1. Institute for Development and Research in Banking Technology
Keynote Address by Shri. R. Gandhi, In-Charge Director, IDRBT,
at the Conference of IT Chiefs, IDRBT, Hyderabad on July 04, 2005
IT Infrastructure Management
The pace of business is accelerating around the globe, as leading organisations in computer-
intensive industries, such as financial, trading, manufacturing and retail industries move toward a
real-time business model in which transactions and information sharing are near-instantaneous.
For long, it was the understanding that IT infrastructure meant the hardware and software, and if
at all, the related network. Managing it meant procuring and installing them. The rapid pace of
competition and growth compelled the organisations to do ‘vertical thinking’, and consequently
the organizations built both forward and backward linkages to this core IT infrastructure. Today,
the IT Infrastructure has been redefined and its meaning has been extended much beyond and
before the procurement function. It starts from where it should – the IT policy and strategy, the
plan and the design of IT architecture, the business process of procurement, installation and
management of h/w, s/w, n/w and other related equipments, tools and facilities, IT personnel and
expertise, IT security arrangements and administration, IS audit, application development,
integration and management, vendor management and on and on.
Further, today’s IT infrastructure has become pervasive in these organizations. It encompasses
front, back and middle offices, covers customers, suppliers, employees and partners, and
permeates every type of operations like strategizing, planning, manufacturing, servicing, etc. In
the process, mission critical business processes heavily depend on the IT infrastructure. Yet
another development is that this IT infrastructure is getting increasingly complex and specialized,
compelling the institutions to develop expertise and specialities in these areas.
This transition is putting increasing demands on the performance, capacity, availability, and
agility of underlying IT infrastructure. As process timelines are compressed from weeks or days,
to hours, minutes or even seconds, the cost of downtime skyrockets. From supplier and customer
transactions, to employee communications and financial reporting, business-critical functions
must be up and running at all times. Business availability and continuity is critically poised on and
directly correlated to and depends on the capacity, availability and reliability of the IT
Infrastructure.
Therefore, the management of such a massive and complex infrastructure has become the
current focus of discussions in many forums, including this one.
Today’s organizations understand the link from the availability and performance of the IT
infrastructure to the availability and performance of business processes as a whole. The
management of the IT infrastructure has a significant impact on the success or failure of the
business, directly affects the quality of service of business applications, and contributes to the
satisfaction of internal and external users.
Business units are asking more of IT organizations. The rate at which new demands are being
placed on the IT infrastructure is outpacing the capacity of IT organizations to effectively manage
and support them. The complexity of what to manage and how to manage is compounded by the
sheer number of new managed objects, as well as the legacy objects that must be maintained.
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2. Business units, however, see the IT infrastructure as a utility managed in such a way that it is
available when needed and priced as a commodity.
An organization's infrastructure management should address the availability, fault and
performance management of its IT infrastructure. Infrastructure Management covers:
• Optimization of the IT infrastructure to meet business needs for high availability, reliability
and scalability
• IT infrastructure monitoring and testing technologies that deliver service assurance
• Technologies needed to build business service views
• Capacity-planning processes and best practices
• Enterprise Customer Relationship Management
• Managed services including Business Processes Management and Hosted Services
The Growing Need for High Availability
Almost every aspect of today's business environment has come to rely on the uninterrupted
availability of platforms, applications, and data. From customer relationship management and
enterprise resource planning, to employee communication and collaboration, a failed application
or system can be costly and disruptive.
The impact of downtime continues to grow as companies move toward a real-time business
model supported by a Services Oriented Infrastructure. Based on Web Services technologies,
this approach allows them to integrate their data and applications more completely, and adapt
them more easily. Transactions are processed in real time, instead of waiting for large batch runs
at the end of the day.
This real-time computing strategy gives businesses and their partners better visibility into their
markets and operations, so they can respond more quickly to new opportunities, changing
customer demands, and unexpected supply challenges. It can also help them address today's
increasingly stringent regulatory requirements. Yet as companies become more connected and
response times compress, the cost of downtime continues to increase.
Achieving high service availability to meet growing needs requires a combination of people,
processes, and technology, including: highly reliable platforms, extensive hardware and software
testing, rigorous change management, redundant architecture, highly trained staff and well
established emergency procedures.
With a sufficient investment, virtually any level of availability can be achieved. Yet costs can be
prohibitive, especially as organizations strive to increase availability guarantees from 3-nines
(99.9 percent uptime), to 4-nines (99.99 percent), to 5-nines (99.999 percent) and up.
