Patty Watson, CIO and Senior EVP, TSYS, is pulling technology teams across the enterprise together to streamline IT delivery for customers. Here she talks Agile, the value of “No Ops” teams, and why the API platform is key to a successful digital transformation.
Patty, what's happening in the payment solutions industry? And what's changing from an IT standpoint?
Well, interestingly enough, I think the two questions tie together. The biggest change in payments is what constitutes a payment. We, as a payment company, have to be thinking about not just how payments have been done historically or how they're done today, but how they will be done in the future. How do we make sure that the technology we're building aligns to any possible payment-type that surfaces in the next two to five to 10 years?
What's driving a lot of this change is really a focus on the customer and the customer experience. It’s about making it easier for the customer to do business with us through a variety of channels and mediums. Whether it's a consumer, a merchant, or a financial institution (at TSYS, we have all three as our customers), it's about providing the data and analytics they need to be able to run their business.
So, you have the external customers that your company serves but you also have your own customers within the enterprise. How are you adapting to better serve them?
One of the things we’re doing is technology business management (TBM), and better serving them is actually one of the reasons we embraced TBM and Apptio because it helps me with my relationship with those internal customers.
When I arrived at TSYS, we didn’t have cost transparency across all of our segments. What we've done over the past couple of years is enable our team to tell our internal business partners how much it costs to run an application, how much we spend to run it on a day-to-day basis, and how much we are investing in it. I can tell you, once we were able to do that, there were lots of surprises.
When you combine that with the profitability side, you get an interesting piece of information that helps internal customers run their business better because they have a view into application costs day to day and the cost to make changes.
Cost transparency gave us a granular view that we did not have before. I knew at a high-level what the costs were. But you need a tool like Apptio to break it down, so we know how much we spend for day-to-day production support on labor to our hardware cost and how much our circuit costs are. We did not have that level of detail before and the information we have today is on a much more granular level than what we’ve had previously.
What was the gap that you had to bridge in order to provide a better customer experience and reduce friction that customers experience in your marketplace?
When I arrived, technology was actually in the business segments. So you had multiple technology teams reporting to business people and no one was talking to one another about what was being done in another line of business.
What we've done over the past couple of years is pull technology together, collaborating across segments to better understand what's being done and to prevent us from reinventing the wheel. Before that, we had separate lines of business within a segment doing the same thing. By pulling all technology together, we better understand our legacy technology and better understand the business.
The next thing we really focused on was where we could help our customers be successful. In each of our segments, the answer is a little bit different.
Our issuing business, which is where the company started, is based on mainframe technology that’s monolithic and closed in terms of architecture. As the industry has moved more toward open platforms and commodity hardware architectures, closed mainframe systems aren’t as viable. They typically can’t compete with the integration, agility, and flexibility that you find with open system architectures. And since our customers rely on us as an enabler of their speed to market, we have to focus on building systems that aren’t limiting and allow us, and them, to move fast.
We’ve developed a digital transformation strategy that encompasses three primary techniques we’re using to move systems from current state to our future state:
- Wrap—Leveraging APIs to wrap certain backend systems that in most cases are highly proprietary and monolithic. This makes it simpler to integrate from a variety of solutions.
- Port—Porting existing technology to more modern technology stacks that are cloud friendly and provide us with more options for hosting. This involves the use of technologies like containers and orchestration to enable more consistency in how we operate the platforms, even in areas where there may be different technologies in play.
- Strangle—Isolating monolithic technology that isn’t in keeping with our long-term strategy and developing techniques to periodically replace parts of it over time. Typically we’ve wrapped these platforms in an API so that customers using them aren’t impacted as we change and migrate the logic in the backend. A term used for this is “strangling”, which sounds terrifying, but it’s actually a good thing in this context.
In the old way of developing technology, you built an application and that application had certain functions and services. If a customer used application A, they could perform these specific things. But that's not how technology is delivered today. That's not what customers want and need. They want the old Burger King, “have it your way” version. So, how do we deliver the functions that they need the way they need them?
A big part of our digital transformation has been about our Open API platform and TSYS Developers. Our clients love it because the API gives them a simple way to tap into a library of capabilities that took us more than 35 years to build into our financial ecosystem. They don’t have to understand special codes or industry nomenclature to be productive and begin building mobile, web and other types of apps with the tools and APIs we provide for them.
For customers who might not have the in-house expertise to build an app, we offer white-labeled solutions the customer can brand according to their marketing guidelines. That’s what our digital platform is all about—providing multiple options to meet the changing needs of our clients and their customers.
Another big piece of our digital transformation has been the creation of a new data and analytics platform. The backbone of the platform is a data lake architecture that enables us to ingest data from our legacy systems, and index, tokenize, and expose it to other solutions in a convenient way. Again we’re leveraging APIs and also event streaming to allow clients to subscribe to lifecycle events that are critical to their business.
One of the big issues that our customers deal with, for example, is fraud, so they want to be able to see how many times someone called the call center, or how many times someone tried to log in. We can provide them with a continuous stream of events they can tie into their overall fraud management system. We also enable the customer to apply rules and routing logic to these events to simplify how they’re consumed and processed by downstream solutions.
Not only do you have legacy systems that you have to overcome with these new technologies and new ways of delivering customer-focused solutions, but your customers, I would imagine, are also in heavy legacy environments. How does that impact what you deliver?
When you think about the way we delivered technology in the past, it was highly dependent on industry norms and financial cycles. This implied heavy use of batch processing and very proprietary file formats. And every customer had their own flavor of these formats, which only complicated the support infrastructure we had to put around it, and raised our cost.
