possibility though. With the same technology, it is also possible to do this in reverse.
For example, if the customer should contact the head office from outside the branch, then an IP-based telephony system can direct that individual’s call immediately to the personnel with appropriate expertise in the head office. However, the same call could also be redirected to someone working within the customer’s local branch, to the extent that the IP system will intuitively page the particular member of staff needed, wherever they are. This benefits the customer experience by ensuring that query calls are not endlessly transferred to various members of staff not equipped to answer the customer’s questions. It also means that the customer’s local branch will be able to develop a more comprehensive understanding of each customers’ lifestyle and needs, and therefore be able to tailor their overall retail banking experience to suit. In short, IP isn’t just a way to improve your telephony; it’s the start of an enterprise-wide CRM system, and the beginning of the end for missed opportunities to up-sell or cross-sell.
IP does not have to be restricted to its native ground of networked PCs and telephones. In-branch security surveillance could also run on IP, deliver real-time camera footage to the bank’s head office or, if needs be, the police. However, the same footage could be used by the bank’s marketing department to assess the impact of an in-store point of sale or other promotional campaign. Staffing levels could also be monitored, even customer behaviour in relation to new branch layouts and signage. Peak traffic times could be ascertained and staffing guidelines adapted accordingly. There is no limit to what can be done if the appropriate information is shared with those personnel that most need it.
As far as the customer is concerned, a trip to the local bank will never be like going on holiday – there is only so much that IP can do! However, once you accept that until the entire population of Europe becomes so comfortable with the internet that they never need to visit their branch, then the same issue that affects the travel industry will continue to affect the retail banking industry. Even if you ignore the issue, then one still has to accept that there are many opportunities for high street banks. Sales can be increased, customer satisfaction levels can be improved, and generally the bank stands to gain from literally wringing the most productivity out of the information its already has. John Paul Getty once said, “Money is like manure. You have to spread it around or it smells”. Metaphorically, information is the same. Once you realise that the best way to use it is to spread it around your organisation, then the only thing left to do is to decide how - and IP is the answer.
Showing posts with label Companies: Cisco Systems. Show all posts
Showing posts with label Companies: Cisco Systems. Show all posts
24 October 2003
01 October 2003
Clean Bill of Financial Health for Telecoms May Cause Serious Illness
Ghost-written article for Cisco Systems EMEA.
Published in TM Forum magazine, UK, October 2003.
Why - because profits without effort will encourage the average network operator to expand the organisation instead of improving it. If the last few years have taught us anything about network operators, it’s that they are not best prepared to cope with adversity. Yes, a global economic downturn has obviously affected all vertical sectors including telecoms, but the temptation is to use this externally as the cause when there are more inherent problems at play. Internally, IT is often the scapegoat. It’s not surprising that management remain reticent when substantial investments in technology fail to deliver the return or savings expected. At the core of all this IT is the organisation’s operational support system, or OSS – it’s heart, lungs and central nervous system combined. Improving the OSS – the way an organisation lives, breathes and does business day-to-day rather than tinkering with peripheral things is the way to reduce costs and improve overall health. However, not all network providers realise this, or are more concerned with the technology they provide than how they provide it. Furthermore, even those that do recognise this fact have yet to learn that organisation-wide ‘surgery’ of this nature should not be taken lightly.
Cure the Cause, Not the Symptom
Two key things are needed – firstly a thoughtful yet practical approach to OSS that deals with the organisation as a whole. A surgeon cannot help a patient by mending a broken leg and a dislocated shoulder, without also considering the circulation that keeps both functioning. The same applies to management trying to improve the organisation by taking each division, management layer or IT ‘limb’ in turn – neither humans nor organisations work that way. Where internal problems are concerned, examining the OSS rather than one part of the business may well reveal that the information all other IT or business systems are reliant on is flawed. Perhaps the way in which information is recorded should be reviewed, the way departments work together, or the way information moves from department to department – maybe all three.
Whatever the case, seeking the quick fix is easier to stomach when the unwelcome prognosis is that there is no such thing, no ‘silver bullet’, or single detail escaping everyone that can be tweaked as a panacea. The quest for the quick fix leads to constant fire fighting, with budget being splintered to attend to many problems occurring one after the other.
Those problems may not be internal flaws but external factors. Difficulties encountered by organisations we advise include: changes in regulatory environment; consolidating, converging or going global; maintaining margins during downturn; and protecting market position against new entrants and new business models. However, the more robust an organisation’s OSS, the better it will cope with unforeseen circumstances. One cannot predict the next bout of flu, but can be physically fit to cope with it when it arrives.
