The big freeze

Mohammad Al Khatib, 2007 CIO of the year, talks to ACN about his current trading system upgrade and what he believes are the failings of regional IT leadership

Tags: Amman Stock ExchangeEconomic crisisJordan
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The big freeze
By  Imthishan Giado Published  June 20, 2009 Arabian Computer News Logo

How has the Amman Stock Exchange (ASE) been affected by the economic situation?
The market has gone down since the beginning of the crisis, just like every other market. In that respect, we have been less affected than the regional or international market.

It's not completely isolated from the rest of the world. We have a huge non-Jordanian investment. Non-Jordanians own 55% of the market. Most of them are Arab investors, so whatever happens in the region will eventually affect Jordan. With respect to IT projects, the ones that we do - at least the big ones - span from nine to 16 months. These kinds of projects are not easy to put on hold or stop or postpone.

IT should be an enabler of growth, not a hindrance. When a recovery or a boom happens, then there will be increased demand on our trading systems, our network, on our infrastructure and you have to be ready. It's not a matter of choice - we cannot stop the IT projects that we have.

How far into the future does your planning extend?
It depends on the area we're looking at. Usually it's from two to five years. You don't cut out items from the budget. It just happens that in a downturn like this, you naturally get better prices.

Have vendors been more accommodating in terms of price since the crisis begun?
The vendors have been more desperate for projects. You have a choice - there are plentiful vendors for everything. They want to work so the prices are better.

Have regional CIOs taken the stance of slashing and burning projects?
I've seen some banks putting projects on hold. I haven't seen anybody cancel projects - they postpone them. The reasons, they say, are that these projects are needed for growth and as growth is not expected, then there's no point going ahead with the projects.

Have there been changes to HR policy at the ASE?
For us, it's business as normal. Nothing's changed. We have a very low turnover rate. It's almost 12 years and we haven't lost a single person. We're not hiring enormously or spending more than we should. It's business as normal.

What project is the ASE IT team currently working on?
It's a new version of the trading system. The IT company of NYSE is called NYSE technology, that's the vendor of our trading system.

What were the reasons behind the upgrade?
It's not just capacity. These systems evolve with time and you get more features with the new software, plus you get better performance measures like lower latency, more users, extra capacity. More importantly, we are able to accommodate more of our legislation and internal procedures. We're able to implement it through the system better than before.

If you go back 10 years, the systems were limited. In many cases, you actually change your procedures to fit the system. Nowadays, you change the system to find the procedures, which is a big advantage for us.

The project has taken a little bit more time than we wanted to because we did some changes to the requirements. The testing takes time. We're very careful with our testing, even if that means delaying the project. We do internal testing, then do testing with the depository, capital markets, institutions, and then we do testing with the members - which is 70 brokers you're talking about.

If there is anything that we're worried about, we repeat the whole testing cycle again. The whole testing cycle takes at least a month and a half. Every time there is a small thing, we redo the whole testing cycle. That's what consumes time, but this is the nature of the business because a trading system is a very serious thing. You have to go through this rigorous kind of testing and that's why you don't change your trading system every year.

The regional IT market has traditionally leaned towards upgrades and refinement, rather than innovation. How can CIOs move their departments in the latter direction?
It's a combination of things. In Jordan, the resources are always carefully controlled. Money is not cheap where I come from, it's very dear. Everything is optimised and optimisation takes time, takes effort and you need expertise. It's much easier just to pay the money.

If you're in a situation where your financial resources are unlimited, it's much easier to just pay the money. When the money is squeezed, you start looking for optimisation, fine-tuning and all of that.

As it happens, we've always been in that stage. Everything has to be milked down to the last drop. That's the rule that we work with. It is heavily dependent on how much influence within the organisation the CIO has. This is very important because within any organisation - especially in the private sector - it is always a struggle between the people who are giving the budget and the people who need it.

The CIO knows that he needs to spend, what systems he needs to upgrade and expand and he knows how critical it is. Then there is a person who is trying to block out the money because it is his job to control expenses, like the CFO. If you're in a situation where the CIO is weak within the organisation and not weak technically but weak politically, then he is at the mercy of the CFO.

The CIO needs to be politically savvy to be able to talk to other departments and to senior management. I see now in the downturn, a lot of companies having their IT budgets slashed.

IT projects need a lot of money and if the CIO is weak, money will be blocked. Unintentionally, the company might suffer, but that's the nature of things. It really makes a big difference whether the CIO has proven his presence and influence within the company. It really depends on the individual.

Some people just don't have the charisma or the capability. Some people have the technical capability but they are not able to deal on the political level with other departments, counterparts and senior management. That's why it is so hard to find good CIOs - because the CIO needs to be technically competent to be able to control his operation and gain the respect of the people working under him.

At the same time, the CIO needs to be politically savvy to be able to talk to other departments and to senior management. I see now in the downturn, a lot of companies having their IT budgets slashed - and it shouldn't, because these projects take a lot of time.

There will be a turnaround. I don't know when. Maybe the second half of this year, maybe next year, maybe even later, we don't know. But when the turnaround happens, those who have survived, who are ready and who have the capacity will be the ones who will take the business. If you're not ready, you're going to miss that opportunity. This comes once every 10 years and if you've missed it, you've missed it.

Once a CIO chooses to leave his or her organisation, where does he or she go next?
Typically, there are two main routes that that you can take as a CIO. You can either move up within the company. If you've proved yourself as CIO, you have a large number of employees, have a big budget, you need to understand both IT and the business.

You're a manager, more or less. If you've been in the industry long enough, you know it as well as any other person. One possibility is to move within the company and that will take you a little bit away from IT. It does happen a lot in exchanges. In many stock exchanges around the world, the second man is the IT man.

The other option is to move into consultancy. You can always bring people to do the physical work. I've seen 22-year olds excel in fields that I haven't been personally able to understand. This is the nature of things. When these people are my age, they will find out that there are 22 year olds who are able to tackle things they can't understand.

It's the ability to do strategic planning for a big organisation, decide a road path for growth, do a five year plan - these kinds of things, you need experience, need to have done it before, been in this type of organisation to advise.

But we also come back to the fact that it's not easy to be a consultant. A consultant needs to have many other skills, presentation skills, writing skills, a lot of these things.

Do CIOs have exit strategies in mind, or do they fail to do anything about it till it's forced on them?
The funny thing is, I see many people reach the position of CIO in their mid-30s. They stay in it until they retire. I know a few CIOs who are in their 50s, I know one CIO who's really good and he's almost 60. I see many CIOs stuck in the position for the rest of their career. Their management are interesting them with managing the IT department and want them to stay there. They will pay them more but they want them to stay there because that's where they want them.

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