As a result, many are eyeing their IT budgets. Although past spending in this area has delivered significant benefits, they’re wondering whether a ‘pause’ button can be hit until things begin returning to normal.
Blurring the line between back office and front line functions
This outlook comes at a time when for lots of firms - including financial ones - the distinction between back-office and front-line is increasingly blurred. When individuals in a financial firm help clients make decisions on the basis of the analysis that’s facilitated by massive amounts of number crunching and the use of AI, they’re using IT as a front office tool. When insurance companies calculate premiums and when new generation banks use fintech tools to help them maintain client relationships and drive new business, they’re also using IT as a front office tool. You get the point. With respect to data management, in many ways, the back office is the new front office.
This point can be taken too far, of course. There is still a back office. It comprises both the hardware that keeps all that tech working swimmingly and the backups that ensure should the worst happen, there is a quickly restorable, complete, system that will be fully operational at speed. Actually, this is so integral to front office working that it really does have at least a toe in the front office itself.
Renewed focus on ‘mission critical’ spending
Analyst Gartner has said that it expects global IT spending to fall by 8 percent in 2020 as a result of the impact of the Covid-19 pandemic and global economic recession. Gartner says this is “causing CIOs to prioritise spending on technology and services that are deemed ‘mission-critical’ over initiatives aimed at growth or transformation.” What does ‘mission-critical’ look like? Drilling into its figures, we find that, Gartner suggests data centre systems will see a 9.7 percent fall in spending, and IT services a 7.7 percent fall.
Financial firms, like every other firm, decide where and how to invest money with at least one eye on risk. Even in more normal times, there is a lot to weigh up, and it is often easy to decide to opt for investing in new tech that will build the business by attracting custom rather than new tech that will keep backup systems up to date and efficient.
Right now, when finances are tight, the danger of squeezing back-end IT spending until it is absolutely necessary is very serious in any sector. In the finance sector, where technology is critical to everyday working, downtime really can be disastrous.
During August, the Commonwealth Bank was forced to apologise to millions of customers when an unplanned outage prevented them from using internet banking or physical bank cards for a period of hours. The bank is continuing to investigate the incident and determine the root cause.
Ongoing investment is vital
Even when finances are very tight, it pays to spend money on data management, security and backup/restore systems, to ensure that the whole edifice on which the firm relies is secure, and that backups are complete, reliable and easily restored at speed. This isn’t just about keeping a firm up and running. Legal responsibilities around data protection in the financial sector require robust security systems, and penalties for breaches are intentionally harsh. Customers whose faith is tested will vote with their feet and move providers.
For financial firms, money may be tight now, and the outlook is not suggesting gold at the end of the rainbow any time soon. But with data privacy so important and data insights so strategically valuable, with the back-end increasingly taking a role in the front-end, plus ransomware and other cyberattacks on the rise, it just might be a false economy to leave that legacy data backup technology in place for yet another year. In the balance of risk, it makes sense to invest cash in a data management system built not just for now, but for the future too.