Wall Street CIOs Have A Vendor Management Problem

Wall Street CIOs know better than anyone how one little hiccup in the software production line can seriously impact competitive advantage. That advantage can be weeks, microseconds, or something in between. The race to build quickly sometimes forces software updates to be done on the fly, even while the market is trading. We all know Wall Street thrives on risk, but anyone in the IT industry also knows that patching production software is like trying to change a piston inside a racecar engine at 200 mph.

Increasing velocity, combined with the constant need for IT to reduce costs, means Wall Street CIOs are under extreme pressure. Much is being outsourced to low-cost locations, through either traditional sourcing or captive development centers. So making sure what’s being loaded into production won’t crash or corrupt the underlying architecture is harder than ever. We have some processes in place to handle proper testing for these systems, but most of us are severely underestimating our vendor management needs and in turn, are throwing money down the drain.

Wall Street CIOs have been relying on third-party vendors for application development and maintenance (ADM) for years to help increase throughput and reduce cost. However, management has limited visibility into software quality once it’s delivered, and whether vendors are making good on their promises.

The tendency is to rely on manual code reviews, combined with lots and lots of functional testing and service-level agreements that focus on application performance in production. However, these do little to tell IT executives if their money is being well spent, or if the final application is bringing undue risk into the business due to poor software quality.