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Is IT complexity a hindrance to performance or an inevitable consequence of complexity in the business?
At Computer Weekly's May CW500 Club meeting in London, three speakers from different industry sectors discussed their experiences with complex IT infrastructures and, in the process, answered this question.
Speakers from the banking, charity and fast food sectors shared three different perspectives on complexity in IT.
Domino's Pizza, which has a turnover of about £200m, is a franchise-based business, which in itself adds complexity when it comes to implementing IT. On top of that, the business is changing as customer buying habits move online. During Rees’ five years at the company it has moved from selling 30% of its products online to 70% online. “This has introduced a lot of change,” said Rees.
He described how complexity in IT has been constant, saying the promise of fourth-generation programming languages that would make programming simple enough for business people to use to produce applications has never really become reality. “There were glimpses of this coming true, and then it evaporated and things got more complicated,” he added.
Rees said this happened because the IT department’s job is not to have simple IT systems, but to simplify things outside IT. “Our life is complex, and it is not going to get any better. We are dealing with a complex world and our job is to reduce complexity,” he told the audience. “Our job is not about making systems simpler and cheaper, but to make our business simpler and cheaper.”
Rees described how many attempts to reduce complexity are simply a case of passing complexity on to suppliers, which are often better at managing complexity. “The only way you can reduce complexity of your systems is by focusing on removing things, not adding things. If you are looking to consolidate onto a single platform, it is the removal of other systems that makes it simpler, not moving to a new platform,” he said.
“When challenging complexity, [remember] someone always has more complexity than you,” he concluded.
This someone is likely to be a bank. Banks are notoriously complex beasts, particularly the full service giants on UK high streets. With legacy mainframe systems dating back 40 years, with layer upon layer of software on top, supporting a multitude of financial products, traditional banks lack the agility to react quickly to changing market dynamics, such as mobile banking and contactless payments. At the same time, they face more competition from new banks than ever before.
Now the CTO of a new challenger bank, which has relatively new and “simple IT” in banking terms, Peter McElwaine-Johnn referred back to his days at Lloyds Banking Group to describe the complexity that big banks face.
He demonstrated the complexity of a bank by showing a “fear-inducing” diagram of all the interdependencies and connections required to run a single mortgage system at a large, full-service retail bank, and questioned how a group of very competent people could produce something so “unwieldy over a period of up to four decades”.
According to McElwaine-Johnn, the complexity of bank systems means most of the effort that goes into introducing something is not in putting new systems in place, but preventing unexpected consequences of doing so because so many systems are linked in so many different ways. “To change a system to get the result you want takes a lot of time and resources,” he said.
That’s why complexity reduces agility, he said, which “is a problem because if you want business alignment, and to be able to do what the business wants today, we need agility”. Complexity also increases risk of things going wrong and is more difficult to secure, he added.
McElwaine-Johnn said banks now have core banking replacement high on their agenda. He described the options available to a bank CIO to address core banking complexity.
He said the first option is to forget changing systems and try to remove complexity. This is what often happens when the people making the decisions are near retirement or can’t stomach a multi-year, multibillion-pound project. “This can work, but is very expensive.”
Another option is to buy a modern core banking platform off the shelf. He said the bank can get it working, connect it and migrate everything from legacy systems onto it. He said a few have tried this, but spent much more than expected. Part of the problem is the fact that there are so many systems and so many stakeholders, he added.
Then there is the option of acquiring one of the growing number of new banks with their state-of-the-art IT, and eventually moving the whole bank onto these modern systems, which can be tailored to the bank’s needs. McElwaine-Johnn said if they can’t find one of these challengers, banks can set up their own and ring-fence it within the current operation. They can then build it up and eventually migrate everything to it.
In contrast to this, large banks can spend money on a state-of-the-art system and make it pay through acquiring other banks and moving them to the platform. McElwaine-Johnn named Santander as an example of a company that has done this and made it a core competency.
