Anthony Malakian: Trust Your Gut

At this year’s North American Trading Architecture Summit, Anthony took note as speakers tried to explain how best to marry IT with the business. It’s a game of hits … and lots of misses.

There are two common—but nebulous—refrains in our industry: aligning IT with the business, and calculating returns on investment (ROI). The former is a principle that CTOs would like to say they’ve achieved, while the latter is a calculation that can prove CTOs’ effectiveness—or leave them hanging in the wind.

Heads of technology at user firms discussed both of these issues—IT–business synchronization and ROI—at WatersTechnology’s North American Trading Architecture Summit in New York last month.

Lack of Transparency
Hemathri Balakrishnan, enterprise architect at Morgan Stanley Smith Barney, has been studying the lack of IT transparency, as it relates to the business, across the industry. He found that in the Asia-Pacific region—a hotbed of new IT undertakings—there is less than 4 percent visibility of the overall IT strategy at the development community level.

“Organizations are struggling with how best to get the IT strategy aligned with the business,” he says. “If you see the number of strategic projects compared to tactical solutions put in place, there’s a very big gap.”

Balakrishnan has worked to create a grassroots movement throughout the organization that helps to promote innovation and that everyone feels a part of. They should also know what the end-state should look like. But that is often easier said than done, says Vladimir Ignjatovic, head of IT at UBS Wealth Management. This requires constant communication between the developers and management, who typically aren’t as tech-savvy as those building the platforms. “We’re always trying to communicate to the business the key initiatives and long-term goals,” he says. “We always try to discuss the strategic initiatives with the business from their perspective.”

There Will Be Failures
Sands Capital Management’s Ryan Bateman talks at length about this very challenge in this month’s cover story on page 28. At Sands Capital, Bateman seeks to  convey that there will be failures, but that they are part of the process of being successful.

“To create an innovative culture, you have to set up the business to understand that everything is not going to be successful—there are going to be failures because we’re going to swing pretty hard if we’re going to get ahead of the trends with the limited budgets we have,” he says.

However, he says, quantifying ROI is a harder task. “I find it difficult to capture ROI on a lot of the things that we do,” Bateman explains.

When marrying business strategy to technology, traditional ROI calculations may not be appropriate. A lot of it comes down to deliverables and gut feelings. If the business wants to be somewhere in two years, IT has to be there in a year so that it can try out different technologies and ensure that the tools, platforms and resources are in place when the business is ready to fire. But that’s a case of business leading IT.

“I still don’t know how to measure the ROI on that,” Bateman says.
Ignjatovic at UBS is in a similar boat. “ROI is very important, but sometimes it’s hard to judge if you are saving with a certain project,” he says.

Paternal Wisdom
Throughout my life, my father has always reminded me of the four stages of knowledge, the first two of which are easily understood: You know what you know, and you don’t know what you don’t know. The information is either in your head or it isn’t.

The other two are trickier: You know what you don’t know, and you don’t know what you know. In other words, there are things that you think you know even though you’re wrong, and that even though you might think you are ignorant of something, you actually do in fact know the answer. I think of it as a case of your gut being right or wrong.

Qualifying true ROI when aligning IT to business strategy is often a gut-feeling sort of endeavor. The stage of knowledge in which you find yourself might go some way toward determining whether or not you will be a successful technologist.