Cloud Banking 101: Technology Exists to Support the Business

Summary: In the beginning, computers were expensive and complicated machines and needed a cadre of high priests to cater to their every beck and call. However, as computers have become cheaper and more ubiquitous in business, technology processes need to become business processes. While many businesses know they have to do this, old habits and processes die hard. In order to be successful, technology needs to be fully integrated into the business, like any other function.  

In the early days of enterprise computing, computers were giant, room-sized machines. They spoke an arcane language and ate specially formulated punchcards. They were complicated and finicky, broke frequently and needed an army of technicians to keep them running.

Computing power was the most scarce resource in the company. A mistake in a punchcard could cause the business to waste thousands of dollars in lost processing time. In order to run these machines at peak efficiency, a cadre of high priests of computing grew up to tend to their every need. Much like ancient gods, these priests’ main goal is to make sure that the machines were kept happy with their daily supply of punchcards.⁽¹⁾Organizing around the most scarce resource makes  a lot of sense. I’ve got some good resources from Elihu Goldratt’s The Goal that talk about this.

Over time, things changed. Computers got cheaper and these large expensive computers became smaller and ubiquitous, embedding themselves into our personal and work lives. They are so pervasive that many banks now think of themselves as technology companies with a side hustle in banking.

While banks know how important technology is to their business, the technology and business teams still aren’t aligned. It’s as if they are two interlocking gears spinning at different speeds and tearing into each other. The business and technology teams are both frustrated that they can’t get enough done. The business people will blame the technology team for not moving fast enough. The technology team will blame the business team for not giving them enough time or guidance.

In the old world, computers were so expensive that new computing capacity needed to be carefully planned. Businesses traditionally had annual planning meetings to plan their IT purchases for the year. But today, with tools like cloud computing, companies can buy computing on demand.⁽²⁾The cost of a mistake has a large effect on the planning process. A good analogy is this difference between planning to take a cruise and planning to take a subway. When you take a cruise it’s very expensive and you need to make sure you get there on time because a slip up could be very expensive. When taking the subway, planning is a lot less important because if you miss one, you can always take the next one. Planning too much when you take the subway is actually counterproductive because you could use that time and energy for something else.

But if you can buy and set up computing on-demand, you don’t need that annual planning meeting. That’s great, isn’t it? The organization is more agile and we eliminate a meeting.  But it’s difficult for some people.⁽³⁾It reminds me of the way that I was taught to use two spaces after a period when writing an essay. That made sense for typewriters to avoid the keys from sticking; however, it doesn’t make sense for typing on computers. The rule still sticks around though.

“What will we do without our annual planning meeting? How will we know what to buy?” these executives ask.

I had to remind them that “The purpose of IT is to support the business. Buying IT is now like buying any other resource.”

They would nod their heads but they were still uncomfortable. They were still thinking about the high priests and how technology was different from the rest of the business.

They might continue with, “If I have this unconstrained ability to do work, how do I decide how to deploy my resources?”

I’d respond, “OK, instead of thinking about this as technology, think about it as the ability to do work. Cloud computing is like having an infinite stable to temporary workers you can hire on demand.” Now they were starting to get it. Once they got their mindset out of technology it became easier.

And then they might say, “What happens if my expenses start going through the roof?”

I’d explain that “You need to think about the temporary workers again. Just because you can hire all of these workers doesn’t mean that you should hire them. If your expenses are going through the roof, you’ve hired a lot of temporary workers. If they are generating a huge amount of revenue, that’s fantastic and you should keep hiring more of then. However, if someone in your organization is looking to hire thousands of workers on a side project, that’s a different story and you should shut that project down fast.”

This isn’t a screed against business people or technologists. It’s a screed against the silos that separate them. Business people need to understand technology and technologists need to understand business. This needs to happen as technologists become true business partners.

My friend told me a story about the Chief Digital Officer at her company. She’s a Managing Director at a large advertising company. The managing partner of her firm asked the Chief Digital Officer what additional value he brought to the business. Everyone really liked him and tried to help him better define his value. However, after months of trying, they couldn’t make a compelling case to keep him. It wasn’t because digital wasn’t important, it was because everyone was already deeply involved with Digital as a core part of their business. He left the firm and ended up as a business lead somewhere else.