Looking into the future, he described how artificial intelligence (AI) could solve complexity issues. He referred to IPSoft’s AI customer service platform, known as Amelia. The platform can read all instruction manuals and automated fixes and could possibly support legacy transformation.
McElwaine-Johnn posed the question: “Could you put that to work in understanding legacy systems to predict what will happen if you make changes?” If so, he said, this could overcome the risks of changing legacy systems.
The National Trust is a charity that has the remit of looking after “beautiful places forever”. As the UK’s second largest landowner, it owns and manages important UK properties and a third of the UK coastline. It welcomed more than 20 million paying visitors to its 500 properties in 2014 and 200 million to its outdoor attractions.
The trust has a turnover of £470m and has 4.2 million members, 5,000 staff and 67,000 volunteers.
Flannigan, who has been CIO at the National Trust for five years, is currently running a large transformation project known as the Systems Simplification Programme (SSP), so reducing complexity in IT is, quite literally, her current challenge. The project will last for three years. “The whole point of this massive transformation it is to reduce complexity,” she said.
Through SSP the National Trust plans to completely change how it engages with its customers, or “supporters” as they are referred to by the organisation. “This includes introducing loyalty schemes and interacting digitally with them,” says Flannigan. This will help the organisation increase revenue by selling more of the products and services that members want. The other side of the programme, known as “tills and finance”, is about cutting costs.
Describing the legacy systems, Flannigan labelled the outdated tills used by staff at the organisations sites as “un-integrated cash registers”. She said these tills are not on any kind of network and the organisation counts visitors on pieces of paper.
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She said the company had to replace its electronic point-of-sale system and decided, while it was at it, to change its 15-year-old finance system, which “if we breathed on it, it would fall over”. This is being replaced with a system from Unit4 Agresso and the organisation is implementing modern “simple tills”.
“Even to underpin this much more simple solution for our staff, the interfaces required are extraordinary,” said Flannigan. This is due to the large number of different business streams. For example, the National Trust has site receptions, shops, catering outlets and holiday cottage businesses using the system, all of which “need to talk to each other”.
The other half of the project will increase sales by better engaging with and understanding members and other customers. Flannigan said the organisation has millions of customers using its services and buying products in different ways, but it did not know who they were and, as a result, could not target them with appropriate offers. Better understanding of the people who are buying will help the National Trust increase its membership, which is its ultimate goal as a membership organisation. To do this, it needs to understand who is buying what, where and when, but with different business lines using their own systems this is tricky.
To overcome this, the National Trust has implemented a data warehouse. “We still have our individual systems, but they all feed into a single view,” said Flannigan. “This is now live, with 13 million customer records, and we now know who is who.”
She said it is now simple for the business marketing teams to target their promotions, but “the complexity to get there was quite something”. The IT team is using visual analytics tool Tableau, which sits on top of the data warehouse and provides instant views of what customers are doing.
This has enabled the National Trust to target customers better, through understanding who they are and their behaviour.
Now it has a better understanding of customers, the organisation uses Adobe Campaign to send more targeted content to customers, rather than using the same message across the board. This has just gone live and already the response from customers who have received email promotions has been good, said Flannigan.
Clandon Park, a National Trust property in Surrey, burnt down recently. The organisation wanted to raise funds for its salvage efforts, so decided to email members for support. Because it now knows its customers, it knew who to target with the fundraising email. It was able to put together an email and send to the relevant members in one hour. Donations started coming in immediately. “Just six weeks earlier, this would have taken four people five weeks to do,” said Flannigan
She said you cannot reduce complexity in most businesses, but you can reduce it in the right place: “It is now getting easy for our staff and customers, but there is a lot of IT complexity to work through to get there.”
The IT department’s responsibility in an organisation is to reduce the complexity of the business that it supports, and while IT must accept that there will be complexity in working towards this, there are things CIOs can do to reduce this.
Flannigan described this as “introducing simplicity for the business through complexity in IT”.