Regardless of the nature of the problem, the second consideration is that tinkering with an organisation’s OSS should not be underestimated. It is the business equivalent of neurosurgery, potentially a fundamental change to the way that every individual in the organisation uses their working time. Samuel Johnson was neither a surgeon nor a telecoms businessman, but he still recognised that, “Change is not made without inconvenience, even from worse to better”. More than a century later, Dr. Bernard Burnes, researcher, lecturer, and head of the Operations Management Group at the University of Manchester Institute of Science & Technology, said of organisational change, “In cases where staff are required to keep up the same level of output during the transition phase, it may require additional resources to achieve this...Nothing is guaranteed to be more demoralising than having to make changes without the necessary resources or support”. When you accept that improving an organisations OSS will deliver improvements throughout the business and decide to do it, then adequate preparation is needed.
Prepare the Surgeon, and the Patient
Before any plans are made let alone implemented, consider that fundamental organisational change needs a budget of its own – not for OSS software, for kit, or anything else – for the change itself. Overtime will be incurred, mistakes or teething problems will be unavoidable, and as a result, resources will be used. The twin necessity to a financial budget is the need to allocate time for the change. You are changing something that has an impact on every employee in the organisation, and doing your best to prevent people outside the organisation feeling any adverse affects, or even noticing. That takes time, and the people implementing the change or being affected by it cannot be expected to cope in addition to fulfilling their usual responsibilities. The other consideration where time is concerned is to plan the change over weeks or months, with realistic deadlines and a way to measure progress. These may need to be adjusted as the organisation encounters problems, but a sure-fire way to ensure something never gets done is to label it ‘ASAP’.
Communicating the importance of the change internally can increase likelihood of success. Appoint an internal change management team, whose sole responsibility for the duration of the project is to ensure that things go smoothly and on time. Use representatives from all parts of the organisation involved and from mixed hierarchical levels, and foster an environment of respect but without bureaucracy, as in Edward de Bono’s theory on brainstorming. Everyone’s experience will be needed, and if concerns or ideas are not aired or overruled then the change will not be embraced.
Anyone attempting to fly British Airways on 18th June 2003 will have borne witness to the result of failure to consider, prepare and provide time to employees for significant OSS changes. Unfortunately there is a tendency for management to veer from one extreme to another – either the ‘fluffy’, people-oriented style, or intense, task-oriented style where the product or service is all, no matter what your staff turnover rate is. There is no simple way to decide what approach to take except to say that it will be closer to the middle than at either end. Accurate consideration of the participants of OSS change will help diagnose where the organisation is now, and where it needs to be. However, this is not the only reason for preparation before embarking on change. Changes to an organisation’s OSS are both time-critical and fraught with danger. To use the metaphor again, a surgeon will progress both methodically and quickly – and a lack of the necessary care or speed will end the same way. If the organisation were still based on paper, pens and copper wire, change might be approached more carefully. The fact that these have been replaced by IT and fibre optic cable does not necessarily make OSS change easier, only different.
The Recovery Room
‘Perpetual change’ seems to be where everyone is headed – a style of work where nothing is permanent and a dynamic organisation can respond quickly to any external factor. As an organisational state, perpetual change in consulting lingo has its roots almost a decade ago, triggered at the time by academic study of managerial steps taken by Nissan and Volvo in the automotive sector. That is not to say that network providers will be able to learn from their experience without suffering some of the same difficulties. Only this year, AT Kearney surveyed almost 300 European organisations in various sectors that had completed a business change programme. Only 20 per cent of those 300 were found to be successful. Regardless of the outcome and whether or not perpetual change is where you want to be, it is essential that both management and employees be given some time to recover from organisational change where OSS is concerned.
It is human nature to hoard information for coercive power, to build empires, and play politics. No amount of IT spend will change that. However, successful change is possible if it is considered and planned appropriately, and where else can network operators make an operational and cultural change more effectively than with the organisation’s OSS, the system on which the rest of the business depends? Let us hope that a temporary improvement of finances in the telecoms sector does not mean essential surgery is postponed any longer.
Published in TM Forum magazine, UK, October 2003.
