Digital transformation or a digitally glorified IT upgrade?


It’s hard to find an organization today that isn’t in a phase of what is called digital transformation and already there is evidence of between 66%-84%[1] of these efforts failing.

How’s this digital transformation trend different to the e-everything trend of the late 90s. Why isn’t this just another overestimated tech promise? Wouldn’t it be preferable for an organization to wait until tech matures and then select through which projects will comprise the digital transformation program?

This is a common question, shaped by previous experience. For more than six decades technology was evolving in almost predictable cycles lasting between 10 and 20 years. Based on that, the question “should we wait until technology matures” sounds reasonable. Well, despite sounding reasonable this question is no longer valid.

Long maturing phases for new technologies as well as the almost exclusive tech usage for operational performance improvement made them only relevant to operations and almost detached from strategy and business models. That is how the question “should we wait and see” surfaced once more around the year 2000.

Since then, we’ve experienced two more tech phases maturing, providing evidence that the timeframe from experimentation to maturity shrinks as more and more new technologies are built on previous ones. What were once 10-20 year cycles have turned into 2-5 years cycles and we’re moving towards a continuously evolving tech fabric. More importantly, it’s not just technology that evolves improving operational performance. Business models, corporate strategies and industry structures are all also challenged by new value propositions based on evolving technology.

This is the simple reason why the question “should we wait until technology matures” may have been valid in the past but isn’t anymore. From 2005 onwards many technologies that have been developing as derivatives of mature ones converged to what was covered by the umbrella term 3rd platform[2], introduced by IDC. This brought together social media, mobile, cloud and big data in one conceptual framework.

Technologies in this framework will continue to evolve and be enriched with others that are either completing a long maturing cycle (AI), surface as modern technologies that have augmented existing ones (software robotics) or a ground-breaking combination of existing ones (blockchain).

Firms need to adapt into this new environment where:

  • Intangible assets are more important for the valuation of an organization[3].
  • Products, services and distribution channels are co-developed with other entities from the common value network (customers, suppliers, and partners).
  • Infrastructure is offered as a service.
  • Application development tools evolve at an unprecedented pace.
  • HR management is redefined by robotics process automation.

In this environment organizations are called to redefine their value propositions based on the opportunities presented by the tech fabric weaved by the rapid convergence of technologies around mobile and cloud. This should ultimately be the target of any digital transformation effort and the need for continuous development following the completion of the first phase makes the term digital evolution more appropriate.

So digital evolution is the mandate within a reality defined by challenges where:

  • There is pressure for immediate financial benefits and operating cost reduction.
  • It’s difficult to approve any project that is not regulatory or will not have an immediate positive impact on profitability.
  • All initiatives are evaluated with backward looking accounting metrics (ROI, IRR) ignoring metrics like sentiment or network value that affect more than half of a firm’s market valuation.
  • Digital transformation is considered an IT project.
  • Robotics will challenge HR.
  • IT infrastructure is based on legacy silo systems that in the best case scenario, will need 2-4 years to be replaced by a modular and flexible IT service broking architecture.


So we know today, that the accelerated convergence of technologies is challenging strategies and business models, as their impact goes beyond operational efficiency that has been within the IT realm for the last 50 years. That is why digital evolution is not a strategic option. It is the inevitable evolution of the business landscape and adapting to it or not isn’t really an option.

This is why every management team should have a clear view of what digital evolution means for their organization and be committed to it. Knowledge and commitment at the highest level is crucial as the cuts needed during this process will be deep and will never be completed if digital evolution is considered as a “digital project”. Digital evolution is not another project competing for resources. Considering it as this, exacerbates the risk of demoting the digital evolution initiative to a digital IT upgrade.

Unless the HR Director or the CIO are members of a leadership team committed to the digital evolution, how will they handle the disruption caused by robotics process automation[4] or the strengthening of the value network[5] of customers and partners?

No matter how strong the vision is, the aforementioned constraints are deeply rooted and the only way forward is through a realistic strategic roadmap that will within a reasonable time frame (for example 2 years with a major milestone every 6 months) complete the first step towards the digital evolution.