Three high-level strategies are crucial to contain total cost of ownership (TCO), while addressing
increasing availability requirements:
1. Standardize Your Infrastructure and Operations — Enterprise standards are essential to
optimize the business value of IT, while reducing total cost and risk. Industry standard
solutions magnify these benefits. They are more flexible and affordable than proprietary
solutions, and are now capable of supporting the most-demanding, business critical
environments.
2. Focus on Service Delivery — The business value of an application depends on the ability
of end-users to access and use the application, as well as any broader service it might
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3. support. That service may depend on multiple applications, servers, networks, etc., and
these relationships must be considered in assessing availability requirements.
3. Measure the Business Value of High Availability —This allows standard ROI metrics to
be established, so decision-makers can align high-availability investments with the actual
business value they deliver.
Recent Trends in IT Infrastructure Management
Now, let us have a quick survey of the recent trends elsewhere in the world, the developed
world’s IT infrastructure. The followings trends are easily discernible:
• Business process management
• Hosted services
• Application management services
• Customer service management
• Governance of IT Infrstructure Management
These trends pose their own challenges and raise several issues. Let us have a close look on
them.
Business Process Management Services
Outsourcing isn't just for the big organizations anymore. Thanks to Internet technology and a
variety of self-service options, mid-market organizations are finding ways to save money, manage
talent, keep investors happy, and find their own strategic focus.
The same business benefits and economies of scale that have made generalized outsourcing a
success, also apply to infrastructure, operations and management services provisioning. Not only
can service providers offer more robust, timely and complete solutions than most companies can
provide internally, they also provide technological expertise and leadership at a time of rapid and
ongoing technological change.
Many large enterprises now view sourcing and services provisioning as the only practical
alternative for meeting their IT infrastructure, applications and management operational goals.
While selective sourcing of IT infrastructure, operations and management services has proven to
be much less risky and more successful than the earlier all-or-nothing sourcing approaches,
business managers must clearly understand the potential and pitfalls that selective services and
sourcing entails. Business Process Management Services should focus on the evaluation,
negotiation, implementation and management of sourcing transactions in order to meet business
objectives and minimize risks. It involves identifying mature operational areas that could be
competitively sourced. Usually, the scope of definition is complex and includes complex financial
analysis and/or development of an activity based cost model (ABC). Sourcing assessment should
cover a quick study of the business case for proceeding with a sourcing strategy or to determine
the viability of sourcing as a business alternative. It should evaluate the current environment and
costs relative to the market to test viability and be prepared to go forward with a sourcing
transaction if results indicate sourcing is a viable option.
We should develop Competitive Sourcing Strategies like Total and Selective Outsourcing
Strategies and Solutions, Performance Work Statement, Management Plan (Most Efficient
Organization, Technical Performance Plan, Transition Plan, In-House Cost Estimate), RFP
Preparation, Response Reviews, Process and Service Improvement
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4. Hosted Services
To reduce the cost, time and burden of supporting IT infrastructures, operations and
management, business and technical managers are now looking to a new generation of services
and sourcing offerings. One such class of solution is infrastructure, management and operations
sourcing. The primary benefits of infrastructure, management and operations sourcing includes
initial and ongoing cost reduction, and the provision of higher quality, better performing, more
robust, and dynamically scalable solutions than could be developed and deployed internally. In
addition, by sourcing their infrastructure and operations, business and technical managers can
focus on their core business, with the flexibility to exploit emerging technologies and new global
business opportunities. These services include
• Networked infrastructure management services
• Remote server management
• Security services provisioning
• Business continuity services
• Web hosting solutions
• Systems management
• Storage management and storage service providers
• Monitoring and management services
• Service management/services automation tools
• Enterprise application delivery systems and application service providers (ASPs)
Organizations have never been more dependent on communications for the success of their
businesses. Improving network efficiency is highly critical.
One of the IT manager's worst nightmares is having a key system crash or having data
compromised. Eliminate these risks through managed services, which provide confidence in
business continuity through:
• Secure facilities,
• Secure systems,
• Distributed and redundant sourcing of power, data and processing,
• Timely disaster recovery,
• Scalability, and
• Highly experienced staff with appropriate security clearances.
Avail an enterprise hosting environment with firewalls, intrusion detection, automated monitoring
and physical and network security.
Customer Services
Is your organisation presenting one face to the customer through the web? Email? Call centers?
Can your customers be serviced 24/7? Are you operating at your maximum efficiency?
Integrating your customer interactions across all channels can drastically improve the level of
service provided to the customer. Customers today are looking for access to needed information
at a time of their choosing. Over the last few years, increased customer expectations are putting
new pressures on organisations to deliver timely service and account information through
alternate channels.