Why - because profits without effort will encourage the average network operator to expand the organisation instead of improving it. If the last few years have taught us anything about network operators, it’s that they are not best prepared to cope with adversity. Yes, a global economic downturn has obviously affected all vertical sectors including telecoms, but the temptation is to use this externally as the cause when there are more inherent problems at play. Internally, IT is often the scapegoat. It’s not surprising that management remain reticent when substantial investments in technology fail to deliver the return or savings expected. At the core of all this IT is the organisation’s operational support system, or OSS – it’s heart, lungs and central nervous system combined. Improving the OSS – the way an organisation lives, breathes and does business day-to-day rather than tinkering with peripheral things is the way to reduce costs and improve overall health. However, not all network providers realise this, or are more concerned with the technology they provide than how they provide it. Furthermore, even those that do recognise this fact have yet to learn that organisation-wide ‘surgery’ of this nature should not be taken lightly.
Cure the Cause, Not the Symptom
Two key things are needed – firstly a thoughtful yet practical approach to OSS that deals with the organisation as a whole. A surgeon cannot help a patient by mending a broken leg and a dislocated shoulder, without also considering the circulation that keeps both functioning. The same applies to management trying to improve the organisation by taking each division, management layer or IT ‘limb’ in turn – neither humans nor organisations work that way. Where internal problems are concerned, examining the OSS rather than one part of the business may well reveal that the information all other IT or business systems are reliant on is flawed. Perhaps the way in which information is recorded should be reviewed, the way departments work together, or the way information moves from department to department – maybe all three.
Whatever the case, seeking the quick fix is easier to stomach when the unwelcome prognosis is that there is no such thing, no ‘silver bullet’, or single detail escaping everyone that can be tweaked as a panacea. The quest for the quick fix leads to constant fire fighting, with budget being splintered to attend to many problems occurring one after the other.
Those problems may not be internal flaws but external factors. Difficulties encountered by organisations we advise include: changes in regulatory environment; consolidating, converging or going global; maintaining margins during downturn; and protecting market position against new entrants and new business models. However, the more robust an organisation’s OSS, the better it will cope with unforeseen circumstances. One cannot predict the next bout of flu, but can be physically fit to cope with it when it arrives.
Regardless of the nature of the problem, the second consideration is that tinkering with an organisation’s OSS should not be underestimated. It is the business equivalent of neurosurgery, potentially a fundamental change to the way that every individual in the organisation uses their working time. Samuel Johnson was neither a surgeon nor a telecoms businessman, but he still recognised that, “Change is not made without inconvenience, even from worse to better”. More than a century later, Dr. Bernard Burnes, researcher, lecturer, and head of the Operations Management Group at the University of Manchester Institute of Science & Technology, said of organisational change, “In cases where staff are required to keep up the same level of output during the transition phase, it may require additional resources to achieve this...Nothing is guaranteed to be more demoralising than having to make changes without the necessary resources or support”. When you accept that improving an organisations OSS will deliver improvements throughout the business and decide to do it, then adequate preparation is needed.
Prepare the Surgeon, and the Patient
Before any plans are made let alone implemented, consider that fundamental organisational change needs a budget of its own – not for OSS software, for kit, or anything else – for the change itself. Overtime will be incurred, mistakes or teething problems will be unavoidable, and as a result, resources will be used. The twin necessity to a financial budget is the need to allocate time for the change. You are changing something that has an impact on every employee in the organisation, and doing your best to prevent people outside the organisation feeling any adverse affects, or even noticing. That takes time, and the people implementing the change or being affected by it cannot be expected to cope in addition to fulfilling their usual responsibilities. The other consideration where time is concerned is to plan the change over weeks or months, with realistic deadlines and a way to measure progress. These may need to be adjusted as the organisation encounters problems, but a sure-fire way to ensure something never gets done is to label it ‘ASAP’.
Communicating the importance of the change internally can increase likelihood of success. Appoint an internal change management team, whose sole responsibility for the duration of the project is to ensure that things go smoothly and on time. Use representatives from all parts of the organisation involved and from mixed hierarchical levels, and foster an environment of respect but without bureaucracy, as in Edward de Bono’s theory on brainstorming. Everyone’s experience will be needed, and if concerns or ideas are not aired or overruled then the change will not be embraced.
Anyone attempting to fly British Airways on 18th June 2003 will have borne witness to the result of failure to consider, prepare and provide time to employees for significant OSS changes. Unfortunately there is a tendency for management to veer from one extreme to another – either the ‘fluffy’, people-oriented style, or intense, task-oriented style where the product or service is all, no matter what your staff turnover rate is. There is no simple way to decide what approach to take except to say that it will be closer to the middle than at either end. Accurate consideration of the participants of OSS change will help diagnose where the organisation is now, and where it needs to be. However, this is not the only reason for preparation before embarking on change. Changes to an organisation’s OSS are both time-critical and fraught with danger. To use the metaphor again, a surgeon will progress both methodically and quickly – and a lack of the necessary care or speed will end the same way. If the organisation were still based on paper, pens and copper wire, change might be approached more carefully. The fact that these have been replaced by IT and fibre optic cable does not necessarily make OSS change easier, only different.
