Digital Business Transformation with SMA Technologies’ Ryan Dimick

Hello and welcome to the latest edition of Digital CXO Leadership series. I'm your host, Mike Bazar today with Ryan Dimick, who's chief product officer for SMA Technologies, and we're talking about the need to consolidate your platforms if you wanna drive digital transformation in the financial services industry. Ryan, welcome to show.

Thanks for having me. We've been talking about the need to consolidate platforms for as long as I can remember, and yet the amount of technical debt that organizations have continues to increase. Why is this becoming a more pressing issue in the financial services sector?

Yeah, so, uh, when I think about the financial industry at large, I, I think there are so many new products and offerings and, uh, then by nature also opportunity for optimizing or efficiency or, or modernization of kind of your whole tech ecosystem. It just continues to spiral in complexity and I think it really, really is inefficient. And, uh, you know, I think efficiency and consistency are two things that are probably pretty sorely needed by today's financial institutions.

And really to me, I, that is what is driving the, the biggest need here for some form of change and, and ideally consolidation of, of your vendor stack. The thing about the financial services sector is they tend to have a significant amount of money, which they are willing to spend on it. Um, as a result, they have one plus of almost everything from mainframes to the latest and greatest Kubernetes clusters.

Is there a methodology or a method to the madness for consolidation? Is there something I should be looking at in terms of my workloads to determine where they might run more effectively? Yeah, so I do think a unique challenge here is, uh, both, uh, a, the n plus one, but also the diversity of maturity of tech.

So you had sort of called out mainframe, uh, but also Kubernetes and, and to me it really comes down to risk. And so I prefer, obviously to start with highest risk items first, but risk can be a couple of things. I think risk can be, hey, this is a, a ticking time bomb and we may or may not struggle to support this in the future, or it's not really plugging in or integrating with, you know, our broader stack.

Uh, but also it could be how core critical to your operations it is and maybe having some risk aversion if it truly is central. So the way I like to think about this is what is, uh, both highest risk from maintenance, so ability to operate this going forward, but then also, you know, if inevitably things don't go perfectly smooth as often they do not, what impact would that have on your core business? And sort of trying to strike that line of, uh, having something that is hard to operate, but also not the very center of your business being where you would start Digital CXOs of course, are trying to drive innovation or sometimes just optimization depending on what the order of the day is.

But, um, to your point, there are a lot of these platforms in each one of those as a touch point, and if I wanna build something, I got more and more integration. So is complexity become essentially the enemy of digital innovation? Yeah, uh, absolutely.

I think so. And I, I think what used to be the case was, hey, you wanted to just integrate to maybe the endpoint of your ultimately products or services you're offering, offering to your customers. Now it's almost like you need to integrate the tech stack amongst itself.

And so pretty quickly this exponentially gets out of control here. And, uh, I do think the tech ecosystem and budget will likely struggle to keep up in the future if we keep going on the path that we are right now. So a hundred percent simplification consolidation, and again, I, for me it's consistency and integrating into fewer things, but in a more consistent and ideally deeper or better way is top priority for these institutions.

Do you think with the rise of AI that a lot of these issues will finally be forced because suddenly, um, having the data in the right place matters and being able to analyze it and expose it to an l LM of some kind, um, is that gonna require organizations to rethink all of their platform strategy? Yeah, absolutely. Uh, uh, for me, AI is enabled by having good and clean data and, and most importantly data with, uh, that you know, where to go to get it.

And with sort of this tech sprawl, this vendor sprawl, that does become quite a problem. And, and again, to me this comes down to, uh, inconsistent or perhaps like nuanced different data across all of these systems due to the way they integrate or the way data traverses through the ecosystem. And so really having a more cohesive strategy for what is the source of truth and then how does that sort of populate out, uh, outward from that source of truth across your ecosystem, I think is critically important with AI and really making your data actionable with AI and, and sort of knowing where it lives and where it needs to go.

One of the challenges that the financial services sector seems to have when it does come to digital processes is everything kind of needs to move in real time and people wanna know well to the second how much money they have and whether it's just me as a consumer or some sort of a library trade that somebody's trying to make, um, as opposed to a lot of other verticals we're, we're still kind of dependent upon batch oriented processing and you know, if we're outta sync for 24 hours, well okay, that's acceptable level of, uh, impact on the business. Do you think this whole push to real time kinda seems to me the laws of physics are such that every time I add a new platform, I just make it harder and harder to make that real time transaction? Yeah, again, I think spot on here.

Uh, so this is near and dear to my heart. I work, uh, at an automation software company and so doing both batch and realtime automation is really what I do for a living. I do think, again, with like real-time automation, I don't wanna say it has to be a hub and spoke model, but I do think back to your earlier question being very intentional on your platform strategy.

So again, what is the source of truth and then what are the expected data flows outward from there is absolutely critical because, uh, it's, you know, again, it pretty quickly gets away I think in an exponential nature if you're trying to push real-time data across all of these distributed services or you know, databases or what have you that really store customer or member data, uh, for your institution. And so I do think just broadly having a strategy for, you know, is it my core processing system? Is it a CRM?

What is the source of truth? And then again, like what are the layers or the rings outward from that that data has to flow. If you don't have that, if you don't have consistency in a real strategy, perhaps even a mastermind for how data's gonna flow, uh, this is something where, you know, I think you can pretty easily see the scenario that we've all heard about where I just got a mortgage and you know, now I'm getting marketed about, Hey, have you considered having a home loan?

Uh, even though I just signed up through you. And so, you know, this is a pretty common scenario. We hear it a lot and I do think it's one that institutions are prone to have if they're not really giving thought to this and sort of how to manage this tech sprawl.

