Value Transformation Services Year One Booklet 1

Year One
Getting ready for a
very different future
(public edition)

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September 1st, exactly one year ago, UniCredit and IBM entered into a strategic partnership
that generated Value Transformation Services (V-TServices) with the aim to design,
implement and manage a wide European transformation project that will bring the UniCredit
group IT infrastructure to a whole new level of efficiency.
Over the last 12 months we have been confirmed about our understanding on Innovation
Technology being one of the enabling factors of success for many Industries, Banking first;
resiliency, security, protection of sensitive data and compliance are key attributes of the
strategic platforms underpinning the Banking System.
Moreover, the long term impact of new emerging technologies such as Mobile, Social,
Analytics and Cloud will be much more dramatic than evidenced so far and it is becoming
clear that their combined impact will be even more profound, potentially driving radical
innovation in business.
This is "the very different future" we want to be prepared for, by transforming and preparing
the infrastructure for the adoption of the new computational and information management
paradigms that will end in delivering competitive advantages for the Bank.
Innovation is at the foundation of the partnership; consistently with the emerging factors for
change Cloud, Mobile, Big Data and Cognitive, DevOps have been the core of the research
and activities that the joint Innovation Teams have been carrying out. Year two and on will
be the time of the full exploitation of the disruptive potential of Innovation.
In this first year a lot has been done, difficulties have been overcome, important results have
been achieved in terms of providing top level operational efficiency and reducing operational
risks by adapting and changing, to be consistently aligned with Clients needs.
Besides our continued commitment to excellence in delivery, our primary focus in year one
has been on building a professional services firm by leveraging and growing competencies
in a structured career professional framework and by designing and implementing a new
delivery model based on the Client First concept.
Furthermore, vitality has been and will be guaranteed through targeted programs of skill
improvement and an already agreed program of top talents hiring.
Go To Market is one of the pillars of our strategy. V-TServices caught the attention of the
Market as it actually addresses a critical need of the entire Banking System seeking for a
new level of efficiency and a more standard approach to compliance. Material opportunities
have been created and we expect the coming weeks start yielding success.
We would like to take the opportunity to thank the V-TServices and the UniCredit colleagues
for this exciting first year, looking forward to become more and more relevant to the success
of our Clients.
Giovanni Linzi

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Value Transformation Services at a glance

Headquartered in Italy, V-TServices is aimed to manage and transform the full Information
Technology infrastructure underpinning the Commercial Banking Operations in European
major countries.

At a Glance

Value Transformation
Services operates in 6
countries: Italy, Germany,
Austria, Slovakia, Czech
Republic and Hungary.

Legal HQ in Verona (Italy)

1000 Employees
12.000+ servers
2000+ network devices
100.000+ total MIPS
40+ Petabytes Storage

V-TServices is an IBM-UniCredit joint venture whose structure mirrors the UniCredit

Business Integrated Solutions organization across Europe with three branches (Germany,
Czech Republic and Slovakia) and one legal entity in Austria.
A vast pool of skills and knowledge coming from 1000+
employees selected both from UniCredit Business
Integrated Solutions and IBM, combined with the
deployment of fine-tuned IBM tools, processes and
methodologies, as well as with high quality networks and
datacenters inherited from UniCredit Business Integrated
Solutions, put V-TServices in a very favorable position to
provide services excellence to the UniCredit group and to
the Market on a state of the art infrastructure.
In addition to that, V-TServices embeds a Value Creation
Center aiming at harnessing leading edge innovation,
monitoring trends in the banking and IT industries and
identifying emerging disruptive technologies to be rapidly
introduced in production.

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CONTENTS

People Matter
Over 1000 professionals are the core asset of V-TServices and the enhancement of
their individual skills is one of our top priorities. We have therefore designed and
implemented a structured professional framework to develop key technical skills within
our critical professions. We are creating a Company Culture, which is aligned
organizationally with our mission, strategic priorities and company values. Based on a
successful first year of operations, V-TServices will continue to invest in Innovation and
Vitality by making 20+ new hires into the business.