The Recovery Room
‘Perpetual change’ seems to be where everyone is headed – a style of work where nothing is permanent and a dynamic organisation can respond quickly to any external factor. As an organisational state, perpetual change in consulting lingo has its roots almost a decade ago, triggered at the time by academic study of managerial steps taken by Nissan and Volvo in the automotive sector. That is not to say that network providers will be able to learn from their experience without suffering some of the same difficulties. Only this year, AT Kearney surveyed almost 300 European organisations in various sectors that had completed a business change programme. Only 20 per cent of those 300 were found to be successful. Regardless of the outcome and whether or not perpetual change is where you want to be, it is essential that both management and employees be given some time to recover from organisational change where OSS is concerned.
It is human nature to hoard information for coercive power, to build empires, and play politics. No amount of IT spend will change that. However, successful change is possible if it is considered and planned appropriately, and where else can network operators make an operational and cultural change more effectively than with the organisation’s OSS, the system on which the rest of the business depends? Let us hope that a temporary improvement of finances in the telecoms sector does not mean essential surgery is postponed any longer.
01 September 2003
An Ecosystem - Just What European Resellers Need?
Ghost-written article for Edzard Overbeek, Cisco Systems EMEA.
Published in European Reseller magazine, UK/Europe, September 2003.
As if leveraging, ramping up, and creating ‘synergies’ weren’t enough business jargon to choke any IT expert, we are now creating 'ecosystems' for resellers in the European channel to market. Recent analysis by Martin Canning, VP, European Services Research, IDC EMEA, suggests that the current linear, hierarchical method for manufacturers to work with their channel partners may be retired by, of all people, the end users. Why? Quite simply, end users want to be able to contact just one person if something goes wrong, they need an upgrade or they have any questions. Traditionally, an organisation might deal with many resellers for different things. However, those days are gone.
Our ‘ecosystem’ functions like a human networking cocktail party hosted both in the real world and in cyberspace. The aim is to ensure that the perfect fusion of specialised IT knowledge is applied to each end-user scenario, reducing duplication of activities and therefore cost to the customer. This tackles the main issue for resellers in that it is impossible for them to be all things to everyone. It is also the reason why the majority of IT vendors employ a mixture of channel partners and systems integrators to provide the ultimate in business flexibility. Furthermore, the ecosystem tackles two other key concerns for resellers – overstocking and keeping up with ever-evolving technology. Both are part of the same problem - rapid advances in technology are almost impossible for an individual reseller to match, resulting in a supply chain beset with yesterday’s technology.
We encourage resellers to specialise, firstly to reduce overlap between rivals and secondly because competing on price alone is a recipe for disaster. Preventing such duplication of expertise is vital to ensure a seamless and profitable channel. The combined market opportunity for the extensive range of networking products, from routers and switches to wireless LAN solutions, is worth up to €64 billion for product sales, plus €30 billion for advanced services. No single vendor can possibly claim to do all this single-handedly, which is why an ecosystem of specialised, complimentary organisations is the ideal scenario. Our goal is to help give those organisations a slice of this action.
If that isn’t incentive enough, the focused ecosystem approach acknowledges the strengths of each player – whether software publisher, distributor, ISP, or reseller - working on any end-user requirement without bias. To reassure all concerned we invoke a “traffic light process,” ensuring that once a partner has been engaged on a project, no other player can muscle in.
In February this year we announced an expanded partnership agreement with US operator AT&T, where AT&T agreed to use our indirect sales partners to sell its advanced services. However, the ecosystem doesn’t solely benefit the reseller community. AT&T obtains access to more SMEs than ever before, regarded by many industry analysts as the "sweet spot" of the multi-billion Euro managed services market.
Far from being simply a new approach tagged with new jargon, the ecosystem presents genuine opportunities for all involved. These range from an increased customer base to carrying more up-to-date or varied solutions, or being able to access one specialised section of a massive IT project that had never been deemed possible in the past. It just goes to show – some buzzwords really are a hive of activity.
Published in European Reseller magazine, UK/Europe, September 2003.
