All transformation carries risk, and all topmanagements know that. The chances of gettingtheir approval improve with a business case thattells it like it is, with an unbiased assessment of risks, their likelihood, potential impact andmitigation.Banking transformation extends way beyondsystems replacement to bring into playoutsourcing, restructuring, change managementand rightsizing. What to do and how muchdepends upon the banks’ individual situation. Asmall bank might go for a big-bang execution andimmediate switch over; a large one is unlikely totake that risk, and will probably insist on phasedimplementation.But in general, since information on the paybackfrom long transformation programs is not easilyavailable, senior managements tend to be wary of projects with front-ended expenses andback-ended results. Hence, it is important tosecond-guess the management’s patience level,desired timelines and accordingly present a planthat accelerates value realization by securingquick wins and reducing the time to go-live.Showing top management that it is possible tomitigate transformation risk through phasedexecution also improves the probability of gettingthem on board.Managing organizational change is one of thecritical success factors of transformation. Often, itis not accorded the priority it deserves, withdisastrous consequences. The plan for managingand communicating change – including its impacton people, processes, resources, policies etc. –must form part of the initial presentation to topmanagement. Banks have been known to keeptransformation plans under wraps, fearingorganization backlash as a reaction to change.Having a clearly defined roadmap for changemanagement will give them the confidence tomake the decision public and get all keystakeholders involved from an early stage. Thiscould make the difference between success andfailure.People issues are the biggest barriers toacceptance of the need for core bankingmodernization. The bank must overcome thefollowing challenges in order to secure the buy-inof all stakeholders:Identify all stakeholders:Transformation haswide-ranging impact, affecting all functionsincluding, but not limited to, IT, Business,
Operations, Sales and Service, Risk Management
and Finance. It is important to identify and notifyall those who will be affected well in advance.Drive different stages of transformation throughthe right stakeholders:Contrary to popular perception, core systems transformation is not theexclusive preserve of the IT department, althoughthey have an important role to play. Theinvolvement of key stakeholders changes alongthe journey. IT may play a large part duringinitiation, but once the project has the approval of senior management, business users must takecentre-stage. Every phase of the transformationlife cycle calls for participation from one or severalteams; it is vital that the right people are involvedat the right time to the right extent.Involve stakeholders early:Obviously, if the bankexpects all key stakeholders to participate in thetransformation process, it must get them on boardearly in the day. This means seeking their contribution at every step, starting with buildingthe business case. Stakeholders must also beinvolved in key decisions, to the extent necessary.Having approved the project, senior managementmust lend its efforts to securing the acceptance of people down the organization.Once all stakeholders are recruited, they must beassigned clear roles and responsibilities. For instance, many people will be entrusted withexecution, others with facilitation and only somewith decision making – it is critical that everybodyunderstands what is expected from them.
Phase I of theCore Transformation Journey: Starting Out
Craft the Implementation Strategy to Suit R iskPresent a Fair Assessment Rof Risk and Mitigation
Appetite and Desired TimelinesHave a Plan for Managing Organizational Change