Independent Bank’s CIO, Pete Graves

By John Ginovsky

With a down economy forcing bank management to pare every expense possible, new hardware, software, and the training requirements behind them may seem like easy places to make cuts. Bank chief information officers can be hard pressed to justify their budgets in the face of such pressure.

Tech Topics talked with Peter Graves, SVP/CIO of Independent Bank, based in Ionia, Mich., about strategies that may boost the effectiveness of existing technologies or support a business case for new technology solutions.

Tech Topics: How does a bank focus on IT in a tight budget environment?

Peter Graves: I think there are three strategies that a bank can use. One is to leverage solutions across the enterprise. Too often, business unit managers want solutions that are custom to their line of business. The tough part about that custom strategy, is you end up solving the challenges for that one line of business when really there are other business units that could benefit from the same technology. The first step should be, what does the enterprise really need, not just what that particular line of business needs. The idea is to create a common tool set which every business unit can share and leverage.

TT: Can you give an example?

Graves: We have been working on a content management system that can support all of our business units. There is a common tool set that allows integrators to place calls for images within an existing loan or deposit platform and automate those images with workflow if needed. The solution uses basic screen scraping methods to pull up an application image as an example, and view it while you are within the platform. The compelling reason for leveraging an enterprise solution is that it lowers the investment overall for the company and spreads the benefits. Then you have one system to train employees across the company, and one system to maintain throughout the life cycle of the technology. The key if you are a CIO is to sell those benefits to all the business units and to get buy-in from the top. In a tough economic year, this is an easier sell.

TT: Suppose you already have all those other systems that are independent of each other—what do you do with them? Isn’t there a large cost to switch?

Graves: The business case to justify the investment and replacement is partially based on the costs to maintain multiple systems over their life cycle, say, five years. If you do it right, you can justify and actually save significant expense by ripping out the old technology and replacing it with new, more modern platforms and equipment. Again, the cost savings and the benefits of the new systems can be leveraged out to other business units of the company [that currently are not supported] and they can benefit from the same technology. This really strengthens the business case when IT investments are more difficult to justify.

TT: What other things can CIOs look at in a down economy?

Graves: I believe you need good solutions to foster collaboration within the organization. Tool sets that allow people to not just do their day jobs but to work together across departments to help solve efficiency challenges. These solutions typically don’t require much investment, but they do provide a better platform for the sharing of ideas, getting the most out of meetings, keeping minutes, managing projects, and even recording audio for training. Enterprise collaboration is nothing new, but when the solution is right for the culture, big things can happen, even across departmental lines.

TT: You earlier mentioned three things CIOs can do now. What’s the third?

Graves: You need to review your existing applications and line of business platforms. That’s a big item to bite off for any bank but the rewards can be significant. There are usually many line-of-business platforms and applications that were never completely phased in or leveraged. Often after review, there are other modules of functionality promised in a later phase that never materialized. These untapped areas are low hanging fruit since the investment in the original software is already spent and the benefit is just waiting to be realized. It’s often a big, missed opportunity. Yes, an investment of staff time, in particular at the business unit level, is required, so buy-in is critical. You really need a push from the top of the organization like the CEO to say that this is the year we are going to better leverage what we already have and get better at what we already use.

TT: Looking at 2011, what emerging things are you tracking?

Graves: Everyone has their own list, but I would say that mobility in the workforce is a big one. Employees need to work from wherever they are. Personal time and work time are becoming blended or even harmonious. That’s still a pretty hot topic and I don’t think anybody has totally figured it out yet because end-point security is such a big factor. If you were to ask any bank, they’d say, “Yeah, we’re trying some iPads” or some other type of tablet, but is it safe? We think we have a sound solution and a reasonable business case that we tested at the top of our organization. I would like to see it pushed down even further into management. That topic leads us into security, another evolving and challenging area. One of the items hitting the radar for regulators is what’s called data loss prevention. How is that working in your shop? What tools do you have to strengthen it? Of course, we’re all trying to do it without using more people, so the systems that we deploy have to be more sophisticated. Another thing that is heating up—a sliver of the cloud services discussion—is infrastructure as a service. You’ve heard of software as a service. With virtualization, the building blocks around infrastructure—the hardware—is  all becoming more of a commodity, more standardized over time. Today, you can put those hardware building blocks together and park them in somebody else’s data center (a vendor hosted solution) and just migrate your virtual machines and your data over to them. Today, the complexity of maintaining and managing a data center for a community bank, patching, all of those systems and servers, is huge and it’s only going to get more complex and more challenging. I’m beginning to think that most of us community bankers are going to need to shed our data centers due to the costs to support, and the complexities to maintain, them while keeping up with expectations of performance and security. The solution may ultimately be a hybrid of in-house versus hosted but it is very compelling. It will be interesting to see how it plays out over the next couple of years.

 

[This article was posted on February 15, 2011, on the website of ABA Banking Journal, www.ababj.com, and is copyright 2011 by the American Bankers Association.]