Deliver Excellence
With the vast majority of financial transactions being processed go through digital
channels, this places significant demands on system resiliency and performance.
Since the service commencement date, V-TServices has delivered a material
improvement in both the service level performance, and the mean time to recover from
incidents. Essentials to the continuous improvement of our V-TServices activities are
the Governance model and the New Delivery Model. Their joint purpose is to manage
all the aspects of the delivered services and to provide more focus and clarity to the
Client. V-TServices and UniCredit Business Integrated Solutions teams are working
together to further improve the time to market and to provide fit for purpose solutions
for New Services.

Prepare for the Very Different Future

Innovation is at the foundation of UniCredit/IBM partnership. The Value Creation
Center (VCC) is the body with the mission to provide new products, services and
capabilities for the Bank that are fit for the future. Our joint Innovation teams have been
working on projects that are consistent with emerging technology developments such
as Cloud, Mobile, Big Data, Cognitive computing, and DevOps. A structured process
between Innovation and Delivery has been set up to guarantee close alignment and
consistency with the Transformation program and daily Operations.

Become Market Leader

V-TServices addresses a systemic issue of the Banking industry, by offering higher
levels of efficiency, combined with innovative solutions, which enable competitive
advantages for our Clients. In the first 12 months, with this approach, we have built a
significant pipeline of opportunities within the Italian market.

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People matter

V-TServices is a professional services firm combining deep technical/industry skills,

processes and methodologies, as well as high quality technology assets.
Our 1000+ professionals are the core asset of the Company; year 1 has been dedicated
to set the foundation for creating a successful entity, able to play a leading role in the Market
from a Captive IT Department, by combining the culture of the original Companies into
something unique.

Professions

IT Architects define IT
solutions to client business
challenges via architectures,
systems, applications and
process components.
Service MgmtDPE ensures
client satisfaction through
formulation, development,
implementation and delivery
Commitment to Excellence is the driving concept inspiring of application, technical and
business solutions,
our actions and plans, hence competencies and skills are
responding to client
at the core of V-TServices. We have built a structured requirements as specified in
professional career framework that identifies technical the contract or Statement of
professions, relevant to the scope of the Company, and Work (SOW).
provides end-to-end career development paths for each of IT Specialists support
them. solution construction
working in a team with IT
As of today 80%+ of our professionals have already applied Architects.
to the Resource Manager Portal and we plan to get to 100% Project Managers initiate,
in the coming weeks. plan, execute, control, and
close projects or programs.
This is the starting point for designing individual
Technical Services involved
development plans supported by Professional Leaders, in the management of live
identified on the base of their Seniority and their recognized systems performing systems-
value in the Profession. level configuration to define,
maintain, and install
Boards are already in place to lead the Professional
network applications or
certification process. systems and workstation
services.
Services Solutions
Management is responsible
for the development of
outsourcing solutions
directly to customers.

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V-TServices started the Technical Vitality Talks program on a

wide variety of Architect and IT Architect Profession Board Leader
technical topics, aimed at supporting the development and
evolution of the competences of our employees.
Tom Wheatley, our Chief Architect is the chair of the program.
V-TServices will continue to invest in Innovation and Vitality by making 20+ new hires into
the business. We launched a graduate Hiring Program in Italy and Germany to select from
the best technical universities and we start the on-boarded per October 1st.

Creating a Company Culture

and Identity is one of our
priorities. A structured change
management process, which
involves the entire Management
Team, is in place to align the
organization along with mission,
strategic priorities and company
values.
The following topics have been
identified as key drivers for
change: Market Growth, Client
First, Innovation in Delivery and
the creation of a Professional
Service Culture.
Objectives, action plans and owners have been defined for each topic and today we are
executing against the plans.
In April 2014, we moved our Operational HQ from Lampugnano to Segrate, which is a major
step in the consolidation of V-TServices as a Company and a significant change for our
people previously located in Lampugnano.

In the spirit of improving the work-life balance, while continuing to deliver superior service to
our Client/s, we introduced a flex work scheme pilot in Italy that allows flexible home working
arrangements.

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Deliver Excellence

The need for increased Resiliency of the infrastructure proved to be the key focus item for
the first year of service at V-TServices. As the vast majority of financial transactions go
through digital channels, this places significant demands on system resiliency and
performance. In preparation of the service commencement date one year ago, we started
with the Transition Program, well before the Go Live.

