Tuesday, October 23, 2007

'Home-grown' software difficult to manage

A common tale one hears from financial software vendors is that banks are riddled with legacy systems, some dating back to the 70s, and that the code for those systems or applications has been lost forever because the person who developed it is no longer with the company or has filed it away in a drawer somewhere where no-one can find it.

With banks running so many IT systems as part of their daily operations, including the ones they have inherited from acquisitions, is it any wonder that they may not have a real grip on their IT environment? It is a bit like corporate treasurers saying they are not quite sure how many bank accounts they have globally - which in effect means cash could be sitting somewhere idle without being invested for maximum return or used more wisely.

With IT, the implications can be resounding. Not knowing how many IT systems, servers and applications a bank has running and their interdependencies with one another, particularly when new applications are installed, could have 'alarming' consequences in terms of rogue IT attacks and system downtime and failure.

This scenario has obviously played into the hands of vendors touting application dependency mapping and IT configuration tools, which essentially seek to provide a map or 'blueprint' of a firm's IT environment and its interdependencies so it can be more effectively managed.

Yet, according to one such provider, Managed Objects, a lot of application dependency mapping tools do not work well with "home-grown" or customised applications which banks have developed in-house.

Based on research commissioned by Managed Objects and conducted by Vanson Bourne, more than half of 100 UK IT managers and senior leaders in the retail banking, investment banking and insurance sectors, indicated that they run home-grown software, with 56% needing over six people and 38% needing more than 15 people to operate it.

What is concerning is that 57% estimated that software outages cost more than $10,000 per hour. And outages happen with regular frequency with almost 80% experiencing outages impacting the business in the past year. More than 20% had more than six outages in the same time frame.

Thirty-nine percent of banks surveyed by Vanson Bourne attributed 25% of outages to application changes, which let's face it, occur somewhat frequently in a banking software environment where the need to upgrade applications to support rising transaction volumes and to stay ahead of the competition, is an ongoing battle.

Banks are not going to retire some of this 'home-grown' software - too many applications rely on them and if it ain't broke why fix it. But it seems the challenge is integrating newer applications with these supposedly "complex" customised and home-grown applications.

Have software and integration vendors oversimplified the challenge of working with in-house software, and is encouraging firms to buy rather than build applications likely to have any impact, particularly as some banks will always see 'off-the-shelf' solutions as a leveler that stifles any so-called competitive advantage?

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