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Issues and Challenges in IT Enabled Business Transformation Programs

Issues and Challenges in IT Enabled Business Transformation Programs. Origins of Business Transformation. Pre 2000- Technology in Banking. Business High Margins No Competition Vanilla Products Low Technology Levels Very low levels of computer literacy Low Levels of Computerisation

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Issues and Challenges in IT Enabled Business Transformation Programs

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  1. Issues and Challenges in IT Enabled Business Transformation Programs

  2. Origins of Business Transformation

  3. Pre 2000- Technology in Banking • Business • High Margins • No Competition • Vanilla Products • Low Technology Levels • Very low levels of computer literacy • Low Levels of Computerisation • Resistance to Change • Replication of Manual Process • Regulator Driven • Computerisation only for Accounting Automation All other Sectors took to IT in a big way while Banking remained untouched by sweeping changes in Business Environment

  4. Pre-2000 Technology Scenario

  5. Evolution of Automation and Its Business Impact EDP Accounting / Back Office Focus Disabling Env • Pre-1960s • Manual Brs, Sellers Mkt • 1960s • Manual, URE, Electromechanical LPM • 1970-80 • Manual, LPM, ALPM • 1990 • Manual, ALPM, TBM • 2000 • Manual, ALPM, CBS • Power Shift from Sellers to Buyers • 2002- 2004 • End of EDP Era, CBS, TBM, Manual • Self Service Channels • RTGS and Payment Systems • Post 2005 • Foundations for Global Banking Branch Automation Networking, ATM Fee Income, Marketing Enabling Env IT as Business Enabler Disruptive Changes Consolidation

  6. Technology Hostile Technology Averse Technology Tolerant Technology Friendly Technology Enabled Technology Savvy Technology Driven 7 Layers of Technology Evolution in PSBs We are here

  7. Drivers of Change • Deregulation • Globalisation • Increased competition • Demanding customer • Convergence Complexity – Banking, Insurance, Broking, Commodities Trading • Complexity of Instruments / Products • Delivery Complexity - Multichannel • Compliance Complexity - Basel – II, SOX, SEC • Economic Complexity – WTO, M&A, Ownership Transformation During Disruptive Changes

  8. New Challenges • Dwindling Employee / Customer Loyalty • Plastic Money • Electronic Payments • Net Banking • New Identity Management Issues • Security Issues • Credit Boom • Emergence of Rural Market • Growing SME / Retail Credit • Cut Throat Competition • Increased Risk appetite of the customer

  9. Business Challenges - Competition • Customer Attrition • Talent Attrition • Business Attrition

  10. IT Challenges – Fragmented IT • Complexity • Machine Proliferation • Loss of Control • Architecture Management • Talent Management

  11. Challenges- Case of Four Blind Men and the Bank • IT – not understanding Business Requirements • Business – not understanding IT requirements and specifying their requirements IT terms, Ownership Issues, IT blamed for Business Failures • Consultant – not understanding ground realities • Customer – As a consequence , he turns blind eye to business and business collapses

  12. Business Failure • Lack of Technology • Lack of Knowledge to exploit Technology • Lack of Enabling Processes / Systems • Lack of Strategy Book of Instructions or Book of Impediments

  13. The New Wave

  14. Why it is called Transformation • End to End Deployment of IT • It affects all aspects of Business • Strategy • Technology • Process • People • Brand • Premises • Business Enhancement • Business Consolidation • Time to Change is short Change was always there , it is only the rate of change that is making us study it as a science

  15. Transformation Drivers • Business Strategy & Architecture • Technology Strategy & Architecture • Behavioral Strategy & Architecture ( HR)

  16. Change & Transformation

  17. Business Transformation – Final State - Global Bank • Corporate Centre Structure as per Global Best Practices • Customer Centric Organisation – LOBs • Service Delivery • Technology • Market / Brand Positioning • Global Culture

  18. Agenda for Transformation • Strategy – Global / National / Niche • Organisation Structure • Enterprise Business Architecture • Enterprise IT Architecture • Transformation Program • Performance Measurement What can be measured - gets done

  19. Transformation Pre-requisites • Top Management Ownership • Sponsor • Project Mode • Business Driven • Communication with key stake holders internal and external – Unions, Associations, Media, Analysts

  20. Business Issues – Take a Global View • Separate strategy from Business and IT • Focus on Building Agile and Adaptive Enterprise • View of an Integrated Connected Enterprise • Enabling BPR & Change Mgt Environment