Let’s see how that would work for an incumbent financial organization: A digital working group manned by management team members would undertake the task of educating the rest of the team and cross reference the firm’s functional architecture and business model with the fintech landscape. They would aim at selecting a couple of proof of concept/value projects that would work as the bootstrap phase of the digital evolution. Such PoC/V projects could be RPA or the cooperation with a fintech partner or even a blockchain related initiative, depending on the digital maturity of the organization.

This process sounds like an extremely tedious task as a result of the uncertainty dominating FY17. But one thing is certain: It will be harder to cover lost ground in FY18. So as the new financial year begins, form your working groups, select your partners and gear up for the first phase of the digital trip moving towards FY19.



Acknowledgment: Tim Richards thanks for editing






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Diginsurance or Instech? It doesn’t really matter how do we call the future of insurance. It’s here!

In the previous posts we went through:

  • how governance frameworks can add traction to a fast changing business environment connecting strategy with execution
  • how incumbents in the financial sector can evolve by establishing interfaces with fintech innovators

In our review of the fintech environment we focused on banking, however disruption in insurance spans from business model innovation to smart contracts.

The following value propositions caught my attention as I was reviewing the instech landscape:

  • Evosure (now IVANS part of Applied) allows brokers to describe the type of risk they have and finds a matching underwriter. (
  • SocialIntel offers underwriting based on social media profile constantly reevaluating risks, not just at initial underwriting and renewal times. (
  • BizInsure focuses on efficient small business insurance.
  • Zenefits provides HR software, making money on health insurance sold through that software.

P2P insurance taps in the origins of mutual insurance and provides alternatives throughout the insurance value chain:

  • Lemonade in US claims to be the “world’s first P2P insurance carrier”.
  • Friendsurance in Germany operates as a broker pooling risk from groups of friends.
  • Inspeer in France pools deductibles between groups of friends enabling high deductibles thereby reducing the premium paid to the carrier.
  • Guevara in UK (I’ll pretend not to care that they’re saying goodbye to meerkats) present an interesting alternative for motor insurance emphasizing on affinity and transparency.

(The Guevara model is as interesting as the Guevara team, so I urge you to read more about it in

These innovative approaches may redefine the value proposition in parts of the value chain and should definitely be studied by insurance incumbents however we should not forget that these offerings are not burdened by legacy silo business practices. Despite the instinctive reaction that legacy IT would be the barrier to innovation, it turns out that the challenges posed by legacy infrastructure can be overcome.

There definitely are challenges posed by infrastructure to incumbents: Moving to a devops culture is essential in order to implement a cloud centric strategy. Again the technical part is the least painful part of moving from the current IT organization to devops:


However moving to a cloud centric strategy is not optional. Cloud skepticism today is equivalent to internet skepticism around 15 years ago. Well, we all know how things worked out regarding that controversy. If you need a more convincing reason on “why cloud now” consider Big Data.

In order to start working on Big Data you need to work on a cloud enabled infrastructure environment, and if you are wondering what does this have to do with the insurance disruptors mentioned before, think how SocialIntel drives their innovative risk assessment engine.

Team transformation is not the only IT related challenge but is the most prominent one. Moving from monolithic applications to a microservices based architecture in a way that security scales by design, is another challenge, but the mitigation tactics for this challenge are well defined by now.

IT infrastructure challenges for incumbents are considerable indeed. However they are well defined and so are the mitigation tactics. Innovation strategy and execution is much harder exactly because it spans way beyond the legacy IT infrastructure challenges to organization and mentality silo restrictions.

An exception among incumbents is AXA with a clear innovation strategy. AXA Strategic Ventures rocks and its investment in blockchain provides an insight on how claims management –one example out of many- will be swept off its feet when smart contracts come into play. Blockchain 2.0 and programmable contracts are extremely interesting topics that move on a stream parallel to that of the cryptocurrencies.

Imagine an event like a health incident, or a flight delay being transmitted over a blockchain 2.0 platform so that the related smart contracts are automatically enforced and policy holders are automatically reimbursed. It kind of changes the way claims are managed today!

This approach to innovation proves that there are ways to overcome the short sighted quarter results focused mentality that dominates insurance incumbent strategies.

