IT and LOB Managers Must Work Together, Say Celent and Bank CIOs

As banks increasingly rely on technology, optimizing IT investments depends on aligning IT with business goals. This challenge was the focus of a June CIO roundtable, "IT in Banking: Moving to the Strategic Table and the Board Room," hosted by Celent Communications (Boston). Alenka Grealish, manager for the banking group at Celent, led the discussion, which included CIOs from MetLife Bank (New York), Umpqua Bank, National City (Cleveland; $139 billion in assets) and The South Financial Group, among others.

"IT has moved up 'Maslow's Pyramid of Needs' from simply automating operations and transaction processing in the early 1980s to a competitive tool," Grealish told roundtable participants. "We've seen the rise of a new order: integrated IT." Grealish cited a Celent survey of financial services CIOs/CTOs in which 58 percent said there's moderate collaboration in their organizations; executives at about one-third of financial institutions said they have a highly collaborative environment.

In integrated IT, business unit managers are responsible for aligning IT projects with business goals and harnessing technology to achieve business results. The CEO, CFO and COO have joint responsibility for mission-critical initiatives. Business unit managers and IT have joint responsibility for IT project performance as well as for establishing relevant business unit standards, system architecture, quality and security. Bank directors also play an increasing role in IT decision making, according to Grealish, who said two-thirds of bank boards have become involved in IT decisions over the past two years.

Three Pillars of Alignment

According to Grealish, the three pillars to properly link IT to business strategy and processes are people and training, support technology, and compensation. And the culture must be supported from the top down.

Mark Tarmy, CIO for Umpqua Bank (Roseburg, Ore.), agreed. "CEO involvement has a lot to do with it," he said. Umpqua Bank, Tarmy explained, looks at IT as a lever behind business process improvement because it helps employees leverage their abilities, rather than supplanting them.

Bringing together IT and business goals helped The South Financial Group (Greenville, S.C.) grow its assets from $2 billion in 1998 to $14 billion, according to Quintin S. Sykes III, EVP and CIO. In 1998, the holding company established IT relationship managers who work with executives in IT and the bank's business units. They determine IT spending across business units so that the projects with the best potential ROI (outside of those required for compliance) receive top priority, Sykes related.

Still, while there's a growing recognition that the business side of the bank must work closely with IT, such cooperation still is in its infancy, Grealish added. "Collaboration exists between IT and the business units, but there is room to grow," she said. *