HSBC: Hitting the tech reset button for an agile, digital future
Image: Alamy
Share on LinkedIn
Share

HSBC: Hitting the tech reset button for an agile, digital future

Jim Mortleman — July 2017
What does it take for a giant corporation to embrace transformational IT trends and attain business agility? HSBC’s global head of IT operations, Dave O’Brien, explains.

Dave O’Brien, HSBC’s global head of IT operations, says the bank’s 20,000-strong IT group has started to shift away from predominantly on-premise, monolithic, waterfall-based IT, and is quickly embracing the world of ‘cloud first,’ DevOps and agile delivery. And he has a heartening message for blue-chip digital laggards everywhere: “If we can do it, so can you.”

There’s no doubt it’s a good deal harder for a large corporation — weighed down with legacy systems and entrenched ways of doing things — to harness the transformational power of newer digital trends than it is for smaller, younger businesses. But as HSBC is proving, with clear focus and confident leadership it is perfectly possible for ‘elephants to learn to dance’ — even in a heavily regulated industry like financial services.

O’Brien says his experience has convinced him that corporate IT leaders seeking true digital transformation need to grasp three key areas: the realities of managing a hybrid IT estate; how to structure and staff the new IT department; and how to adapt often-challenging governance processes to fit the new model.
No escape from legacy

Like all traditional banks, HSBC has been storing and processing customer data on-premise since the dawn of information technology. Indeed, it is still running monolithic legacy applications (originally developed in the1980s) that are “still very much a part of current banking services,” says O’Brien. It is just not possible to migrate away from such a weight of legacy overnight.

“As you start that transition, your world becomes more complicated, not less,” he says. “Three years ago, I believed we’d be able to retire all our legacy and move everything to the cloud. But it quickly became obvious that in the short to medium term we were going to need to keep our legacy systems running while also investing in the cloud and digital technology.” And that means accepting the need for new operational structures, metrics and additional IT investment.

HSBC had to look closely at its operating model and adjust how it was running and managing IT services, says O’Brien. “We invested heavily in identifying, agreeing and documenting robust and measurable KPIs, because as you start to become a matrix organization, every functional area and team needs to have performance indicators you can hold them to — and which they feel responsible for delivering,” says O’Brien.

HSBC also reduced complexity by corralling the data generated by around 300 disparate services. “Aggregating those with an [operational intelligence] tool is key. We had to invest heavily in end-to-end service management tools and disciplines. We run all manner of monitoring tools, but previously they were all in siloes. To attain visibility over our estate, we’ve had to put a lot of resources into tailoring those tools so they work in a hybrid environment,” says O’Brien.
Commitment to DevOps

When HSBC began its transition two years ago, O’Brien says it initially made the mistake of delaying the move to DevOps with its meshing of software development and IT operations to empower agile delivery. “Really what we were doing at the start was just large-scale agile development. We kept telling ourselves we’d do the ops bit later, but we only started looking at that a few weeks before we went live,” he says.

While HSBC saw some benefits in switching from traditional waterfall software development approaches to agile methods, O’Brien says, we quickly realized true DevOps was where we wanted to be because that’s where you see the dramatic improvements in efficiency, productivity and service availability. The development bit — taking a service live — is easy. The difficult bit is keeping it going forever, and agile development in the cloud doesn’t change that.”

Having learned from that experience, last year HSBC hit the reset button and created a completely separate, ring-fenced organization within the company – HSBC Digital Services. “We wanted to empower the organization to move at pace and not be held back by the sludge that typically bogs down a large, global operation. It also allowed us to attract the best talent, including people and partners that wouldn’t previously have engaged an organization of our size and way of working,” says O’Brien.

Around 3,000 IT staff have now moved across to Digital Services, including O’Brien who now heads up service management for the new organization, with 24/7 responsibility for more than 300 online banking and mobile services in more than 40 countries. “If a digital product anywhere in the world breaks in the middle of the night, I’m the one who has to wake up our CIO, Darryl West,” he says.

The Digital Services business is comprised of multiple ‘two-pizza’ teams of around 10 people. Each has business and IT representation and, crucially, all the skills necessary to deliver and support the service end-to-end — operations staff, developers, testers and security practitioners.

Finding the right mix of individuals for these teams is particularly tricky, says O’Brien. “There is a global shortage of ops people who ‘get’ DevOps. They need to be able to multitask and make the jump into development and testing, while also influencing the team to think about operations — something that doesn’t always go down well with developers,” he says.

He also advises any organization thinking of doing DevOps to identify and work with others that have done it before. “Don’t reinvent the wheel. We’ve worked with [the UK government tax office] HMRC and other large financial institutions to understand their approaches to this, which has been invaluable,” he says.

Governance in the cloud

The large-scale switch to cloud services and DevOps presented some major challenges for HSBC’s corporate governance functions, says O’Brien. The organization has different teams responsible for legal and regulatory compliance, risk management and IT security governance, with robust processes that have evolved over many decades. “The people in these functions are typically very passionate about their governance processes. It can be difficult to get across that moving to the new model requires these disciplines and the way they’re governed to change radically,” he outlines.

While older on-premise software might have been tinkered with once a month or quarter, in the new environment updates to a service might happen daily or even hourly. So it’s important to work closely with governance teams, says O’Brien, to help them understand how processes must change. That doesn’t mean they should cut corners or abandon their rigor, it simply means adopting robust processes that don’t stifle agility, he adds.  

That is easier said than done. “For HSBC, getting governance right has probably been more challenging than transforming our technology and culture. What worked was having very open, honest exchanges with our various governance departments, taking time to explain how and why things had to change and encouraging them to reach out to their peers in the industry who’d already done this and bring in new people to help them along the journey,” he says.

Indeed, O’Brien says new blood was critical in most areas. “Throughout the cloud and DevOps journey, you need to bring in new partners, new people and new ways of working. If you don’t, you’ll quickly find you hit a brick wall,” he says.

O’Brien views the progress HSBC has made in such a short time with a mixture of relief and pride. “We now have 30 production services live in the cloud. And from quarterly releases that took us nine months — three months to design, three months to build and three months to implement — we are now doing daily and weekly releases,” he says.

But he’s under no illusions that the journey is over. “Customers’ appetite for our digital services is insatiable. Younger customers now expect to be able to manage all of their finances online, instantly. When applying for a financial product, they want a response within 20 seconds and the money to appear in their account immediately,” he says.

Even though he knows attaining such fluid, fast service is “still beyond the wildest dreams” of most banks today, he’s in no doubt those are the kinds of expectations HSBC’s transformation is seeking to fulfill.

• Dave O’Brien was speaking at TechXLR8 in London
First published July 2017
Share on LinkedIn
Share
I-CIO on Linkedin
    IMPORTANT:
    This website uses cookies to improve functionality. Continue to use the site as normal if you're happy with this or click here to find out more about cookies.