IT a commodity? Tell that to millions of banking customers

The IT troubles befalling UK banks will have huge financial implications, with lost customers, extra staff to cope with problems and compensation claims.  Richmond Systems looks at whether ‘IT as a commodity’ is damaging the industry.

Another week, another banking IT failure.  Nationwide and Natwest say they have restored customer services following a error which caused more than 700,000 customers to unwittingly make duplicate payments.  This continues a sad chain of problems started by the catastrophic IT collapse which caused misery for customers of RBS and the other banks under its umbrella.  

While the details of these failures will take sometime to unravel, there is an important lesson to consider relating to the way that businesses, and even the IT department itself, treat technology.

Since IT became ubiquitous and (relatively) reliable, consumers and businesses alike have begun taking it for granted.  A working PC and network connection is now seen as a commodity, like turning on a tap and expecting water to emerge.  

The problem with ‘commodities’ is that because we take them for granted, they become devalued in our minds.  Why should I pay so much for gas and electricity; they are necessities, not luxuries we expect to pay big money for.  This dynamic has, in some respects, been healthy for IT by diminishing its self-importance - the notion that IT holds the keys to a forbidden kingdom that only it can navigate has been shattered.  

However, the commodity mindset has also had a far more worrying effect.  It’s easy to understand the thought process of business leaders: if IT is so simple and straightforward to deliver, why are we paying so much for it?  Supplier X tells me it will deliver the same service as our incumbent, but for less money, so why wouldn’t we switch?

This devaluing of IT can lead to disaster - it is common knowledge that many outsourcing agreements have backfired in spectacular fashion.  Hopefully the events of the last few months will remind businesses that IT is not something that can be switched on/off and that the complex arrangement of agreements and processes must be respected and attended to on a regular basis.  

There are signs that the years of IT neglect could be ending, with research research from Gartner showing that IT spending is now the number one priority for business leaders.  Whether this is a reaction to the high profile banking IT failures or a collective realisation that the potential for technology to transform business practices is unclear, but if the end result is greater investment than we are all set to experience the benefits.