The speed at which things are changing won’t get any less. Technology won’t wait for the insurance industry to catch up. Even if smart contracts look like a blurry vision far ahead (despite the fact that anyone can experiment with platforms like Ethereum today), the immediate next steps are crystal clear for incumbents in the insurance industry.

Setting up a two speed IT strategy is a key step. Keep the shop running and experiment with new technologies in a structured way. Design a flexible cloud centric architecture that will allow for a modular replacement of legacy systems and provide interfaces for cooperation with disruptors. Invest heavily on automating workflows. Smooth optimization of processes through automation is the best way to prepare for a services based business architecture that will be able to accommodate smart contracts in the –not so far- future.

Evolving from 3-5 year plans and IT projects to an ongoing companywide transformation process will be painful for most organizations but this is not just another step in technology innovation that we are making. It’s a whole new industrial revolution that spans across industries.


Posted in Business Architecture, Diginsurance, Digital, Fintech, Instech, Insurance, Management, Strategy | Tagged , , , , , , | Leave a comment

Digital : An awe inspiring frontier for traditional financial institutions

Where would you place your Financial Institution on the imaginary line between the empty booth and the person talking on his mobile phone if this line was a digital adoption scale?


Image source :

When discussion comes to “digital”, this is how I try to get people from financial institutions to realize where they stand. Most people think about the technology their organization has already adopted and deployed and consider the analogy meaningless. Maybe you would to. Initially that is, because later in the discussion things change.

For people like me, that have spent more than 20 years working in banking and insurance, it may not be easy to accept, but Moven ( and Kabbage ( rank closer to the person with the mobile phone while the traditional financial institutions rank closer to the empty booth. It’s hard to accept. However, the sooner we get it, the sooner we’ll have the chance to reorder our position on this line.

In order to understand that, we have to grasp that what has evolved in telecoms industry is not just technology. The evolution from the phone booth to the Nokia 6210 and then to oneplus ( is based on industry-wide disintegration and reframing beliefs in order to build new approaches in creating value. It is fundamental for people in traditional Financial Institutions to embrace these concepts in order to start the digital journey that customers and fintech firms have already embarked on. (Fintech, is a line of business providing financial services based on innovative technology solutions)

So what does disintegration and reframing beliefs mean in the context of FIs and how can we break it down to simple steps? How can the “operating system” of a financial institution evolve from monolithic to modular? What is the landscape, where do we start from and what are the first steps down this journey?

No one would argue that strategy definition should be the first step. Unfortunately, most strategic initiatives become zombies of ideas haunting board rooms without any chance of incarnation. Instead, organizations end up operating based on reactive incrementalism that can easily be mapped to a –by definition- broad mission statement while thinking that they are implementing corporate strategy. On top of that, the typical -board room designed- 5 year strategy plan doesn’t seem to work anymore.

So let’s take a look to see who the new players are and how are they moving down this digital journey. This is an indicative list compiled after going through lists like the biggest fintech investments in 2015, the  Finovate unicorn list etc. and devoting time navigating around the site of each firm. Bond market social network Retail investment management services Bitcoin wallet provider Cloud based money transfer International mobile money transfer p2p international money transfer International money transfer to mobile wallets Payments Bill payment Online equity crowdfunding Startup crowdfunding Small business lending Online small business loans  Helps small businesses to manage and process receipts. p2p business loans b2b lead generation and risk management Online p2p borrowing against unpaid invoices p2p lending p2p lending p2p mortgage


Ahh! So these are the competition for traditional financial institutions!

Well … not actually. These are teams that you might as well work with tomorrow.

You see this is the main difference between the empty phone booth and the mobile phone being used in the picture. The evolution of the communication infrastructure from a monolithic application with the operating system and the applications tightly coupled together, to a platform designed to enable applications plugging in it -built from an ecosystem of partners-, reveals the design pattern.