  21. Reasons for Poor IT Absorption –Avoid IT / Business Disconnect • IT not participating in Business Strategy formulation • Business implementing IT without involving IT • IT by itself cannot provide value • Only business derives value from IT • IT is concerned only about performance of IT systems • Business Strategies , Goals , Policies must result in IT projects • IT Representation at Board Level

  22. Business Issues – Customer centricity • Customer, rather than account, focused business • New Lines of Business (Customer Segmentation) • Channel Management • Customer Relationship Management • Re-Brand • Marketing Focus

  23. Business Transformation – Technology • CBS • Internet Banking • Lending Automation • Cash Management • Global Treasury • GL • Risk Manager • ALM • HRIS • Multi-Channel Delivery • Networking • Security Infrastructure

  24. Business Transformation – Operations • Operational effectiveness and efficiency thru Technology • BPR • Shared Services • E-Strategy - Multi-Channel Delivery • Lending Process Automation • Performance Measurement • Telecommuting / Working

  25. Technology Challenges

  26. IT Issues • Customer Data - MCIF • Data Migration • Historical Data Storage / Retrieval • Record Management • Universal Teller • BCP at Branch / Bank Level • STP • Integrate HRIS • DWH / BI / CRM • Basel – II • Testing and Acceptance • Security Policy • Project Management Tools

  27. IT Issues • Cost of IT • Perishable nature of IT • Technology Refresh • Need to get ROI Faster Business needs to Leverage IT investments Quickly for Survival

  28. Business Issues - Ownership of IT Projects • Business Owners • LOB Heads • Technology Owners • IT Head IT Enabled Business Transformation

  29. IT Governance • IT Business Alignment • Old, Transition, Final Models • Security Policy • BCP

  30. Sourcing Models • Assets Owned and Managed by Bank • Assets owned but FM outsourced • Assets and FM both outsourced • Onshore / Offshore Donot Outsource Strategy, Architecture, Design, Security

  31. IT Deployment Management • Data Center & Rollout Mgt • Disaster Recovery Center • Business Continuity Plans • DRS Governance • DRS Drills • Transfer & Recovery at DRC • Return of Control to DC

  32. IT Management Challenges • Security Management • Record Management • Channel Management • Shared Services Management • Risk Management • Compliance Reporting

  33. HR Challenges

  34. IT impacting HR • Universal Teller • Extended Hours Banking • Sunday / Holiday Banking • Mobile Banking • Mobile ATM • Global Treasury • BCP

  35. HR Issues • Skill / Talent Identification • Competency Mapping • Career Planning • Succession Planning • Performance Measurement • Rewarding Performance / Excellence

  36. HR Issues • Constant transfers • Lack of specialisation • Moving to / from Rural to Urban Areas • Transfers when LOBs are formed • HR policy on transfers

  37. HR Issues - Managing Digital Divide • Management / Employee Training • Including top management training on use of digital dash boards , DSS • Customer Behavior Monitoring thru Multiple delivery channels • Product Design • Customer Training • New Generation Customers can handle complex products • They can handle self service channels • Older Generation needs simple products and human touch

  38. New Skills

  39. New skills - Business • Strategy • Best Practices / BPR • Risk Management • Financial Engineering • Performance Management • Reporting • Treasury • HR • Marketing • Branding

  40. New skills - Technology • Strategy • IT Architecture • Vendor Management • SLA Management • Security Management

  41. New Skills • MCIF • CRM • HRIS • Datawarehousing • Business Intelligence

  42. New Designations - CXOs • CEO – Chief Executive Officer • COO – Chief Operating Officer • CFO – Chief Financial Officer • CTO – Chief Technology Officer • CSO – Chief Security Officer • CCO – Chief Compliance Officer • CRO – Chief Risk Officer • CMO – Chief Marketing Officer

  43. IT brings fundamental changes in the style of doing business. Willingness and Ability of business to adapt to these paradigm changes is critical for any technology driven transformation program

  44. Success of an enterprise depends on building internal skills and competencies on an enabling (IT) agile infrastructure and govern it wisely for business results

  45. In aligning the organization, communicating the strategy is not enough - effective communication is backed up by enabling processes and structures - that essentially translate strategy into day-to-day activities. In short, effective strategy has to be embedded in work.

  46. Delivery is all about Leadership, Communication, Culture and People There must be someone in the organisation to put it out of comfort zone – on a continuous basis

  47. Summary • Ensure Sponsorship • Identify Change Agents • Increase number of believers • Create an entrepreneurial environment • Encourage innovation • Forgive genuine failures • Nothing like an overall Feel Good Environment – Positive Strokes

  48. THANK YOU

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