The problem isn’t convincing customers to move away from these kinds of mechanisms. It’s more that the industry itself is heavily cycle-based and has these established ways of doing things that are difficult for everyone to overcome without a united effort across banks, processors, government, merchants, etc.
In terms of custom data and integration formats, when we're trying to drive a change on our platforms or our clients are trying to drive a change on theirs, we run into integration problems. Custom formats and protocols mean more cost and overhead associated with every change. This is why our Open API platform is so important to us—it creates a highly standardized, consistent language between us and our customers. And since all of us speak the same language, everyone in the ecosystem realizes the benefit immediately, without having to wait for custom changes to be made.
You have three distinct customer audiences. What can you tell me about your strategy in terms of balancing B2C versus B2B technologies?
We play in both worlds. We have a great consumer-facing product and business segment—Netspend—which has a recognized consumer brand in the Prepaid Card space. Our presence in that space gives us the unique opportunity to offer products to segments of the population that may not have access to traditional bank products. We want to continue that focus because of the customers' lives that we’re positively impacting every day.
On the other hand, in our issuing and merchant segments, we have a strong B2B presence. In fact years ago, our corporate motto was “the action behind the transaction,” which really highlighted our expertise as a B2B enabler. Today we serve some of the largest and most dynamic clients around the globe. These include both traditional brick and mortar banks and merchants, as well as some of the leading digital companies who are driving the new economy.
Are you currently exploring and/or incorporating new technologies at TSYS?
We’re heavily investing in new technology across our three segments. From an application infrastructure perspective, we’re placing major emphasis on technologies like cloud orchestration, microservices, and containerization to create an underlying service fabric that all of our future systems will leverage.
We’re also leveraging machine learning in areas like authorization and origination to significantly reduce our client’s fraud risk. We’ve done a lot of work in the past 18 months with data management and are leveraging emerging technologies like Hadoop, HBase, and a variety of targeted NoSQL platforms to scale, manage, and expose our data in new ways for our clients. This includes investment in new analytics platforms that will transform the way our clients manage customer and account portfolios.
Are you using Agile and DevOps to get there?
We have some teams that are Agile, we have some teams that are DevOps, and we have one team that’s very progressive and arguably “No Ops.” They are our most advanced team in the company and we leverage them on many of our newest technology and product initiatives.
What does that mean, “No Ops”?
It’s basically changing up the way the technology organization functions. In the past, you would have an infrastructure team that was responsible for racking, stacking, and supporting all of the servers, the network, telephony, etc. And then you had a team of people that did the software development.
What we're seeing is that with the move to cloud, the need for this large infrastructure organization to rack, stack, and support servers has changed. More of the things that were done in infrastructure are now done through software. And so, in our most advanced development software engineering teams, we've combined our infrastructure and our software engineering skill sets onto one team. We've automated a lot of the functions to provision virtual instances, moving code and applications between environments to spin up new instances of applications. It's a complete shift in how technology and application lifecycles are managed.
In this transformation, the biggest challenge is around the mindset shift that people have to have as they're transforming an organization from a legacy way of doing things into a new, more cloud-based, collaborative, DevOps way. Rather than the traditional, “I run infrastructure,” and “I run software,” and “I run InfoSec,” it's a much more collaborative mindset change for people. That’s probably the most difficult part of this transformation.
It doesn't surprise me to hear you say that. Transformation success often comes down to the culture of IT and how adaptable and agile teams can be in their work.
Yes, and I have to say, we are a very high-tenured organization, especially in our issuing business. But I am really proud of how many of our team members have bought into and embraced this change. It's not easy, because you're asking them to not only learn new technologies but also to do things in a very different way. We've had a tremendous amount of success in the last 12 months as we’ve delivered new products to our customers and it's because our team members have done such a great job with this change.
Great teams come from great leadership. What do you feel is the most interesting thing about the IT leadership role today? What makes the role aspirational for others in the career track?
The most interesting thing about the role today is the impact you have on the customer. To me, it’s all about the customer experience and how you can make a difference for the end user. It’s about how we help our customers grow their business, make their business more effective, and ultimately how you help impact the cardholder experience, all while making the customer experience delightful and seamless.
Technology is imperative, no matter what industry you’re in. As a CIO, you have the opportunity to make an impact because technology is such a big part of everybody’s lives today.
Who has inspired you the most? Why?
The first person who comes to mind is my dad, who really was my first leadership role model. He taught me about leading people and the importance of having people want to follow you, versus having to follow you.
Over the course of my career, I think of Barbara Desoer, who is currently the CEO of Citibank, N.A. When I worked at Bank of America, she was the head of technology and operations. Simply put, Barbara was an amazing role model for me. She was an incredibility successful executive, but also a devoted mother and wife.
I was a technology executive when I first met Barbara, who was very focused on talent development at the time. When she came to Dallas (where I was based), she took the time to meet with me and we ended up spending two hours talking over breakfast. At the time, there were more than 80,000 people in our organization, and it was just the two of us. We talked about my long-term goals within the bank, and interestingly enough, within a year of our initial conversation, I was promoted to the next level.
She took a keen interest in me, and that is something I’ve tried to replicate with colleagues over the years. Looking back, Barbara’s advice and the way she lived her life helped me be successful at home and at work.
»Read next on Emerge: More than a facelift, digital transformation revamps the IT value chain, an interview with Anil Cheriyan, former CIO at SunTrust