How We Improved Services

With the help of
UniCredit Business Disciplined management
Integrated Solutions, system
we prepared for the on
Effective problem
boarding of the people
management process to
joining V-TServices, detect and permanently
establishing required remove Root Causes to
IT such as e-mail and prevent that the same
the portal, organizing incident would reoccur
access to systems
and other practical Teamwork between
things. different organizations

Since the first date of service, we have been delivered a significant improvement in the
service level performance, as well as a reduction in the mean time to recover from incidents.

In addition to that, the importance

of having enhanced resiliency, an
even more rigid change management
process and an improved compliance,
led V-TServices, with the full
endorsement and support of IBM, to
adapt the planned approach and
create, in parallel to the
Transformation Program, the so
called "Stability Program", aimed to
improve the infrastructure reducing
exposures to potential risks, preparing
it to host all future solutions coming
from R&D and the Innovation team.

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Experts from IBM and our partner AT&T were flown in from around the world, working with
our V-TServices colleagues, to assess the priorities and to create plans for immediate
improvements of the infrastructure.

For each of the different work streams the findings of our analysis have been classified as
High, Medium or Low priority. Immediate focus has been given to improving the change
and incident management processes while from a technology perspective we pay
specific attention to network and storage.

To prevent further customer impact, we also identified improvement activities in support

of the Critical Applications, such as the Internet Banking applications in the major and CEE
countries, the Austrian ATM application and SEPA. Especially on these topics the
V-TServices teams work closely with the UniCredit Business Integrated Solutions application
teams, and good results have been achieved by adding new tools and technology,
upgrading infrastructure, adding processes, resources and training specific skills.
A New Delivery Model, consistent with the IBM Client First model, has been designed and
implemented. The purpose of the new delivery model is to provide clarity within the
organization and to our Clients regarding:
Client relationships and services as delivered to local clients and per business
line
Integrated Services organized Cross Country, based on Centres of Excellence
for different technical service lines
Shared Services such as service and operations management are cross Client
and organized cross Country, potentially also from IBM delivery centers
Supporting functions such as procurement, communications, HR, legal,
finance and business operations.

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As the business is evolving and new requirements

Disaster Recovery
Among the most relevant examples of
new services, following new regulatory
requirements, V-TServices has been
working in very close cooperation with
the UniCredit Business Integrated
Solutions and Group CIO teams to
develop enhanced Disaster Recovery
solutions.
V-TServices and the Client built a phased (intended for unique and larger solutions).
and flexible solution addressing first
the infrastructure in support of the
Systemic processes for both commercial end to end process (leveraging the Six Sigma
and investment banking, to be followed methodology with the Customer black/green belt
by the Critical processes.
Cartography and the optimized used of
storage are being evaluated to grant
additional flexibility by optimizing the
Disaster Recovery infrastructure in scope
by process.
Disaster Recovery is a strategic project
for the Bank and V-TServices is fully
aware of the importance of meeting the
challenging timelines.
have to be supported, new services requests are
submitted to V-TServices. In an outsourced
environment this requires different processes
such as demand and solution management, pricing
of the service and a formal approval process.
In the first year V-TServices received and
processed almost 1000 requests for new
services, both through the simple service request
process (catalogue of pre-priced and approved
items) and the request for services process
The V-TServices and UniCredit Business Integrated
Solutions teams are working together to improve the
support) with the objective to reduce the time to
market and to provide fit for purpose solutions.
To achieve greater efficiency the teams will
implement joint tooling and processes, expand the
catalogue with new items and pre-bundled offerings,
and leverage new technologies such as Cloud
computing. As results of the required new service
solutions close to 600 new projects have been
initiated, of which 250 have been completed, and
currently more than 90% of the work is
progressing as planned.

Setting up V-TServices

The Transition Program is aimed to successfully transfer the services from an in-house to an external
service. In the case of V-TServices, this also included the creation of the Joint Venture, and everything that
involves setting up a company: as an example a new SAP system was created, we adopted the portal from
UniCredit Business Integrated Solutions, implemented a business controls policy and the VT-Services name
and logo were registered.

To transition the services we established a management, including contract governance, and prepared new
processes for new services. V-TServices inherited around 500 in-flight projects of which 90%+ have
been already completed. The level of compliance, security and data protection were assessed and the
outcomes were the basis for the proposals to fill the identified gaps.
Sdfsdf
All in scope contracts were transferred from UniCredit Business Integrated Solutions to V-TServices, a
physical inventory of all transferred assets has been performed as well as an extensive customer
environmental analysis, overall resulting in an agreement on joint verification.

