research topics

Layer 1 in 2012: IT-Infrastructure: Service Systems in E-Finance

(Prof. Dr. Wolfgang König, Prof. Dr.-Ing. Ralf Steinmetz)


In this layer we focus on three major work streams:

Services Sourcing

Here, we analyze near- and offshore outsourcing relationships as well as new paradigms for service provisioning (e.g., Software-as-a-Service, Platform-as-a-Service, and Infrastructure-as-a-Service). In addition, potential infrastructures that support global sourcing strategies (e.g., Cloud Computing) are investigated. Financial services providers are increasingly outsourcing IT-related services to offshore and nearshore locations. However, aspired cost advantages do not materialize easily as global outsourcing is accompanied by unique challenges – for example additional costs to align cultural differences between the vendor and the customer – that can offset the expected benefits. Therefore, we examine the antecedents and the causal relationships for the outsourcing success. From a technical perspective, Cloud Computing exhibits the potential to support a global outsourcing environment (shared service offerings) with lower IT infrastructure costs, lower energy costs – which is of rapidly increasing importance – and an improved scalability to meet the quickly changing demands of the financial services industry. Secure cloud systems can provide a platform for real-time, market-wide transparency, accountability, and control for both major stakeholders: market participants and regulation authorities. To enable first-hand experiences, the Frankfurt Cloud was implemented in cooperation with E-Finance Lab partners as an infrastructure to investigate the effective management of – actually: federated – clouds and to examine the conditions to effectively use cloud services in varying application profiles which differ in the demands for compute power, storage space, and communication intensity. Based on this infrastructure, the business value of Cloud Computing will be analyzed.

Services Management

This research stream analyzes the management of services within organizations, focusing on Service-Oriented Architectures (SOA) which enable agile IT-supported business processes, i.e. workflows, by concatenating loosely coupled services. In order to compose workflows on the fly and to handle a large amount of concurrent workflow execution requests with a high quality of service, cost-efficient workflow optimization approaches have to be developed. Especially in the financial services industry, which exhibits a high percentage of batch processes, resilient performance is of great importance. Thus, the research focus in this stream is on the development and evaluation of algorithms and heuristics that ensure reliable workflow executions and avoid Service Level Agreement (SLA) violations due to arising overload. The flexible integration of external services across organizational boundaries also requires dedicated mechanisms in order to ensure the security of the participating systems and exchanged messages. Achieving and guaranteeing dedicated security goals, such as confidentiality, authentication, authorization, non-repudiation, integrity, and availability, is mandatory. Thus, a further research focus is on SOA security challenges in the financial services industry.

Decision Support Services

The overall objective of this research stream is to explore methods, principles, and technologies to support decision-making within financial services institutions. The Internet provides masses of structured and unstructured data in near real-time (e.g., twitter messages). Our research focuses on how to extract relevant information from Web sources (i.e., Web 2.0 platforms or channels). Therefore, appropriate methods and tools are applied to explore how market sensing capabilities, like financial forecasting and reputation monitoring, might be improved through the integration of this kind of data in the decisionmaking process.

Key Results

Layer 1 projects focus on creating, sourcing, composing, securing, and governing services and comprise the necessary alignment of financial business processes with IT resources. Our main results so far are based on extensive empirical research on outsourcing and IT value creation, as well as conceptual work and scientific simulation. The research results are documented in over 100 articles since 2003 at major international and national conferences (e.g., International Conference on Information Systems (ICIS), European Conference on Information Systems (ECIS), European Conference on Web Services (ECOWS), International Conference on Service Oriented Computing (ICSOC)) as well as renowned scientific journals (e.g., Management Information Systems Quarterly (MISQ), WIRTSCHAFTSINFORMATIK) and important industry journals (e.g., Die Bank). Some recent key results of layer 1 are:

Grid Computing and Cloud Computing

Grid Computing and Cloud Computing have gained considerable attention in the financial services industry due to, e.g., its potential to significantly decrease the time-to-market of new financial products as well as to facilitate a more effective and efficient assessment and simulation of risk exposure and asset allocation. So far, much research has focused on the technical challenges that have to be overcome in order to foster the widespread use of these technologies in the financial services industry. As a result of our collaborative research with several industry partners, we complemented prevalent technically-oriented research by providing an explanation of how Grid and Cloud Computing can generate business value in the core business processes of financial services providers and what kind of financial services providers succeed in doing so. In order to analyze the aforementioned research questions, we conducted for example a multi-national, survey-based field study among financial services providers with more than 1,000 employees (U.S., Canada, U.K., Germany, Netherlands, and France) and gathered over 300 complete responses. The data was analyzed using structural equation modeling (SEM). Our results indicate that Grid and Cloud Computing generate significant business value with regard to an increased effectiveness, efficiency, and flexibility of the analyzed asset management processes, new product development processes, and risk management processes. Among the key determinants that help firms to effectively assimilate Grid and Cloud technology is the capacity of the middle management as well as its close collaboration with the top management in order to ensure an improved business-IT alignment.

Service-oriented Architectures (SOA)

Recent research regarding SOA in particular in the highly dynamic financial services industry has revealed this paradigm as a possible solution for the adaptation to rapidly changing market demands, instituting both agility and flexibility with regard to business-IT alignment. We investigated the technical dependencies between business processes and their corresponding underlying services. Based on the concept of modeling business processes as a composition of services from various vendors, we focused on resulting security challenges that may prohibit an application of these services, especially in the context of financial institutions. We identified an attack class of particular danger in the field of cross-organizational, service-based collaboration because attackers can create detailed profiles of service consumers and providers by observing communication endpoints. Here, valuable and sensitive information about the underlying business processes of the communicating financial service providers can be inferred easily. Furthermore, we showed how typical countermeasures in this area affect important quality of service parameters.