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 computerintensive
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.

Page 1 of 6 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

Page 2 of 6 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

Page 3 of 6 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).

Page 4 of 6 • 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

Page 5 of 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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