As if leveraging, ramping up, and creating ‘synergies’ weren’t enough business jargon to choke any IT expert, we are now creating 'ecosystems' for resellers in the European channel to market. Recent analysis by Martin Canning, VP, European Services Research, IDC EMEA, suggests that the current linear, hierarchical method for manufacturers to work with their channel partners may be retired by, of all people, the end users. Why? Quite simply, end users want to be able to contact just one person if something goes wrong, they need an upgrade or they have any questions. Traditionally, an organisation might deal with many resellers for different things. However, those days are gone.
Our ‘ecosystem’ functions like a human networking cocktail party hosted both in the real world and in cyberspace. The aim is to ensure that the perfect fusion of specialised IT knowledge is applied to each end-user scenario, reducing duplication of activities and therefore cost to the customer. This tackles the main issue for resellers in that it is impossible for them to be all things to everyone. It is also the reason why the majority of IT vendors employ a mixture of channel partners and systems integrators to provide the ultimate in business flexibility. Furthermore, the ecosystem tackles two other key concerns for resellers – overstocking and keeping up with ever-evolving technology. Both are part of the same problem - rapid advances in technology are almost impossible for an individual reseller to match, resulting in a supply chain beset with yesterday’s technology.
We encourage resellers to specialise, firstly to reduce overlap between rivals and secondly because competing on price alone is a recipe for disaster. Preventing such duplication of expertise is vital to ensure a seamless and profitable channel. The combined market opportunity for the extensive range of networking products, from routers and switches to wireless LAN solutions, is worth up to €64 billion for product sales, plus €30 billion for advanced services. No single vendor can possibly claim to do all this single-handedly, which is why an ecosystem of specialised, complimentary organisations is the ideal scenario. Our goal is to help give those organisations a slice of this action.
If that isn’t incentive enough, the focused ecosystem approach acknowledges the strengths of each player – whether software publisher, distributor, ISP, or reseller - working on any end-user requirement without bias. To reassure all concerned we invoke a “traffic light process,” ensuring that once a partner has been engaged on a project, no other player can muscle in.
In February this year we announced an expanded partnership agreement with US operator AT&T, where AT&T agreed to use our indirect sales partners to sell its advanced services. However, the ecosystem doesn’t solely benefit the reseller community. AT&T obtains access to more SMEs than ever before, regarded by many industry analysts as the "sweet spot" of the multi-billion Euro managed services market.
Far from being simply a new approach tagged with new jargon, the ecosystem presents genuine opportunities for all involved. These range from an increased customer base to carrying more up-to-date or varied solutions, or being able to access one specialised section of a massive IT project that had never been deemed possible in the past. It just goes to show – some buzzwords really are a hive of activity.
01 August 2003
No Need for Basel to ‘Sex Up’ Storage
Ghost-written article for Geoff Love, Business Development, Storage Area Networks, Cisco Systems EMEA.
Published in Storage magazine, UK, August 2003.
Mention ‘storage’ to a non-IT person and you’ll inadvertently conjure up images of a garage, cobweb-ridden attic, or dusty, crate-filled museum basement. Even in business the image isn’t much better – a storeroom on the top floor, filled with little-used filing cabinets. Sadly the image of storage in IT terms hasn’t been that different until developments over recent years with the realisation that data (voice and video) is one of most valuable commodities within the business. Storage now plays a core role in protecting and managing the digital assets of an enterprise to ensure operational productivity. Storage Area Networks, ‘SANs’, in particular have helped to change the image of storage from that of the redundant cyber-filing cabinet into something more flexible, more dynamic, that can positively impact an organisation’s bottom-line. The much talked about Basel II Accord, which builds on original directives from 1998 and, whilst late in the game, brings a political stamp of approval to what many financial organisations were considering or already in the process of implementing anyway.
However, as Samuel Johnson once said, “Change does not come without inconvenience, even from worse to better”, and financial institutions falling under the scope of the Basel Accord now have a lot to think about. There is work to be done in terms of improving reporting mechanisms and public disclosure. Most of all, the introduction of operational risk as a part of the criteria on which organisations are assessed brings a host of new scenarios that not only need to be planned for, but also budgeted for.
Basel Brushes Up Legislation
The impact of the original Basel Committee on Banking Supervision was significant. In general, financial organisations were advised to put aside capital to counter two issues. Firstly, the adverse effects of changes in financial market prices, which included currencies, interest rates and liquidity amongst others. Secondly, under the umbrella of ‘credit risk’, the scenario where the value of a bank’s position is adversely affected by a change in the credit quality of a counter-party i.e. default, or by the bank being downgraded by a credit agency.
