Transformation is a difficult and lengthy process, but as I touched on last week (see Transforming the capital markets firm: Getting technology transformation right), the benefits to the bottom line can be significant. Key to reaping these rewards, however, will be overcoming potential barriers.

Confronting obstacles

There are obstacles that will stand in the way of successful transformation efforts, and these can be placed in four main categories:

  • Business and cultural – At many capital markets firms, achieving long-term benefits may take a back seat to short-term goals. Multi-year projects are harder to manage, budget and complete. Proper sponsorship and project governance, along with a clear commitment from business leadership to see the journey though, can help address these concerns.
  • IT culture – In many firms, technology organizations have been built around the custom applications they develop and support. They may have less comfort with an approach that shifts some control to a vendor or redeploys developers to new areas.
  • Financial concerns – No matter what path is taken, there will be significant upfront investment. The business case should find investment from additional sources and consider the optics of different structures.
  • Transformation risks – Any major undertaking runs the risk of budget or cost overruns, as well as the possible loss of key personnel. In addition, changes in the firm’s situation or in the industry landscape may push the transformation off track. Careful planning, close tracking of financial metrics, clear assignment of responsibilities and establishment of well-marked rollback points can mitigate most transformation risks.

Transformation can provide firms with streamlined expense bases necessary to survive and compete in this market, and many capital markets firms are already well down this road, making the need to plan and implement even more urgent for the others.

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