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Getting a handle on complexity

By , Network World
November 21, 2011 12:08 AM ET
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Network World - Everyone knows complexity is a foe of IT. But how bad is it, and how do you tell if your decisions are making it better or worse? Peter Leukert, CIO of Commerzbank, one of the largest banks in Germany, set to find out. Leukert, who runs the financial service giant's 3,800 member centralized IT group, built an IT Complexity Model to get a handle on the problem, and then turned to consulting firm Capco Partners to help get other financial service firms involved. Network World Editor in Chief John Dix recently caught up with Leukert and Mat Small, Partner with Capco in New York, for a briefing on the effort.

Peter, tell us about the complexity issues you face and what you're hoping to get out of the model you developed.

LEUKERT: In an environment like ours with more than a thousand business-relevant applications, you see complexity increasing, and every CIO I talk to shares the opinion that complexity is an issue. But it is very hard to get under control.

Why is it hard? Because it keeps creeping up on you and, compared to budget for example, you can't localize it. To manage budget, if I get 100 and I have five reports, each of them gets 20 and I deal with everyone who goes above 20, so you can localize the problem. With complexity, that doesn't work because it's the interaction of many, many efforts and you only feel the effect in the aggregate. Another reason it is hard is we cannot measure it. And that was really the guiding thought behind the model.

Complexity increases cost and decreases flexibility -- often in unforeseen ways -- and also tends to decrease stability. If you run IT, those are three of your most important KPIs. So all three are adversely affected by complexity.

We started building the model three years ago and collected a time series of data, but you can only learn so much from your own data. What I'm really interested in is benchmarking myself against other institutions. That's the main reason for us to join forces with Capco, to get other banks and financial institutions involved, because I believe that together if we get data from other institutions it will become a more valuable tool.

Mat, the first whitepaper about the complexity model that Capco co-authored with Commerzbank says the model is designed to help organizations "model, measure and master" complexity, but go a little deeper for us.

SMALL: It is a model based on inputs that generates a metric. All model inputs aren't equal so, as a company embraces the model, they would want to place different weightings on different inputs. Over the last many months we've been working with Commerzbank to refine the model and increase the number of inputs.

The model itself has been statistically validated by Professor Martin Mocker at MIT, so the math is very tested. And Capco and Commerzbank have been refining the inputs, refining definitions of inputs, continually validating that as we add or amend inputs.

Over the next year we're going to take data from other financial service organizations and start running the model against those inputs, producing metrics that are appropriate for those firms. And then over time we will have created a larger set of benchmark data so different organizations will be able to start accessing larger problem statements.

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