Turmoil in the Financial Sector

The financial services industry is experiencing profound disruption, especially in the U.S. JP Morgan buys Bear Sterns then swallows Washington Mutual. Bank of America takes Countrywide then Merrill Lynch. Lehman Brothers collapses, with Barclays picking up some of the pieces (including Lehman's main data center). Lloyds grabs HBOS, while Fortis and B&B collapse. Citigroup buys out Wachovia. The U.S. Government now owns most of AIG. Investors as diverse as Warren Buffett's Berkshire Hathaway and Japan's MUFJ pump cash into Goldman Sachs and Morgan Stanley, respectively. The Big Three U.S. automakers are bleeding cash, with $5,000 and even $10,000 SUV discounts now routine. And central banks around the world, particularly the U.S. Federal Reserve, inject massive amounts of cash into the world's financial system. These are historic weeks in the financial industry, and there is more news to come.

All of this turmoil is causing (and will cause) big changes in these companies' IT plans and operations. Most directly, IT staff now must rapidly reorganize infrastructure assets to match the new corporate organizations. They must do so quickly, and with little or zero service interruption lest they cause further panic.

Fortunately, most if not all the companies mentioned above rely on mainframes for the bulk of their core business processes. It's no exaggeration to say that mainframes have facilitated the incredible pace of consolidation in the global financial industry which occurred even prior to this turmoil on Wall Street. So in an IT sense these historic events are nothing new. IT staff will be busy splitting more LPARs, relocating more LPARs, and/or consolidating more LPARs as they help their companies adjust to their new circumstances. In fact, the extent to which these companies have mainframe-based applications and information will heavily influence the ease and speed of their IT restructuring. These events resemble "disasters," and the mainframe IT staff at these companies certainly understand disaster recovery (DR). Also, we already know mainframes can scale instantly and easily to handle more demand, from customers and/or simply because a merged organization is much bigger. These are good times to have mainframes. These are the "change machines." In contrast, reorganizing the non-mainframe IT infrastructure elements will be much more painful. A lot of smart people will appreciate the contrasts.

These times undoubtedly will result in job losses, including IT job losses. However, the good news is that the IT employment market has been relatively stable or even growing robustly in certain parts of the world, with continuing demand for skilled IT professionals. Although there are never any guarantees, I expect that individuals with mainframe-related skills will do comparatively well in the months and years ahead. But there's an important caveat: if you expect to continue working for the same employer in the same city, you may be in for a shock. Workloads will be moving, a lot. Turnover is likely to increase even while the number of jobs remains relatively stable. Fundamentally, however, business managers do appreciate how important their IT staff will be to help them reorganize their companies, especially IT staff skilled at rapid, well-executed shifts of workload.

There are other IT challenges facing financial companies. In particular, it is now abundantly clear that company managers do not have real-time visibility over their own corporate balance sheets. IT practices in the investment banking community have been largely "siloed," with little or no respect for central management oversight and business controls. I expect high demand for recentralized financial information with real-time executive "dashboards," to give managers much better information to make informed decisions about their financial assets at any moment in time. I think there will be serious questions asked and much different architectural patterns for implementing decision support systems. My view is that mainframes and mainframe-based solutions will play increasing roles in financial decision support, reversing recent trends. One notable and extraordinarily timely example is IBM's Scalable Architecture for Financial Reporting (SAFR).

What trends do you see amidst the chaos?

by Timothy Sipples September 30, 2008 in Future


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nice post. I am a mainframe guy and would wish your predictions come true in 2009 :)

Posted by: Kaps | Dec 31, 2008 1:48:54 PM

For cobol links :

Posted by: Kaps | Dec 31, 2008 1:49:40 PM

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