The new accord dwarfs the former one in terms of implications for day-to-day business. Senior IT staff will need to take a strategic view of risk management, aligning the business needs of the enterprise with the technologies required to enable adequate reporting, data collation, exceptions monitoring, and compliance reporting. From an IT perspective, the new regulatory environment will require a common risk methodology across the enterprise which, in turn, is based on common definitions and report formats. It includes ‘operational risk’, where a bank must literally brainstorm, anticipate, and allocate budget to contingencies against anything from a simple missed deadline that impacts revenue, to terrorism or an Act of God. The deadline for senior management to do this isn’t until 2006, but much of the IT-related work will need to be commenced before this year is out.
AXA Technology Services, for example, is already reaping the benefits of IP technology. During the summer of 2003 it began deploying Cisco SAN technology as part of a global consolidation of its ‘IT Competency Centres’. To give some sense of scale AXA has the challenge of storing information pertaining to the many insurance products and financial services it provides to over 50 million individuals and businesses around the world, totalling $65 billion in annual sales. Its business depends on the quality and security of this information, which no doubt it considered when choosing to move towards SAN.
Yet despite such complexities, this shift of information strategy has been relatively straightforward for AXA. It established a storage-over-IP infrastructure without incurring much incremental cost, because it already had an IP network in place. The beauty of IP is that in allowing voice, video and data all to run over a single network, the addition of SAN functionality was relatively uncomplicated.
As well as cost this is an important demonstration of how businesses can, in real terms, address the Basel II stipulations that information must be relayed to storage sites located beyond specified distances from organisations’ main sites. Moreover, it is noteworthy that this can be achieved without additional expense to a company’s existing IP or Fibre Channel networks. In fact, different such networks are no longer separate as Fibre Channel over IP (FCIP) can easily link Fibre Channel storage area networks (SAN).
Dealing With Operational Risk
Here storage, SANs and networking in general comes into its own. Delve into the detail of the Basel II Accord and the factors that financial organisations need to consider include failure of key vendors to fulfil contracts, data entry error, model or system mis-operation, hacking, lack of integration, utility or systems outage and, of course, natural catastrophe, vandalism, or terrorism. In short, those organisations already moving from a traditional ‘points of risk’ approach to one covering extended supply chains, viewing IT security in a non-compartmentalised manner, and planning safeguards will be ahead of the game. Little wonder then that almost 40 per cent of UK banks consider enterprise-wide, data warehouse development a high priority, and 20 per cent consider implementing an integrated collateral management system similarly urgent.
One of the likely impacts of Basel II will be a massive increase in data storage. While Basel is an affirmation of what financial organisations should, and have been doing anyway, it is shifting the focus away from hardware-based resilience and simple backup solutions to end-to-end IT architectures that are resilient to data corruption or loss. The nature of this vertical sector means that SANs are ideally suited to multiple enterprise environments, especially those that have multiple locations globally, need to integrate with other organisations, and have business-critical systems, some of which being customer facing. The security and reliability of the network becomes paramount as more business critical information is held electronically.
These are some of the reasons why Euronext.Liffe, the derivatives business of Euronext, used Cisco to network its London and Paris data centres, backing up information to each other – despite being 650 kilometres apart.
SANity Check for CEOs, CFOs and CIOs Alike
Financial organisations responding to Basel or their own objectives to contingency plan may well look outside their organisation for help.
Using focus groups to identify ‘hot’ issues which cause the most headaches for IT managers, Cisco found three main areas of concern: the sheer task of managing large, disparate islands of storage from multiple physical and virtual locations; dealing with the complexity of maintaining scheduled backups for multiple systems or preparing for unscheduled system outages; and the inability to share storage resources for utility. In addition, IT managers complained of a shortage of qualified professionals to manage storage, and went on to admit confusion over the choice of storage technology alternatives. Further pressure is being brought to bear as IT budgets are continually restricted, and the IT department is put under more scrutiny than ever before.
One common concern is that as Basel II comes to fruition, the financial services sector will have less time, little money, and in some cases insufficient expertise to cope in-house. Worse still, in some cases different teams manage networks and storage, which is against the flow of networking evolution. At the same time, IT industry opinion is that direct attached storage is on the way out, and that SANs trump them anyway in terms of lowered cost of ownership, increased return on investment, and the ability to provide CRM, ERP, or even the basic e-mail function.
