First in a three-part series on effective information technology management.

Newer, better, faster ― technology changes almost daily. The real challenge for a financial institution is not simply keeping up but recognizing the need to maximize the benefits of information technology in support of its business objectives.

Technology is an investment that leaders must manage in order to get a return. Putting a sound system in place requires first determining whether such technology has any business merits for the organization and then validating its bottom-line value.

An institution’s leaders must work to ensure that any system and all IT activities are directly tied to the organization’s strategic plan. Doing so allows for the appropriate allocation of valuable time and resources. A positive alignment between IT infrastructure and business strategy can further enhance an organization’s performance, as well as its opportunities for success.

A good IT plan rests in the business strategy

IT management is no longer a back-office function. Today’s institution recognizes the need to integrate IT management into the strategic plan for each business line.

This requires that institution leaders and technology leaders work together toward achieving the organization’s common goals. Everyone should be clear on the overall business strategy, direction, and objectives. The institution’s strategic plan then becomes the platform for the technology plan.

Taking the lead in overseeing technology planning is an institution’s board of directors and its senior management. The board should review and approve all IT plans and policies to ensure their strategic alignment. Often a board will work hand-in-hand with an IT steering committee to help direct technology initiatives.

Because IT committees play an important role in technology management, they should include membership from all functional areas of the institution. One of a committee’s key responsibilities is to provide the board with ongoing reviews of IT projects and updates on significant activities. This information lets the board make knowledgeable decisions without the need to be involved in day-to-day, routine operations.

Also key to the success of IT initiatives is a senior IT manager or chief information officer (CIO). The board should ensure that such an individual has sufficient IT knowledge to execute and maintain the institution’s technology plan.

The risks of improvising and the benefits of planning

Without a technology plan to guide it, an institution has no clear direction or real destination in mind. The consequences can be great and may include performance problems due to outdated or obsolete technology. Such problems are typically accompanied by unplanned expenditures for IT maintenance or replacement of outdated systems.

Equally detrimental can be adopting new technology or changes without a plan for them. Changes in technology can introduce new sources of risk to a financial institution’s operations and reputation.

An institution relies on IT systems to provide services and products to its customers. Better IT management through planning can strengthen an organization’s efficiencies and reinforce its competitive advantage.

Adopting a planned approach allows an institution to intelligently implement its technology. Because implementation isn’t rushed or done while in a crisis mode, an organization is able to perform adequate due diligence on new technology changes. Likewise, expenditures can be appropriately planned for. With an ongoing process for planning and managing technology, an organization stands the best chances for success.