There’s been a cultural revolution in tech departments over the last decade or so, that has allowed engineers and developers to deliver innovation at pace. The question is, how can we ensure the rest of the organisation keeps up?
This problem can be particularly acute when it comes to highly regulated industries like finance, where it is hard to untangle “standard operating procedures” designed to fulfil regulatory obligations from those that are simply “how we do things here”. It’s even more problematic when changing workflows and new infrastructure bump up against the ways non-techies and senior executives are “incentivized”.
The extent to which broader organisations lag behind their tech departments was highlighted by a panel of experts brought together by Container Solutions to discuss innovation and cloud constraints in regulated industries.
Kyle Brown, who’s been a senior technical leader for transformation projects in finance, travel, transportation, and retail, said just working out just how much of a gap there is in a given organisation can be a challenge.Finance companies might talk at a high level about cultural and business change, but “They don't talk about these details because they don't want their competitors to know how far behind they are.”
That’s assuming they even have a handle on how far behind they are. “They don't want to talk about it because they don't want to air that dirty laundry and convey that they actually are eating crackers in bed,” said VMware transformation architect Barbara Eder, who has worked on large transformation projects, particularly in finance, across North America, “And very often they also don't know. They don't know and they don't understand”.
And while the tech world may have been on a multi-year mission to break open siloes as part of the shift to Cloud Native and DevOps, this doesn’t always extend to the broader organisations. “Through this process, through this modernization journey, a lot of these things now come to the surface and now we have to deal with them”.
This highlights the paradoxes around how organisations invest in change and work out how the benefits it delivers. As hard as it is to accomplish a digital transformation, getting funding for it can be harder.
UK-based John Haines, Principal Technical Project Manager at Container Solutions, who has been a product owner in the delivery of transformation projects at number of large organisations, said the shift to cloud can be seen as a purely infrastructural project—a simple case of “deliver me cloud” —yet “a lot of the benefit is gained elsewhere”.
So the company needs to be ready to fund changes elsewhere in the organisation, for example, in the shape of staff training or re-architecting applications: “The parallelism isn't there and the federation of money into the right areas at the right time doesn't necessarily happen as you need it to … you need that overall program wrapper around it because it's an overall company change. You need to approach it that way or you don't get the results that you want necessarily.”
Or as Brown bluntly put it, invariably “It's the first mover that bears all the costs. So, they're the ones that are going to be responsible, for instance, for all of the tool purchases or all of the initial public cloud purchases. And everyone wants to hang off of them, but no one wants to contribute to that overall program.”
This is despite the potential benefits for the business at large that the shift from traditional waterfall planning to the agility that the cloud can enable. Mark Schwartz, an enterprise strategist at AWS, and former CIO at US Citizenship and Immigration Services in the Department of Homeland Security, said “with our digital ways of working, one of the great advantages and one of the great risk mitigators is that you can move incrementally and you can actually make funding decisions incrementally, you can do staged investments and projects, see how they're going, adjust course, all of those wonderful things about agility.”
Unfortunately, he continued, “Businesses haven't really figured out how to do governance of their investments when that is a benefit.”
This is partly because that incremental way of working is at odds with the yearly investment cycle most businesses remain locked in to, when projects are assumed to be multi year with the big investments and corresponding improvements all coming at the beginning. In which case, the incremental paradigm means, “you're going to have a harder time making a decision to go forward.”
Things can get even more complicated when variable infrastructure and other elements are added to the equation, said Haines. “That has to be catered for at a higher level within the organisation to allow that shift, otherwise the application teams are paying the bill twice.”
The solution to this is for the CFO to take a leaf from the DevOps and CI/CD playbook, and work together with the CIO on an ongoing basis, said Schwartz. “It's really a question of continuously reviewing these incremental changes and what you want to do incrementally and managing your costs in the cloud on a granular ongoing basis, with the responsibilities possibly distributed to the technical teams and so on.”
Eder said moving to the cloud turns the overall operating model on its side. “It brings to the surface the investment plan, the cultural behaviours, the processes, and the significance of moving to new agile capabilities with a vision and a leadership team that is partnering beyond their domains of control, but across their domains of influence.”
As projects progress, “We are trying to demonstrate KPIs and value to senior leadership that what we're doing is actually worthwhile.” With some degree of understatement, she said “That's not simple. It's not easy.”
This prompts the question whether there is a problem with how business leaders are trained. Traditional MBAs might focus on the “when, how much, and what do I get” type questions, rather than what will it enable, and how will it deliver benefits.
Brown said the idea of continuous adjustment of both goals and costs might be at odds with what most MBA programs have taught their students, but that the ultimate goal of an MBA program was to teach students to think, learn and continuously adapt. “I think that's the real attribute that you want to be looking for in leadership”
Schwartz said it was “revealing” when senior execs ask how to measure the results of digital transformation. “The value is based on what you're trying to get out, that hopefully the cloud is a tool and you're using it to accomplish something and if you don't know what the something is, then it's going to be hard later on to justify the cloud. The justification should be that you're accomplishing what you want.”
This could mean that the move to cloud enables machine learning, which allows the company to reduce fraud. Or it could be that a company expands its availability.
But execs might struggle to articulate how they are going to use or benefit from “agility, even though it’s clearly valuable to the business to have it. Likewise, with working out the return on investment that comes from risk reduction. “So there are those challenges in making a business case, vetting a business case, and all of that. Because the biggest bang for the buck is really coming from those kinds of things or changes elsewhere in the organisation.”
There’s another challenge for technologists who’ve accomplished a shift to Cloud Native, or reworked workflows to ensure the whole organisation can be more agile: what is that going to give you from a business perspective? And that ultimately has to start with the business, with the technical goals flowing from that, said Brown.
“Because where we see this disconnect is they're getting to the point that they're becoming more agile, but the business itself is not coming up with new ideas at a more rapid pace and is not able to take advantage of that agility because there wasn't that connection between the two halves.”
Even when they do articulate what they want, both senior execs – and engineers may be confounded when they are inexplicably blocked by what Schwartz described as “the frozen middle management”.
“And my answer is, I bet you are setting incentives wrong. I bet you're still holding middle management to their old definitions of success. Because in that case, they're going to resist change”
Getting business leaders on board with DevOps can be as simple as pointing out that it previously took a year to deliver something valuable, said Schwartz, but moving to DevOps could see some degree of value delivered in a matter of weeks. Then suggesting, “would it be okay if your team actually sat with my team and made sure they did the right things, would that be okay? And here's a dashboard to measure the business result that you want.”
Of course, in some industries, it might be easier to identify the key incentives. With banks, Eder said, “The wealth guys, they're very much wanting to move forward…. ‘Just make it work, allow me to make money, don't stand in my way’.”
So, she continued, “If we realign the incentive model, such that it's in everyone's best interest to move forward on these tactical and strategic objectives we can demonstrate that we have actually delivered value to the business.”
In wealth management in banks, she says “Where we have done iterations and we can demonstrate key performance indicators, [and] attach them to a dashboard, guess what? Suddenly the rest of the business is like, wow, we delivered X. And you just want to foster that energy and get more people on board with that energy of success.”
Or put another way, sometimes nothing accelerates cultural change like cold, hard cash.