If we worked in a team with carte blanche to design and implement the infrastructure for a financial institution today, we should select to put the emphasis on app mesh and service infrastructure. We should prepare the organization to either plug in to one or more of the offerings mentioned above or use one or more of the platforms listed (indicative list) below: Customer acquisition for financial services Mobile account opening Omni channel experience Digital banking SaaS platform Low settlement cost international payments  e-banking & e-commerce fraud detection Fraud prevention with big data Regulatory data and onboarding solutions for financial institutions KYC capture/review to rapidly finalize due diligence for client onboarding


Even for the business capabilities that would have to be developed and operated in-house, we would select to work with teams like Backbase and Infosys based on tools and infrastructure from forward looking pure cloud offerings. I know that the recent EMC & Dell deal is the biggest pure tech acquisition ever, however betting on this deal reminds me of the controversy in Jules Verne’s from the Earth to the Moon : Should the seats in the projectile to be shot to the moon be facing the origin or the destination? Well you know how it worked out. The moon in our case is not EMC & Dell, it is Pure Storage and Amazon, Google or Azure cloud infrastructure.

These principles, apply to cases like the one of TSB that bases its operation on Lloyds infrastructure as well as to the ones like Williams & Glyn that will be building the infrastructure more or less from scratch. It is up to the Enterprise Architecture team to deliver the Service Architecture and coordinate a portfolio of initiatives that do not wander off to hazy “innovative” pet projects. There are frameworks that can deliver methodologies to keep these initiatives backwards traceable to the business capabilities and plugging in to the infrastructure available.

Mentioning Enterprise Architecture frameworks and methodologies may sound out of place when discussing groundbreaking ways of cooperation (or should I say co-opetition?). Well they are not out of place. You see whoever has implemented innovative projects knows that innovation is not only jeans, scarfs and couches at workplace. Well it’s that too, but more than that, innovation is a process. It demands a different way of managing things so it’s a different process.

When embracing innovation there are no silos. Collaboration across functions is imperative. Speed in trying and failing is essential. Sorry about your hockey stick budget planning, but it doesn’t work in cases where if you are going to fail you have to fail fast. I know how proud you are about knowing your IRR but –and I don’t know how to sugarcoat this one- you cannot judge something that has never been tried before with financial performance metrics based on hypothesis fueled from past experience. The approach here is budget tied to progress. That initiative might have sounded good and everybody got along but if it doesn’t deliver then it’s dead and you move on.

When Moven decided to introduce the Impulse Savings feature addressing the untold truth that most people hate budgeting and are lousy savers, would you ever think that it compared that initiative to another project using IRR?

Easier said than done right? Definitely! Especially if in parallel to the need for innovation and while reframing the implicit beliefs of how financial institutions make money you have to operate a financial institution with millions of customers, under the scrutiny of regulators and shareholders.

Again Enterprise Architecture has to design and maintain an architecture coordinating a 2 speed infrastructure. A lot of disruption, a lot of bruised egos, that is why Enterprise Architects and CDOs have to have a lot of patience and exceptional stakeholder management skills.

I’ve developed this line of thinking a few times in conversations regarding the outlook of Financial Institutions only to find that around this point in the discussion the greatest doubt is revealed: What if we cannot change? What if we go on relying on the ever diminishing commissions and spreads, ignoring digital currency? What If the pure plays and the P2Ps without the regulatory burdens have already won?

Well there’s no fight therefore nobody’s winning. We’re lucky to live another revolution like the 1995-2000 one. Are you aware of any commercial financial institution that has not adopted internet as a mainstream technology? Do you remember the endless discussions on security and the advantages of X.25 over TCP/IP? Who benefited from the opportunities that we were presented with back then? Customers and innovators won. It’s no time for doubting capabilities. There’s no time for doubt.

Regulation is here for a reason and we will have to devise new more effective ways of complying. Meanwhile 25% of new P2P applications have been withdrawn due to new UK P2P regulations. KYC is here for a reason and we will figure out ways to do it more efficiently. Blockchain technology will reduce costs regardless of the bitcoin adoption. Small businesses will prefer Kabbage instead of a time consuming traditional loan application process. It’s up to each team that is challenged to deal with it and offer a better experience combined with the management of accounts and financial advice. Probably this will be achieved working with a “white label” service from Kabbage or through plugging in to an equivalent platform. Two thirds of the Finovate unicorn list are offering solutions either in lending or in payment. No matter how innovative they are they remain just lending or payments or digital wallets or… On the other hand, financial institutions who dare will be able to use “and” instead of “or”.

