Lessons for Financial Services Firms in New Juniper Research
Aug 4, 2016
A newly published study that reflects the views of over 2,700 global IT and business decision makers includes valuable takeaways for financial services. The Juniper Networks commissioned Wakefield Research report reveals that while IT Decision Makers (ITDMs) and Business Decision Makers (BDMs) both appreciate the value of IT infrastructure for future success and the need to upgrade existing capabilities, there remains a troubling disconnect between IT professionals and the C-suite.
The responses from the financial services (FS) industry are largely consistent with those from other verticals. This in itself is an interesting finding, because the FS industry has traditionally lagged behind other verticals in network transformation. The industry has already addressed server, storage and virtualization upgrades. Networking is among the remaining technologies ripe for innovation that can help FS firms gain a competitive advantage. An efficient network infrastructure means less staff required for the basics (i.e., “keep the shop running”) and freeing resources to deploy in pursuit of opportunities to move the business forward.
According to the report, over 85% of FS decision makers agree their companies would benefit from a more tech-savvy C-suite:
Given such a broad consensus, what’s the hang-up? Too often, ITDMs make things overly complex by speaking in code and creating impressive sounding acronyms that do not resonate with BDMs. Fostering a common language and all-on-board understanding would go a long way towards bridging that communications gap. A tech-savvy CEO needs an appetite for synthesizing tech trends without getting into the weeds. Simultaneously, they should stay abreast of the benefits of new technologies, and be able to discern proof points from other companies’ moves. As Juniper CEO Rami Rahim explains, “The C-Suite doesn’t need to code, but leading a company strategy for growth requires a strong relationship between those who set the strategy and those who execute.”
Perhaps the study’s most concerning finding, three-quarters of FS BDMs acknowledge having circumvented their own IT staffs multiple times in the past year in order to obtain the desired responsiveness and/or capabilities:
This is a big deal; IT cannot afford to be seen as a barrier – and less than a full partner – within the organization. Given recent advancements in the cloud and software tools, it has become easier for BDMs to go outside the organization to get what they need. Of course, such moves carry risk as well, but both IT and the enterprise are better served if the former is viewed as an ally rather than a necessary evil.
When asked to grade themselves at deploying network automation solutions, nearly one-third of FS decision makers gave their firm a C or lower. The reality may be worse, as professionals are generally not inclined to grade themselves poorly. In Juniper’s view, fundamental automation has proceeded reasonably well, but very few organizations have embraced a true end-to-end approach to automation - and likely don’t fully grasp the forgone benefits. Automation can be threatening to many, but it is necessary to address competitive market dynamics.
When asked if their company’s existing IT infrastructure would be a hindrance to accelerating a new product or service, 70% of all FS respondents said yes. Interestingly, for ITDMs, this figure was the lowest of any industry vertical surveyed, while for BDMs it was the highest. Although the focus has been on areas like applications and change management in recent years, a robust infrastructure driven by technologies, such as network functions virtualization (NFV) and software-defined networking (SDN), remains an unexploited competitive weapon.
According to our report, over 80% of FS firms have adopted some form of these technologies – and, like other companies, they report enjoying greater benefits and capabilities than were initially expected:
Like other industries, FS is susceptible to stagnation. The more entrenched a firm becomes behind legacy entry barriers, the more vulnerable it is in reality and the more quickly its market may crumble. Consider the remarkable pace at which Uber upended the taxi business and Netflix rendered video stores obsolete while their competitors languished with traditional and outdated approaches. This is not to say that banks are going away anytime soon, but without transformational change they certainly risk being relegated to a clearing/compliance mechanism as nimbler startups assume the value-added customer-facing roles.
Those FS firms willing to embrace technology, innovate new business models and take risk may have the advantage in beating back these challenges, while more conservative organizations may ultimately face the greater hurdles. One critical success factor will be a tech-savvy CEO – a business leader who understands the IT possibilities, asks the right questions, can balance the risks of bold transformation- and pushes IT to stretch beyond its comfort zone in an intelligent fashion. Perhaps then the perception gaps between BDM and ITDM will recede.