Spice Up Your Organisation with Basel II
Basel will not create panic in the financial services sector. It is not a reason for stomachs to churn, nor a dictatorial directive coming from ‘bureaucrats in Europe’. In most cases it will enforce banks’ existing or intended risk management strategies, but it is also an opportunity. Following a methodology to ensure compliance with Basel will be surprisingly satisfying. Assessing the current capability of an organisation’s network and identifying the weak points is something that is probably already completed. It might also be advisable to plan for significant increases in data storage requirements, and for a redesign of data warehouse and associated security issues. Again, this is part of best practice that IT managers will probably want to do anyway. Compliance with Basel also allows organisations to standardise their networks onto single integrated IP infrastructures, using SANs to enable them to maximise network and information management.
Given these benefits, perhaps it’s no surprise the market for SAN-attached storage in 2005 is expected to exceed US$22 billion – three million terabytes of data. Total cost of ownership of a SAN is typically less than half that of a traditional direct-attached solution, and backup and recovery applications can be much easier managed in a SAN environment. Then consider the perils of downtime that Basel is designed to help financial organisations avoid. In the specialisation of financial brokerage, unplanned downtime can cost an organisation US$6.5 million per hour, not to mention damage to other important areas such as reputation and brand. Basel will offer financial organisations validity for their risk management process, a chance for in-house IT staff to improve their lot, and a reason for the IT industry to get excited about what used to be one of its least glamorous specialisations.
Published in Storage magazine, UK, August 2003.
Mention ‘storage’ to a non-IT person and you’ll inadvertently conjure up images of a garage, cobweb-ridden attic, or dusty, crate-filled museum basement. Even in business the image isn’t much better – a storeroom on the top floor, filled with little-used filing cabinets. Sadly the image of storage in IT terms hasn’t been that different until developments over recent years with the realisation that data (voice and video) is one of most valuable commodities within the business. Storage now plays a core role in protecting and managing the digital assets of an enterprise to ensure operational productivity. Storage Area Networks, ‘SANs’, in particular have helped to change the image of storage from that of the redundant cyber-filing cabinet into something more flexible, more dynamic, that can positively impact an organisation’s bottom-line. The much talked about Basel II Accord, which builds on original directives from 1998 and, whilst late in the game, brings a political stamp of approval to what many financial organisations were considering or already in the process of implementing anyway.
However, as Samuel Johnson once said, “Change does not come without inconvenience, even from worse to better”, and financial institutions falling under the scope of the Basel Accord now have a lot to think about. There is work to be done in terms of improving reporting mechanisms and public disclosure. Most of all, the introduction of operational risk as a part of the criteria on which organisations are assessed brings a host of new scenarios that not only need to be planned for, but also budgeted for.
Basel Brushes Up Legislation
The impact of the original Basel Committee on Banking Supervision was significant. In general, financial organisations were advised to put aside capital to counter two issues. Firstly, the adverse effects of changes in financial market prices, which included currencies, interest rates and liquidity amongst others. Secondly, under the umbrella of ‘credit risk’, the scenario where the value of a bank’s position is adversely affected by a change in the credit quality of a counter-party i.e. default, or by the bank being downgraded by a credit agency.
The new accord dwarfs the former one in terms of implications for day-to-day business. Senior IT staff will need to take a strategic view of risk management, aligning the business needs of the enterprise with the technologies required to enable adequate reporting, data collation, exceptions monitoring, and compliance reporting. From an IT perspective, the new regulatory environment will require a common risk methodology across the enterprise which, in turn, is based on common definitions and report formats. It includes ‘operational risk’, where a bank must literally brainstorm, anticipate, and allocate budget to contingencies against anything from a simple missed deadline that impacts revenue, to terrorism or an Act of God. The deadline for senior management to do this isn’t until 2006, but much of the IT-related work will need to be commenced before this year is out.
AXA Technology Services, for example, is already reaping the benefits of IP technology. During the summer of 2003 it began deploying Cisco SAN technology as part of a global consolidation of its ‘IT Competency Centres’. To give some sense of scale AXA has the challenge of storing information pertaining to the many insurance products and financial services it provides to over 50 million individuals and businesses around the world, totalling $65 billion in annual sales. Its business depends on the quality and security of this information, which no doubt it considered when choosing to move towards SAN.
Yet despite such complexities, this shift of information strategy has been relatively straightforward for AXA. It established a storage-over-IP infrastructure without incurring much incremental cost, because it already had an IP network in place. The beauty of IP is that in allowing voice, video and data all to run over a single network, the addition of SAN functionality was relatively uncomplicated.