Tomorrow, in some organizations, there will be meetings about Adaptive Security Architecture about evolving from Agile to DevOps, about killing an initiative that did not deliver as promised and proceeding with the next one. I bet you that these are the organizations that will be delivering value during the next very interesting years. These are the organizations evolving away from the empty phone booth.





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Successful Failures




Have you ever come across cases of projects, that satisfied all the predefined constraints yet they were perceived as failures?

I recently attended a CIO conference, and took the opportunity to talk with a lot of people trying to understand if they applied formal project management and operations practices. I was not surprised to find out that many were frustrated by the formality of such frameworks and practices. Frustrated, to the point that even successful by -conventional KPIs- projects “did not feel right”.

I wondered: is it the project management formality that is frustrating, or the contrast of it against the way business needs to operate today? Would agile project management provide the answer? Well .. it is not an easy answer.

Agile Project Management would be the solution, if  the problem was the application of plan-driven project management in an agile organization. Unfortunately in most cases we as CxOs face the incompatibility of any framework no matter how flexible it is with the way the rest of our organization operates. In fact, one of the top challenges in organizations today is the strategy-operations mismatch. This results in :

  • increased operation costs as well as in
  • failed projects leading to rework

Environmental volatility mandates operational flexibility, as strategic horizon shortens. In order to meet this mandate, organizations either invest on adapting their organizational structure to a more lean and change receptive one, or just pay the increased cost of attempting to operate in the old fashioned way.

In many cases, the first step towards a more lean and flexible organization is adopting agile project management methods. I cannot stress enough, that the selection of change-driven  (agile) project management methods is definitely part of the answer, but it does not provide a complete solution and will definitely not meet high expectations regarding lean change driven management.

In my experience, the part of the operational environment that is usually missing in order for the lean and flexible organization target to be achieved, is the one that corresponds to Business Architecture and Business Analysis (the “ownership undefined” part in the image above that you can enlarge if you click on it).  This function is the structural joint, that connects Business with IT and in most cases is dispersed in an ad hoc way among business stakeholders without a common approach. This results in increased indirect costs due to the disconnect between strategic options and operations, as well as in direct costs because specific business challenges are addressed reactively, with specific high maintenance solutions instead of platform solutions, that will support strategic initiatives.

In either case, the main issue is that unless the whole business environment is supported by a commonly agreed set of flexible frameworks, methods and tools, there are communication gaps that can be dealt with a penalty in flexibility, increased costs and stakeholder frustration.

IT may have selected and implemented the most flexible methods for lean project management, and the best tools for building and managing low cost solutions but unless there is a seamless flow from the expression of a business need or the appearance of an opportunity to operationalizing the result of the related project, gaps are bound to exist penalizing agility and increasing operational cost.

Regardless of the organizational structure, the ownership of the Business Achitecture / Business Analysis domain, either as an independent unit of in-house business consultants or through IT, can and should drive the effort to :

  • design and implement a lean, specific, change-driven Business Framework that would combine the merits of different existing frameworks  as shown in the picture above and
  • select or design and implement  the necessary tools and processes  in order to support a seamless flexible operational environment.

WARNING: Such a framework would represent the culture of the organization and cannot be a product or a tool that can be purchased and applied. It is not a “get a consulting firm to introduce Balanced Scorecard” kind of approach, although such an approach could be part of the business framework.

So if it is not something that can be purchased, how can an organization build it? Having an extensive experience on managing projects within the financial services industry, I decided to study the most important frameworks as soon as I understood the issues that lack of common formal knowledge and the myopia of fragmented approaches causes. The certifications in ITIL and PMI as well as my current effort for BA certification and study of TOGAF have strengthened my belief that a holistic approach and well trained teams with clear interfaces across the organization from board members to operators are the ONLY chance any effort has to succeed when it comes to increasing the operational agility of an organization and reducing operational costs.

What does this mean in practice? How do we do it? If you’ve got this far and you’re interested, please contact me with a description of your organization and I’ll be happy to provide a brief description of how would I approach a business framework implementation in your case.


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