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IT Complexity: Model, Measure, Manage, and Master

Journal 34: Cass-Capco Institute Paper Series on Risk

Peter Leukert, Andreas Vollmer, Mat Small, Peter McEvoy

This paper describes a groundbreaking initiative underway by Germany-based Commerzbank and consulting firm Capco to develop a model for measuring IT complexity in the financial services industry. Importantly, individual financial institutions will be able to derive value from this new model through immediate application to their existing environment, while reaping long-term benefits through contribution to an industry database of results.

IT complexity: a new metric to evaluate the impact of change
What if complexity was a discreet, measurable metric rather than a discretionary, ambiguous term? Could a complexity metric reshape the decisions and activities of a CIO?

The information technology (IT) field is filled with quotes and anecdotes about organizations trying to contain, explain, and manage complexity. Often these words reflect an inclination to assume that if complexity exists, we should try to reduce it. As computer science pioneer Alan Perlis once said, “Fools ignore complexity. Pragmatists suffer it. Some can avoid it. Geniuses remove it.”

Pure genius, however, rarely exists. And with our world in a state of constant change, we need to master, not remove complexity. The reduction of complexity can reach diminishing returns, and the existence of complexity can allow greater business flexibility. Without a doubt, an appropriate level of complexity is necessary to maximize return. Leading financial institutions recognize the need to acknowledge, embrace, and harness complexity. They understand that the many layers and connected dependencies of today’s IT environments cannot be managed with simple heuristic, or experience-based, approaches alone, but instead require objective, quantifiable measurement of their origins and effects.

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