As well as cost this is an important demonstration of how businesses can, in real terms, address the Basel II stipulations that information must be relayed to storage sites located beyond specified distances from organisations’ main sites. Moreover, it is noteworthy that this can be achieved without additional expense to a company’s existing IP or Fibre Channel networks. In fact, different such networks are no longer separate as Fibre Channel over IP (FCIP) can easily link Fibre Channel storage area networks (SAN).
Dealing With Operational Risk
Here storage, SANs and networking in general comes into its own. Delve into the detail of the Basel II Accord and the factors that financial organisations need to consider include failure of key vendors to fulfil contracts, data entry error, model or system mis-operation, hacking, lack of integration, utility or systems outage and, of course, natural catastrophe, vandalism, or terrorism. In short, those organisations already moving from a traditional ‘points of risk’ approach to one covering extended supply chains, viewing IT security in a non-compartmentalised manner, and planning safeguards will be ahead of the game. Little wonder then that almost 40 per cent of UK banks consider enterprise-wide, data warehouse development a high priority, and 20 per cent consider implementing an integrated collateral management system similarly urgent.
One of the likely impacts of Basel II will be a massive increase in data storage. While Basel is an affirmation of what financial organisations should, and have been doing anyway, it is shifting the focus away from hardware-based resilience and simple backup solutions to end-to-end IT architectures that are resilient to data corruption or loss. The nature of this vertical sector means that SANs are ideally suited to multiple enterprise environments, especially those that have multiple locations globally, need to integrate with other organisations, and have business-critical systems, some of which being customer facing. The security and reliability of the network becomes paramount as more business critical information is held electronically.
These are some of the reasons why Euronext.Liffe, the derivatives business of Euronext, used Cisco to network its London and Paris data centres, backing up information to each other – despite being 650 kilometres apart.
SANity Check for CEOs, CFOs and CIOs Alike
Financial organisations responding to Basel or their own objectives to contingency plan may well look outside their organisation for help.
Using focus groups to identify ‘hot’ issues which cause the most headaches for IT managers, Cisco found three main areas of concern: the sheer task of managing large, disparate islands of storage from multiple physical and virtual locations; dealing with the complexity of maintaining scheduled backups for multiple systems or preparing for unscheduled system outages; and the inability to share storage resources for utility. In addition, IT managers complained of a shortage of qualified professionals to manage storage, and went on to admit confusion over the choice of storage technology alternatives. Further pressure is being brought to bear as IT budgets are continually restricted, and the IT department is put under more scrutiny than ever before.
One common concern is that as Basel II comes to fruition, the financial services sector will have less time, little money, and in some cases insufficient expertise to cope in-house. Worse still, in some cases different teams manage networks and storage, which is against the flow of networking evolution. At the same time, IT industry opinion is that direct attached storage is on the way out, and that SANs trump them anyway in terms of lowered cost of ownership, increased return on investment, and the ability to provide CRM, ERP, or even the basic e-mail function.
Spice Up Your Organisation with Basel II
Basel will not create panic in the financial services sector. It is not a reason for stomachs to churn, nor a dictatorial directive coming from ‘bureaucrats in Europe’. In most cases it will enforce banks’ existing or intended risk management strategies, but it is also an opportunity. Following a methodology to ensure compliance with Basel will be surprisingly satisfying. Assessing the current capability of an organisation’s network and identifying the weak points is something that is probably already completed. It might also be advisable to plan for significant increases in data storage requirements, and for a redesign of data warehouse and associated security issues. Again, this is part of best practice that IT managers will probably want to do anyway. Compliance with Basel also allows organisations to standardise their networks onto single integrated IP infrastructures, using SANs to enable them to maximise network and information management.
Given these benefits, perhaps it’s no surprise the market for SAN-attached storage in 2005 is expected to exceed US$22 billion – three million terabytes of data. Total cost of ownership of a SAN is typically less than half that of a traditional direct-attached solution, and backup and recovery applications can be much easier managed in a SAN environment. Then consider the perils of downtime that Basel is designed to help financial organisations avoid. In the specialisation of financial brokerage, unplanned downtime can cost an organisation US$6.5 million per hour, not to mention damage to other important areas such as reputation and brand. Basel will offer financial organisations validity for their risk management process, a chance for in-house IT staff to improve their lot, and a reason for the IT industry to get excited about what used to be one of its least glamorous specialisations.
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About Me
- Glyn
- Toronto, Ontario, Canada
- PR, internal communications and branding pro currently freelancing as a consultant, writer, DJ, and whatever else comes my way.
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