Emerging Technologies special report

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Beware the Bleeding Edge

Capital markets firms, by virtue of the competition they face, are constantly on the lookout for new technologies to provide them with a temporary monopoly-or competitive advantage-to help them increase their operational resilience and efficiency, and reduce their overheads through automation. From a technology perspective, capital markets CIOs have been well served over the years: For at least a decade now, there has been no shortage of cutting-edge technologies available to them, either expressly developed for specific capital markets use-cases, or generic hardware and software that can be tweaked with the minimum of fuss to address an explicit challenge.

But too much of a good thing is not a good thing, and this is especially pertinent to financial technology. CIOs are familiar with this fact, given that one of the most demanding issues they face when evaluating emerging technologies pertains not to the products they choose to implement, but rather the ones they opt to jettison. In many instances, multiple technologies will adequately suffice for most use-cases, making the decision that much more vexing.

CIOs must make watertight business cases when evaluating new technology before considering the vicissitudes and idiosyncrasies of its implementation. Once this hurdle has been negotiated, the real work starts, which must be driven in a disciplined and objective fashion if the project stands a chance of delivering on its promise. In this context, "disciplined" means different things to different CIOs, but any implementation-especially when it comes to a new and potentially untested technology-needs to be managed accurately and incrementally, with an experienced hand on the tiller. In this respect, the stage-gate or phasegate model provides the way forward, requiring project teams to formulate well-defined mini projects within the overall implementation, allowing for regular "stock takes" to ensure objectives remain clear and any scope creep is nipped in the bud. This toe-dipping procedure has a number of benefits, but the most often overlooked is its ability to help CIOs identify instances where it's more beneficial to walk away from the project than to see it through to its conclusion. Breaking up is hard to do, but sometimes it's crucial to call it quits and pull the plug on the project, irrespective of how far down the line that decision comes. After all, new technologies represent something of a double-edged sword to those firms adventurous enough to implement them: Get too close to the leading edge and soon it becomes a bleeding edge, where firms hemorrhage time and money in pursuit of little more than a pipedream.

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