Like most IT hungry organisations, banks are under pressure to meet the changing customer needs and increasing regulatory requirements. This is placing increasing demands on IT functions. However IT executives often do not have the full understanding of the actual quality of the delivery of projects and services to provide that advise, especially for complex IT environments.
IT functions need to improve the transparency of projects and services while providing insights and analysis that challenge the perception of many business customers that IT is an expensive black box.
By doing this IT executives can show that they deliver significant savings for the organisation, while improving customer satisfaction. A European retail bank undertook such a transparency programme. This showed improved customer satisfaction and delivered cost savings of €30million per annum in the IT Operations spend.
There are three central aspects to IT transparency:
The first is to ensure a Bill of Materials (BoM) is provided that defines, in understandable terminology, which IT services are being provided and how they satisfy customer demands. It also outlines the resources that are required to deliver the services such as hardware, software, contracts and staff. The BoM approach is based on a technique used in the manufacturing industry and goes beyond the concept what many IT functions know as a service catalogue. Its content is governed at executive level and should be the leading structure in all the operational and financial systems required.
The second is to underline where trade offs can be made. The cost, volume, quality and risk of a service are related. If the business wants lower quality, than the cost of IT can go down. But if the volumes of usage go up, then either the cost must go up as well or quality will go down. In a mature organisation these drivers are linked to overall business performance and showing where IT can add value. It will also help to show alternative approaches to support the business processes, and the impact on cost and quality of these alternatives. This will ensure that customers feel that IT used the available expertise to deliver what was really needed. An example where money has been saved is in reducing volumes in ´storage´. Examining usage of the applications in the business process turned out that the same document was stored multiple times. Reducing this to two times (for back up purposes) saves storage capacity and thus money.
The final focus should be on using an IT dashboard to bring the business and the IT function together in a joint commitment. Dashboards and management reports are output focused and allow the customer to identify measurable benefits and support ongoing discussions at tactical and strategic level. These dashboards based on the BoM are not merely reporting on an SLA. They support the discussions with the business based on facts and provide control at tactical level. By making the added value of IT explicit, this increases the ability of IT executives to work in partnership with the business. It will enhance the amount of cooperation and teamwork both within IT departments and in the business as a whole. This helps the implementation of improvement initiatives such as Lean, Agile in such a way that they are done in a way that suit the business needs rather than have a pure internal focus. The BoM and the measures enable trade off based discussions both internally as with the customer.
For example paying several million Euros to maintain a system might seem expensive, but if the cost per transaction is only a few Eurocent and the benefit of that transaction is much greater, than the discussion is of the cost of the system is placed in a different perspective.
To learn how your organisation can achieve credible IT, or to speak to one of our consultants about our work in banking, please contact us now.