It is Time to Deal with the Legacy below the Surface

I love a good metaphor – that wonderful space where two parties with different backgrounds can move closer to a shared understanding of something complex and abstract. CIOs, who are forever explaining technology costs to their executive peers, love metaphors too.

Imagine my delight, when in speaking recently with Bruce Lee, Group CIO of NYSE Euronext, he talked about infrastructure as an iceberg.  It goes like this:

The tip of the iceberg, that 10 or 20 percent of the IT budget, is visible to everyone in the company.  It is gleaming in the sun and holds within it the promise of mobility and predictive analytics and integrated data, and all of the wonderful things that modern businesses need to compete.  But lurking below sea level is a quagmire of old hardware, bolted on systems, unsupported applications, complexity, cost and bloat.

As CIO, you alone among the executive committee can see below sea level.  You see the heavy, antiquated iceberg.  You know that with every year that passes, the heavy bottom threatens to drag the tip of the iceberg down until it is completely submerged.

But where, I asked Lee, does the iceberg come from?

“In moving as quickly as possible to deliver new technology solutions to their businesses, most CIOs have not had the luxury of going back and re-architecting in a new paradigm,” says Lee.  “CIOs are more likely to put in a new tool to abstract data, secure access, overload a data model for new business requirements, and bolt on web services than re-engineering an underlying application. Often the solution is cross platform, cross functional and adds layers to the overall application and infrastructure portfolio.”

Let’s say you have an application that’s 10 years old and only remains secure and compliant through add-ons. But your competitor has a new system with embedded security and compliance.  “If your competitor’s system is newer, then it is simpler, easier, and probably cheaper,” says Lee.  “This means that your competitive position against that other company decreases. You as a firm are not getting the benefit of the technology market evolution.”  The weight of the iceberg, in other words, is a reflection of giving up market wide productivity gains.   

If your iceberg is so weighty that it is putting you at a competitive disadvantage, you need to act.

What do to?

Be technical.   “Being a CIO today can no longer be solely about cost, corporate governance, business strategy, sourcing and labor relations,” says Lee.  “We are now at a major turning point where technology has gone through such a transformation, that unless CIOs get into real application engineering, they’ll have trouble.”  Lee cites, as an example, the current push toward open stack. For CIOs to know whether they should get in on that trend, they’ll need to do a functional gap analysis:  what does the open stack trend mean for your applications? Are your applications designed for high availability of single processes rather than newer, multi process, designs that are built with failure in mind? Will open stack support your legacy architecture? ”

Lee is skeptical that CIOs can delegate this huge architecture re-engineering to their CTOs, “To bring technology excellence into their companies, CIOs have tried to hire CTOs to do the tough architecture work,” he says.  “But in many firms the CTO role has tended to become focused on infrastructure, data centers, and networks, and not on the application piece.  Bolted on applications are quickly piling on to the iceberg.  That’s where the architectural work needs to happen.”

Stop protecting the iceberg.  “Some CIOs,” says Lee, “are so protective of their current infrastructure, that they are their own worst enemy.  Every time the CEO says, ‘let’s go the cloud’, some CIOs say, ‘But the cloud isn’t secure!  We’ll suffer from a lack of integration!  We’ll be captive to those cloud providers. Rather than do the hard work of rethinking their architecture, these CIOs wind up perpetuating the problem. “  These protectionist CIOs even with the best motives, are often responsible for the size and weight of the iceberg.

Embrace shadow IT.  You know the story.  A vendor has a new database marketing product and meets with the SVP of Marketing.  That SVP comes to you and says, “All we have to do is connect our customer database to this new SaaS tool.”  When CIOs stand aside as marketing moves ahead with the SaaS tool, they are often complicit in adding to their architecture problem.  But if they embrace this shadow IT moment as a chance to educate the SVP on Marketing about what lies below sea level, they will move one step closer to dismantling the iceberg.

If the CIO can explain to the SVP of Marketing that we cannot use this new tool easily because we have 18 fragmented customer databases, he has a burning platform. He can seize on this opportunity to say, “If you want this new tool, then we have to change the legacy also.”

“Shadow IT is a clue toward where you will get the most support to retool your architecture,” says Lee. “Use those moments to get support for some of the fundamental reengineering that reducing the iceberg really requires.” 

Change your criteria when selecting outsourcers.  Outsourcing, most CIOs admit, produces diminishing returns.   You outsource initially to get lower labor costs. Three years later, the CFO wants another 30 percent cost reduction, but you can’t squeeze anything else out of your outsourced operations.  “The only way to get further cost reductions is through re-engineering,” says Lee.  “These days, many of the major outsourcers are revisiting their engagement model and are having the tough conversations with their customers about architecture. ‘Which applications do you care about?  Which can you do without?”   CIOs may want to ask themselves, suggesst Lee, which outsourcing partner has the skills to break down the legacy problem, and help re-engineer.  “CIOs who are used to selecting their outsourcers on who can run their operations the cheapest, may want to change their selection criteria,” says Lee.  “They may want to start asking which outsourcers have the architecture and engineering skills to get them out of this mess.” 

Unless your company was born yesterday, you probably have been mortgaging your technical future and have to start paying your technical debt. This iceberg is more than a metaphor. It is a real problem that is getting more and more acute with each year that you let your infrastructure ride.  It is time to let the executive committee know that just because they can’t see below sea level does not mean that what lurks there is simple, secure and free.

About Bruce Lee and the NYSE Euronext

Bruce Lee was born in the UK and graduated Hertfordshire University with a first class honors bachelor of science in computer science in 1987. His professional background includes time spent at IBM, Midland Bank (now HSBC) and American Management systems, before starting at Paribas (now BNP Paribas) in 1993 to develop currency options derivatives trading systems.

Lee joined HSBC’s investment bank in New York in 2006 as global head of infrastructure and architecture. He also ran global information security, business continuity and IT process groups. He became Americas CIO for the Investment Bank and then COO managing IT, business operations and operational risk.

Lee joined NYSE Euronext in summer 2012 as global head of IT infrastructure and operations to undertake a two year IT transformation to reposition the firm in the rapidly-changing business environment. In spring 2013 he was appointed as group CIO, leading the firm’s IT teams through their continued transformation and the pending acquisition by IntercontinentalExchange, Inc. (NYSE: ICE).

A leading global operator of financial markets and provider of innovative trading technologies, NYSE Euronext (NYSE: NYX) is the holding company and the first cross-border exchange group created by the combination of NYSE Group, Inc. and Euronext N.V., on April 4, 2007.