In the face of drought, famine, civil unrest and other devastation, can technology make a dent in the needs of developing nations today? I believe it can.

A report published in 2006 by the U.K. Government’s Parliamentary Office of Science & Technology concluded that:

Information and communication technology (ICT) can help developing countries tackle a wide range of health, social and economic problems. By improving access to information and by enabling communication, ICT can play a role in reaching Millennium Development Goals such as the elimination of extreme poverty, combating serious disease, and achieving universal primary education and gender equality

And a new report issued this year by the United Nations says that “ICT offers the promise of fundamentally changing the lives of much of the world’s population. ICT affects many of the processes of business and government, how individuals live, work and interact, and the quality of the natural and built environment.”

From 2006 through 2010, I was fortunate to travel and work with microfinance organizations based in Central and South America, various parts of Africa, the Middle East, former Soviet republics, Afghanistan and India. During that period, I served as CIO for a global microfinance organization, FINCA International, learning firsthand the technology problems — and also the benefits — of making loans to developing nations.

Microfinance institutions (MFIs) and the nations they serve clearly face economic and political problems, as well as corruption, lack of infrastructure (e.g., passable roads, electricity) and last, but not least, ICT. Specifically, the four most critical ICT-related challenges for MFIs in developing countries are:

• Unreliable electricity
• Lack of Internet connectivity
• Lack of access to good, experienced IT resources
• Lack of access to robust and scalable core banking software 

Some people will correctly note that in the last couple of years, Africa and India have seen steady improvements in telecommunications capability and that cell phones have proliferated. From only 16 million subscribers in 2000, Africa now boasts 500 million cell phone subscribers in 2010, according to telecommunications firm Ericsson. At the same time, however, by the end of 2010, the percentage of Internet users in Africa had reached only 9.6 percent, far behind both the world average (30%) and the developing country average (21%).)

Overall, there are still too many countries where the rate of change has been painfully slow, and completing simple tasks can be very time consuming. I believe that it would be economically and politically beneficial if telecommunications vendors could help improve Internet connectivity whether by using Wi-Max, general packet radio service (GPRS), satellite or other technologies. In the meantime, MFIs perform a valuable service in providing those at the bottom of the Pyramid (BOP) a means to stand on their own two feet.

The Technology Landscape

MFIs, however, usually have minuscule technology budgets and a typical in-country environment may feature:

• Two or three PCs that are several years old, plus printers, etc., at branch offices of microfinance organizations

• A LAN (local area network) is common at the headquarters (HQ) office, usually with no authentication capability; a LAN is not normally found in a branch office.

• Internet connectivity at HQ locations, but not in branch offices.

• HQ locations normally have an uninterruptible power supply (UPS) because street power is unreliable, but most branches do not.

Moreover, access to good, experienced IT staff is a huge challenge. Most organizations try to have, one knowledgeable IT person at the HQ location who can fix PCs and has a basic knowledge of networking. This challenge is somewhat reduced if the HQ is located in the country’s capital city. But usually, working knowledge of LANs, Active Directory, firewalls or SQL is rare, as is good support from IT vendors. If available, the cost may also be prohibitive.

Strengthening Software Models

For all of these reasons, most small- to midsize MFIs use homegrown financial-lending software or programs provided by a small “mom and pop” software factory. This approach works when the organization is small and has limited needs, but as the finance organization grows and demands increase for added functionality and support, the software struggles to scale up, and support suffers.

As CIO at FINCA International, I experienced the technology challenges faced by our operations in 21 countries. These included a lack of experienced staff and robust, scalable core banking software. I found that these problems also affected other MFIs, large and small.

Since leaving FINCA, my mission has been to bring affordable access to robust and scalable core banking software — for the microfinance sector — to nations in Latin  America, Africa and Asia. That’s why I helped form MicroPlanet Technologies Inc., a nonprofit organization that aims to address the technology-related challenges faced by MFIs globally.

We aim to improve the MFIs’ operational capabilities, enable growth through stronger controls, improve portfolio quality, and raise bottom-line impact by increasing both return on equity (ROE) and return on assets (ROA). We focus on the midsize to large MFIs, and we market a hybrid Software-as-a-Service (SaaS) offering. This service addresses the quirks of operating in an environment with unreliable Internet connectivity by using an off-site server, which enables the MFI to continue to operate even when connectivity to the hosted environment is down.

Our first client, Friendship Bridge, an MFI in Guatemala, now runs our SaaS solution from a hosted site in Denver, Colo. To support MFI clients in AfricaAsia, Data Center infrastructure will need to be hosted in the cloud through either London or Frankfurt to ensure favorable response times.  and

MicroPlanet Technologies has partnered with banking software provider Infrasoft Technologies for its core software platform, which is used both by regulated and nonregulated MFIs. With this platform, MFIs can focus their resources on growing and scaling their operations, and our company shoulders the burden of managing and servicing their technology needs.

Providing cloud-based software solutions is just one small step in addressing the huge needs of developing nations and those of the MFIs. However, I believe it is an important catalyst that will help to spur these MFIs to scale, grow and extend their reach, ultimately benefiting more poor people around the world.

Microfinance in itself is not a panacea for poverty, but when coupled with other efforts that help improve health and provide better access to clean drinking water, education and agriculture, it can make a huge difference.