The following will enable you to deliver the world-class service supports customers value:
• Channel Management (Single view of customer, Cost-to-serve Analysis).
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5. • Contact Center Optimization (Operational efficiency, Process optimization, Diagnostic).
• Online Self Service.
• Content Management (Portal design & development, Single face to customer,
Fulfillment).
Application Management Services
The application management services market is now in the process of shifting from first
generation, "emerging solutions", to second-generation "growth markets". With this shift has
come market maturation, in terms of viable product offerings and services models, and entry into
the enterprise market. There have also emerged a dazzling array of choices, along with market
segmentation and the rapid development of whole new classes of offerings. For example, ASP
offerings were formally limited to ERP solutions targeted to the small-to-medium businesses
market. Today, all manner of applications are available as hosted or managed solutions. These
offerings range from horizontal systems applicable to all classes and sizes of organizations, to
niche systems limited to very narrow vertical market segments. Similarly, the number and scope
of application management services that are available today are increasing rapidly and are just as
equally rapidly being employed by the largest organizations in the world. Unfortunately, few
business and technology managers know that these new solutions and services exist, to say
nothing of the process of selecting competitive offerings.
These services include:
• Application management: The potential and pitfalls
• Hosted vertical market solutions
• Application management trends
• Software as a service
• ERP and back-office applications options
• Hosted desktops and front-office systems
• Hosting options for wireless services
• Technical evaluation and selection
• Managed applications and e-services including:
o Procurement
o Supply chain
o Content management
o Email, Groupware and collaboration
o Virtual office solutions
o Data warehousing
o Storage
o Software development and testing
o e-Marketing
Governance in IT Infrastructure Management
The ability of organizations to exploit IT infrastructure, operations and management
sourcing/service solutions not only depends on the availability, cost and effectiveness of
applications and services, but also with coming to terms with solution providers, and managing
the entire sourcing process. In the rush to reduce costs, increase IT quality and increase
competitiveness by way of selective IT sourcing and services, many organizations do not
consider the management side of the equation. The predictable result of this neglect is
overpayment, cost overruns, unmet expectations and outright failure.
• Negotiating service level agreements (SLAs)
• Using third party negotiators
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6. • Performance metrics/ROI
• Service options of Web hosting companies
• Establishing security-related Service Level Agreements
• Cost analysis and budget considerations for infrastructure, operations and management
outsourcing
• Metering, Service Level Agreements and relationship management
• Service level management
• Managing the sourcing process
• Customer/user relationship and support issues
• Contract negotiations, out clauses, escalation procedures
• Penalties for non-performance
• Employing external measurement services
• Contracting, staffing and outsourcing options
IT Infrastructure in Banks in India
The banking industry in India has been leveraging IT for its business for the past twenty-five
years. However, the technology adoption and therefore the creation of IT infrastructure have not
been uniform across all the banks. There are leaders who are on par with any international
organization in terms of IT infrastructure build-up and usage and there are laggards who are still
rudimentary in terms of approach, magnitude and coverage.
However, the noteworthy feature is the common direction in which all members of the industry are
traveling, i.e. towards ever increasing use of IT. Therefore the trends that we have been
discussing till now are very relevant, immediately to those banks which are in the forefront and in
near future for the others who are rapidly catching up. Both the groups are toiling to understand
the implications and take the best advantage of the trends. I am very happy to note that a select
representative of each group is going to discuss in detail later in this conference the challenges
that they faced and the solution that they have adopted in managing their IT infrastructure.
Related issues are the network design and architecture, security and legal issues. As 85% of our
banking industry is still to fully husband the benefits of the connectivity, issues on networking and
security is of immediate relevance. And, as we increasingly eliminate manual processes and
records and rely on electronic records, we need to create general awareness, processes, case
laws, conventions, best practices, etc. for ensuring legality of e-records and data. Thoughtfully,
the Conference will be discussing these subjects as well.
Conclusion
To conclude, enterprise infrastructures have become increasingly complex. Most have a wide
diversity of platforms, operating systems, and applications. New systems are being implemented
that integrate end-to-end business processes across Web servers, application servers, ERP
applications, legacy applications, and even partner and supplier systems. Managing this
infrastructure and pinpointing failure points in a distributed process spanning multiple systems is
a difficult task. The deliberations in this conference, I am sure, will help the IT Chiefs of banks
deal with the growing complexity of managing diverse infrastructures. I hope, it will explore best
practices, and offer tips from analysts and experienced on keeping your diverse infrastructure up
and running.
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