Bringing scale to Shared Services Gert Engman Group Executive Vice - - PowerPoint PPT Presentation

Bringing scale to Shared Services

Gert Engman

Group Executive Vice President, CIO and Head of Shared Services,

Corporate Bank of the year 2003

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Agenda

• Creation of a Shared Services Unit
• Current drivers and trends in IT
• IT and a realistic cost dimension
• Maximum return on IT investments
• IT project portfolio 2004 and beyond

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Why Shared Services

Create scale and efficiency from tasks performed in many areas but only partially today Services used by other than the performing entity (ies), are candidates for Shared Services Clear separation in e.g. head office functions between strategy and delivery

Cost efficiency Satisfied customers Branches Competence Growth

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Shared Services today

IT Channel and

• perations

development Support services

Shared Services

1 200 staff + 3 billion SEK cost

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Support Services

• Administrative duties in branches are

centralized to a few administrative centers, creating increased efficiency at a target ratio

• f minimum of 2:1, e.g.

Loan administration Collections Other daily, non customer focused activities are moved out of the branches

• Many other areas where economies of scale

applies, e.g.: Training Procurement Staff admin Etc.

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Channel and Operations Development Unit

• New unit responsible for all customer and

staff related systems, platforms and applications across channels, i.e. Internet, ATM, branch and telephone.

• Allows for cross-channel development and

process workflow for increased efficiency in systems development, application maintenance and operations

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Our IT

• 850 IT professionals
• ~ 6 000 Mips IBM OS/390, hot and cold
• Platforms

– IBM OS/390 – Sun Solaris (Unix) – Windows NT (Client/Server) – Oracle – Tandem – NCR Teradata data warehouse

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Current drivers and trends in IT

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Current drivers and trends in IT

Technical infrastructure Organization Governance and processes Performance management Application and architecture

“The IT pentagon”

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Application and IT architecture

Today

• Components based – promises re-use,

less complexity and shared development

• Striving for standards in software, J2EE,

Soap, WSDL, Dot.net, etc.)

• Multi-layered architecture

drives down cost and shortens time to market

Application and architecture

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1970 2005 Complexity

Host Connectivity Layer Internet Telephone ATM Office Future channel ? Internet Telephone ATM Office Future channel Infrastructure layer Common Business Component Layer Application Layer Host Connectivity Layer Internet Telephone ATM Office Future channel ?

Architecture revolution

Application and architecture

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IT and a realistic cost dimension

12 IT costs 2000 –> 2003

Middleware transactions/channel – per day average since 2000-01-01

Transactions and use increase but the cost of IT is constant

Transactions per day, millions

Internetbank Branch ATM Telephone Bank

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Beware of the production trap

Time

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FSB has conscientiously committed itself to comparative analysis: in part to objectively communicate the competitive strength of its IT organisation to the bank’s management and users and in part to maintain and increase the competitive strength of every part of that IT organisation. One prerequisite for the steady trend of improvements FSB has made is its persistent efforts to convert analysis results into improvements that are continuously followed up. As a result, the bank ranks, in most areas, in the highest international class. Using a fact-based, independent methodology, FSB has been able to prove that large-scale outsourcing is not an unavoidable alternative for large IT organisations. Furthermore, it has created value-added for the bank by allowing it to maintain full control over this key aspect of its

• perations

Nordic companies included in Compass’ peer-group include: Banverket, Danfoss, Vattenfall, EDB Teamco, BRF Kredit, Kommunedata, DSB, RFV, Norsk Hydro,SEB, Telia, Tietoenator, Folksam, Volvo, Vägverket, SchlumbergerSema, Akzo Nobel, Astra, Zeneca, Saab Bofors, Skandia-gruppen, Länsförsäkringar, If, Sampo, Stora Enso, SKF, Posten,Ergo Runit, Gjensidige

Compass award 2003

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Maximum return on IT investments

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Areas to constantly challenge

Business and IT Development Idea generation Business development through IT Value realization IT Infrastructure IT applications and platforms Optimize development resources Governance Consolidate Consolidate support Sourcing

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Potential

Areas Description

Improve prioritization of development projects Alternative sourcing, primarily IT Sharpen procurement process and skills Reduce cost through consolidation Optimize business development resources in business units

Governance Sourcing Consolidate support Optimize dev’t resources Consolidate applications

Optimize applications landscape

Identified potential Target Potential

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On-going projects

• Replacement of deposit system (core banking)
• Components based, real time, multi-bank
• Cheaper to maintain and operate
• Faster product development (days instead of

months)

• Web based cash management application for

large corporates and municipalies

• Replacement of web platform
• Same platform for Internet bank, external web and

intranet

• Cheaper to run, maintain and develop
• New distribution middleware platform
• More flexible and with standards based interfaces

(J2EE)

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On-going projects

• Economic capital/Basel II
• Substantial positive effects expected through more

efficient capital employment

• scoring tool for SME:s
• Portals
• Personal productivity tool for increased though-put
• CRM
• Campaign management for better precision in direct

marketing to mass market customers