Financial Sector Technology

Guest Blog: Optimising Business Processes

Charley Rich, Nastel Technologies

Looking back to the January 2010 FST post, The coming year: 2010 predictions,there were mixed opinions on what direction financial services IT spending would take in 2010. Some industry resources forecasted tech spending would increase given that new strategic technologies would require significant investments, while other key players predicted reductions in the amount of money available for technological investments.

With 2010 capping off in mere days, Gartner has reported IT spending indeed did increase in 2010 and that a 3.5% increase in worldwide IT spending for 2011 is likely.

While this is a positive sign of an economic upturn, it’s vital in 2011 for financial services organizations to control costs by optimizing business processes. This empowers institutions to be more competitive at a lower cost and with an improved customer experience.

The key here is to integrate IT into the business. IT teams need to be able to instantly visualize technology issues as situations in the context of their business and to automatically predict – and even prevent – their business impact. The all too common alternative, simply reacting to problems, is an expensive process for problem resolution. This impacts the business in multiple ways such as escalating support costs, reduced productivity and poor customer service – all of which result in customer attrition and order fallout. Even more troublesome is that most of IT talent gets pulled into fixing problems instead of working on developing new services to attract business. As such, IT is stuck fixing the business instead of helping to grow it.

A remedy for reactive troubleshooting is Business Transaction Management (BTM). The IT departments in financial services firms can utilize BTM to monitor business processes comprised of applications, the transactions they invoke and the middleware that interconnects them for patterns that identify imminent failures. The software needs to be able to monitor complex, service oriented architecture (SOA) applications comprised of many composite services spanning the distributed, mainframe and cloud tiers. These composite applications are themselves dependent on other complex processes that are prone to failure including networks, storage, security, firewalls and even the electrical power grid – any of which could cascade into a serious business impacting problem.

BTM solutions give deep visibility into transactions from the business perspective and can discriminate between failures which are important, but not business impacting, and those that have immediate critical impact to the business. Customer satisfaction and the visibility provided by BTM are intertwined. Once middleware and related processes begin to conflict and slow down, end users experience session time-outs related to new application versions or scalability problems. In order to avoid this, IT departments need the visibility BTM brings to see these bottlenecks.

To begin the BTM process, the software first needs to clearly define normal behavioral benchmarks. BTM systems can use a combination of Complex Event Processing (CEP) with policies to determine normal or abnormal behaviors compared to the business’ expected results.

Establishing the “normal” first involves establishing a base line of user-defined samples for certain sets of key performance indicators. Computation of statistical indicators follows, which measure rate of change, momentum, exponentially moving averages and other analytics. The system then compares the newly made samples to the continuously learning base line to understand if there is a deviation from normal behavior and determine if this will have business impact.

An effective BTM solution should monitor applications, transactions and middleware to proactively find business process issues. In addition, by leveraging CEP, it can prevent the impact of a problem via the automated dynamic invocation of business rules.

So what’s the big picture result? Implementation of BTM in financial services will result in lessened mean times to resolve problems, and will greatly increase the time between system failures, thus, freeing up IT resources to help build the business.

Lowered costs through operational efficiencies will always be a priority for financial services IT management. However, saving money isn’t strategy, it’s a tactic. No financial services institution can claim saving money internally is a competitive differentiator. Saving money will remain the number one priority, but 2011 should see a focus on other initiatives including growing revenue and improved customer satisfaction as companies begin to focus on growth instead of recession-induced survival.

Financial services IT departments can meet the challenge of optimizing business processes and maintaining (or lowering) operational costs through forward thinking strategies including Business Transaction Management. Additionally, the proactive identification and preventive action can be a direct driver of customer retention, acquisition and business growth.