Speaking of tech sprawl and the, the technical debt that goes with that, um, a lot of the applications that are running today are monolithic and we've seen the rise of microservices based applications. Uh, it's not quite clear when I should use microservices versus when I should rely on monoliths. It doesn't look like one supersedes the other as much as it is trying to figure out how these things coexist.

Yeah. Uh, so again, this is something that's near and dear to my heart. I do think microservices for a tech guy is extremely exciting.

In general though, what I would say is it can pretty quickly complicate your tech stack and or your broader ecosystem. My general philosophy, the way I like to think about this is use monolithic until you can't or maybe until you shouldn't anymore. And at that point, uh, you would know that maybe you need that if certain areas of your tech stack or your applications, your products can't scale.

And so rather than having to scale the whole thing or the complexity of adding scale to a big monolithic app, maybe it makes sense to spin out some smaller, you know, payment processor oriented service rather than the entire monolithic application. In general, though I'm gonna advocate for keep it simple, uh, and really, you know, monolithic apps have gotten a bit of a bad rap, but uh, they do serve a purpose and really the biggest purpose can be simplifying your tech ecosystem to not have sprawl, which microservices really can enable. We've chatted about the tech that drives a lot of these digital transformation issues, however, the folks that write the check for these things don't always have a deep technical background.

So how do the technical folks have a conversation with the digital folks about, um, these challenges and these issues in a way they can comprehend? Yeah, great question. For me, it all comes back to quantifying business impact.

And so again, being a guy that builds tech for a living, you know, we think of this as tech debt and how it limits options or agility into the future. And so where I to work at a financial institution, the job or the the path that I would take would be to try to quantify impact that that lack of agility would have in terms of ability to meet customers needs and or their future needs. And so, hey, if we continue down this path, then it's gonna be harder for me to do X, Y, Z or move data between these systems, have some form of consi data consistency between these systems, which on the other side is gonna then result in, you know, poor customer experience or longer wait times, inaccurate data, our inability to run personalized marketing campaigns, all of those things that you hear about.

But it's really translating the woes of technology into the customer or member experience that is most relevant to your institution. And so for any technical leader, uh, that's, you know, the, the path that I take internally here at SMA but also that would work at an institution is, hey, this is tech. It's complex, you don't need to know it.

Here's what happens to me though in this scenario and here's what it does to my ability to meet the needs of the business in the future. And this plays out a, in a weird way in the financial services sector. 'cause what we've seen over the last few years is a whole bunch of startups who are in the FinTech space and they launch an app that they could build easily and quickly, mainly partially, arguably 'cause they didn't have a lot of data to worry about.

And then there's the big incumbent competitors who have massive amounts of data and all these systems that you talk about and you'd almost set your watch by it, you know, after two or three years the large company gets annoyed enough to buy the small company and tries to roll it up into its organization and adds yet more data and yet another application to integrate. So, um, is this just the nature of the thing? Is this a perpetual cycle we're in or is there a way to kind of break this like, Yeah, so, uh, I think in that scenario, which very common and I I do think we're likely to see that continuing into the future, it's really figuring out where are the platforms.

And so if that were to happen, say how are folks maybe gobbling up some of those smaller fintechs or, you know, new to market companies, but making it more a part of like a cohesive strategy or experience, again to simplify your tech stack rather than buying all of those point solutions or individual apps, how could we instead think about having a, you know, more singular consistent platform or technology that really spans many of those to simplify a number of things, uh, up to it, including, you know, just how to manage a number of vendors, but also again, like systems that you core business apps need to integrate into. So I do think, um, likely to keep happening and the advice that I would give to the industry is focus on those, uh, vendors that are looking to simplify your life and your tech stack, your application and your ecosystem. Um, because I do think we are likely to see apps continue to get rolled up into the vigor players.

Did we get into a trap where we conclude that the cost of modernizing the legacy app is too high, so we continue to maintain it without realizing that the total cost of maintaining that application and the platform in terms of its impact on agility to the number of people required to support it, um, the math might've been better to modernize it or replace it. Yeah, for sure. I do think in many of these cases there is a, uh, it requires a big appetite.

So going back to some of our earlier examples around things like mainframes, mainframes still exist today for a reason, and my belief on that reason is mostly just the criticality of what they're running and the risk of getting off of them. The problem is the longer you wait, the more debt you accumulate and this really never gets easier. So unless somebody comes and really disrupts this market and finds an easy path off of not just mainframes, but perhaps any legacy tech where we do tend to get trapped because that starting cost is so high, it's only going to accumulate more and more debt, right?

That's part of the, the reason we call it tech debt and essentially only further, uh, compounds the math problem that we have for how do we get out of this and how do we have more options in the future? So there's never a better time than now I do think you need to be intelligent about it, but these problems aren't gonna go away and you know, hey look, I still employ, uh, the odd cobalt developer and they're hard to find now, and you know, it's only going to get harder to find. And so how do we encourage modernizing our ecosystem in the face of that high starting cost?

Because again, it's only going to get harder and harder, not easier as time goes on. Right? Folks, you heard it here.

Hey, be careful what you use for platforms because you, they don't go away or they, well, they might if you put some effort into it, but they tend to stick around for a long time and you have to figure out how to integrate them and well, that kinda impedes digital transformation in ways that we don't always think about. Hey Ryan, thanks for being on the show. Yeah, thanks for having me, Mike.

All right. And thank you all for watching the latest edition of Digital CXO Leadership series. You can find this episode and others on our website.

We invite you to check 'em all out. Until then, we'll see you next time.