Jiten Patel, Co-Founder, MicroPlanet Technologies Inc.

Jiten has spent many years in financial services and technology, including deep experience in the microfinance sector. He is now bringing a cloud-based SaaS offering to MFIs in Latin America, Africa, and Asia, as well as technology and operations consulting globally.

Prior to MicroPlanet, he was Chief Information Officer of FINCA International, a global microfinance organization operating in 21 countries. At FINCA, Jiten was successful in reorganizing the global IT infrastructure for local ownership of critical technology while simultaneously ensuring increased global efficiencies. Before that, he was CIO for a U.S.-based consumer finance subsidiary of Banco Popular, where he and his team helpt it grow its portfolio from $2 billion to $10 billion in four years. Jiten earned a degree in mathematics from the University of Liverpool, U.K.

Many executives talk about aligning IT and the business, and some actually collaborate on small projects or one-time efforts. Very few, however, work as closely together as do Jim Walker and the IT executives at recently created financial services giant, Morgan Stanley Smith Barney.

Corporate mergers and acquisitions can create huge headaches for all involved. And the merger of the two giant investment companies in June 2009 created the largest, global wealth-management brokerage in the world, with $283 billion in assets under management by the end of last year. That’s quite a headache! It necessitated “the largest integration effort” of two firms in the history of wealth management based on the number of accounts, assets and systems that need to be merged, according to Walker, COO for the Investment Strategy and Solutions Group, the wealth management arm of the new company. And a large part of the integration involves merging the IT systems to be used by 18,500 financial advisors in 42 countries, as well as about 6.8 million consumers worldwide.

Walker participated in a panel discussion about IT value at the MIT CIO Symposium in May, where he said that there is often "creative tension" between a CIO and the COO. At MSSB, he said, for better or worse, “We are joined at the hip."

After the panel, Walker told me that CIO Moira Kilcoyne has taken an active role in the corporate merger efforts, and now she and her team — including ISSG business unit IT director, Dan McGuire — continue to work in lockstep with Walker on the ongoing integration efforts. It’s clearly an example of business and IT teams working together daily; they also hold regular weekly meetings to assess progress, he said.

The two-year restructuring and system integration — which is about halfway complete — affects the entire business and is the highest priority for the new company, Walker said. He reports back to corporate COOs and other integration executives. MSSB combines Morgan Stanley’s Global Wealth Management Group with Citi's Smith Barney in the U.S., Quilter in the U.K., and Smith Barney Australia’s retail units.

Staying Focused, Looking Seamless

One of Walker’s roles is to ensure that the focus remains on the business value of IT systems and process automation — not on the technology itself. In such a huge endeavor, the end results have to be kept in mind and “the tangible value has to be demonstrated,” he said. Additionally, Walker advised other executives at the conference to stay focused on a project’s goals and not allow the projects to mushroom and distract them from the original plan. “Sometimes, it’s harder to stop doing things than to start them,” he said.

At MSSB, Walker also evaluates the business risks of IT decisions and serves as a liaison between IT and the rest of the business. “I can help get resources or I can say no … I have a track record with the business units,” he told me.

The biggest challenge? Making sure that the integration work done behind the scenes is seamless to end users and consumers, he said. “It’s a little like putting an old engine in a new car,” he said. “It has to run smoothly.” And a good part of his job is to make sure systems not only run smoothly but that headaches are kept to a minimum.

I hope to follow up with Walker and the IT team as the massive integration efforts wind down to see how well they’ve achieved their goals. At the same time, I’m sure that the partnership between business and IT will remain an ongoing relationship.

Jim Walker is Chief Operating Officer, ISS group, Morgan Stanley Smith Barney.
MSSB’s Investment Strategy and Solutions Group is the wealth management arm of Morgan Stanley. He works closely with business units in ISS and across the company in developing strategies, building relationships and managing risk. He is also responsible for investment research delivery and The Investment Group — the high net worth asset management business — as well as finance, legal technology and human resources.
Prior to this position, Walker was Director of Finance, Risk and Strategy for Global Wealth Management Investments at Citi. He also spent 20 years at Merrill Lynch as Chief Administrative Officer, Americas, for the Global Private Client business.
He holds an advanced degree from MIT’s Sloan school, where he was a Fellow and where he continues to lecture and teach.

Since June was the midpoint for calendar-year 2009 budgets, most CIOs are  continuing to redistribute their limited funds for the remainder of this year while also planning ahead for 2010.

There is still much cost-cutting taking place, and yet a new report issued by Computer Economics in late June, finds a surprising bright spot among the cost-cutting. Below is an excerpt from the Executive Summary, which you can find here.

Banking, Finance and Healthcare Show Increasing IT Spending

"While IT budget-cutting is increasing in most sectors of the [North American] economy, a few industries, such as embattled banking and finance organizations, are actually increasing their IT operational spending at the median this year, according to the 20th annual Computer Economics survey of IT spending and staffing metrics.

Overall, Computer Economics, an IT research and advisory firm, reports that most IT operating budgets are showing no growth over the prior year...and about 38% of companies are cutting their IT operational spending. Capital spending budgets are also flat at the median, with nearly half of all organizations reducing capital expenditures."

What is your experience? Let me know how your IT spending forecast is shaping up.