A decade ago, former Harvard Business Review executive editor Nicholas Carr famously asked, “Does IT matter?” Amid the rise of cloud, consumerization, and other technology-related megatrends, we’re still looking for the answer, but PwC's financial services marketing leader Paul Dunay suggests that IT relevance today depends on agility and an ability to innovate quickly -- something that has not always come naturally to financial services companies.
Dunay will be discussing this topic at the upcoming Interop New York session, "Is Great IT a Competitive Advantage or an Equalizing Commodity?," taking place Thursday, Oct. 2, 1:30-2:30 p.m. EDT. IT can still provide companies with a competitive advantage, he says, but not in the ways with which most CIOs are familiar.
“Your traditional IT advantage is going by the wayside,” Dunay says. Instead, there are what he terms “waves of competitive IT advantage” that peak and then fade. A technology-based capability may provide competitive edge for a brief period of time, but then “it may erode, and then you move to next wave of advantage. It’s almost like a series of advantages.”
[Consultant Mick Simonelli says many executives understand the need to drive innovation in their organizations, but will succeed only if they aren't afraid to fail: Risk Taking Is Essential for Innovation.]
It may not even be the IT organization that identifies these advantages; it could be an organization’s innovation center or marketing team that spots them, according to Dunay. He suggests applying the same kind of agile concepts that have transformed software development. “The way we think about agile development can be applied to innovation. Companies like Google, Facebook, Apple, and Samsung have ways of investing in some of these advantages.” Dunay characterizes this approach as, ”If it pans out good, if not, fine.” If the advantage around innovative new products and offerings “is short lived, that’s fine.”
From an organizational standpoint, “If you really want to get to the root of being able to innovate like this, you probably want a group that is traditional, and then an innovation group or center of excellence that can spot these opportunities in the marketplace, that is doing competitive analysis on ongoing basis, and then adopting” these opportunities, Dunay says. “That almost has to be an adjunct group that can assemble around innovation, get that going, and move to the next” opportunity.
Although IT prowess is critical to capitalizing on these fast-moving opportunities, it’s not about scale, processing, or traditional measures of success. The days of being able to differentiate and compete on operational capabilities, such as “we have the best systems or the best supply chain, are starting to wane,” Dunay says.
It’s not that traditional IT responsibilities around “running the business” are no longer essential, he notes, pointing out, “For example, branches haven’t gone away.” But it’s incumbent on IT to be part of the effort to capitalize on the next big thing. “The IT advantage of ATMs has come and gone -- what is the next iteration of that? This is the wave they need to get on going forward.”
In this environment, there will be different kinds of metrics applied to determine what is actually “great IT,” according to Dunay. “Great will be providing a great customer service -- surprising or delighting customers, if you will. You have to define the metrics that go around that.” This probably will require “a series of metrics that could be marketing-ish, or address [factors such as] customer service aspects, human resources, recruiting, or uptime. It might take into account... what metrics would be good for different stakeholders.”
For financial services firms, this represents a “different way of thinking,” Dunay acknowledges. “We’re in a market that’s fast changing, [and] we’re in a cycle where those waves are getting shorter and shorter. [Financial institutions] have to get into a space where they’ve got agile development and can jump on the next wave, even if it’s a pricing advantage or a combination of products. It’s definitely something they need to be considering.”
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Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio