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Simple IT Restructuring Has Failed To Provide Cost Benefits

CIOs are now looking to reposition IT as a hub of innovation, driver of enterprise-wide collaboration and provider of more sophisticated, brand-differentiating technology products and services, according to PriceWaterhouseCoopers.

Many financial services companies that restructured their IT departments to provide standardized technology services on a supply and demand basis have not realized the cost controlling benefits they hoped for, according to latest issue of PricewaterhouseCoopers’ Financial Services Technology Journal.

CIOs are now looking to reposition IT as a hub of innovation, driver of enterprise-wide collaboration and provider of more sophisticated, brand-differentiating technology products and services, PwC said.

To control costs and offer greater flexibility to business lines, some financial services CIOs recast their organizations to operate as a technology services provider over the past several years. The intent was to help IT better manage increasingly complex responsibilities, reduce the cost of operations through economies of scale and benefit businesses by offering access to a simplified set of standardized services at the lowest possible cost.

According to PricewaterhouseCoopers, the unintended consequence of this IT business model is that it has limited the ability of chief information officers (CIO) to be strategic business partners and diverted attention of the IT organization away from high value contributions.

“When the CIO is perceived to be yet another external services provider, he or she is not positioned to influence the business vision and is left to play a reactive role, often mired in a conflict-ridden game of maintenance, margins and cost reductions,” said Julien Courbe, director of PricewaterhouseCoopers’ Financial Services CIO Advisory practice and executive editor of the Financial Services Technology Journal.

“The IT organization needs to resist the urge of remaining 'business as usual' and refocus its energy and resources on being effective, innovative and strategic business partners embedded within the business units they support.”

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

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