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The Transformation Program consists of 5 clusters:

Open Storage
Open Systems (including Cloud)
Service Management
Mainframe
Network.
More than 150 experts from IBM are working together with over 100 V-TServices
employees, who have come over from UniCredit Business Integrated Solutions to execute
the 22 programs that have been identified. Each of the individual programs has been
specified in detail in Program Definition Reports that have been submitted and are approved
by the Client as the work is executed.
The following figure shows the 22 programs with actual percentage of completion and the
color status, to provide an overview of the progress.

The upgrade of the Z-Series Mainframe cluster will be closed before the end of September,
when we will have implemented all new mainframes without impacting the service. The
benefits are already evident: performance improvement and capacity optimization.
All programs have gone into execution as V-TServices continues the ramp up in staffing.
Through a rigorous joint management system we will ensure to have timely decisions to
allow the program to make the required progress. Specific focus is on "service recipients":
critical areas where additional complexity is present due to external regulatory compliance
and/or where specific Bank authorizations are required.
In the next months, we plan to finish the infrastructure deployment, configure the network,
implement and migrate storage, simplifying the environment and increasing standardization.

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We have started with the deployment of a Private, on premise Cloud in the Verona and
Munich data centers, delivering Infrastructure as a Service (IaaS).
The first phase will be Infrastructure as a Service, but will rapidly expand to platform and
Software as a Service (SaaS).
Additionally, we have just
introduced the use of
SoftLayer, IBM's global
Public Cloud provider, in a
Hybrid Cloud delivery model
to allow a better evaluation of
the potential of this platform.
The V-TServices Cloud is
planned to rapidly evolve to
deliver Platform as a Service
and Software as a Service
(PaaS, SaaS) in the hybrid
environment.
The Hybrid Cloud model will provide UniCredit with the benefits of rapid provisioning of
virtual servers, lower operating costs, improved service management and integrated
systems governance.
Moreover the platform as a services solution will allow to setup environments and deploy
apps very quickly.
In fact, we intend to use SoftLayer to
complement and extend the on premise Private V-TServices and SoftLayer
Cloud we are building in Verona and Munich.
SoftLayer is a market leader in
This will immediately provide enhanced Infrastructure as Service solutions
business agility, access to worldwide Data offering both shared and private off-
Center facilities and to a growing portfolio of premise cloud environments dedicated
Infrastructure, Platform and Software as service to Clients.
solutions.
V-TServices and SoftLayer have already
The hybrid model leverages the benefits of both
established PoCs to demonstrate how
the Public and Private Clouds enhancing
UniCredit flexibility and scalability and UniCredit can benefit from such a global
accelerating his ability to cope with the speed of Cloud platform.
the business requirements. A V-TServices team has been already
fully trained on SoftLayer.

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A governance model, which operates on multiple layers between the UniCredit Business
Integrated Solutions and V-TServices, has been established to effectively manage all the
aspects of service delivery and contract management.
The governance model includes centralized and local bodies to ensure deep
understanding and strict control; in addition, it was agreed to extend the model with Risk
Management and separate meetings with the UniCredit Business Integrated Solutions
Business Lines in order to improve our understanding of business priorities and to contribute
with innovation and a pro-active approach.
We believe in continuous innovation as we want to get ready for the coming very
different future.
We will continue to transform and to provide new products, services and capabilities to the
Bank, that are fit for the future, and that will deliver competitive advantages.
This requires a virtual continuous circle between Delivery and Innovation.

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Preparing the very different future

Innovation is at the foundation of the UniCredit/IBM partnership. The Value Creation
Center (VCC) is the V-TServices body having the mission to create a new innovation working
environment between UniCredit and IBM.
It builds on existing relationships and engages global leaders and experts to deliver
sustainable innovation in the domains of Infrastructure, Application and Business along
with three time horizons.
A structured process between Innovation and Delivery has been set up to guarantee close
alignment and consistency with the Transformation program and daily Operations.
Our joint Innovation teams have been working on projects that are consistent with emerging
technology developments such as Cloud, Mobile, Big Data, Cognitive computing, and
DevOps.
An Agile Development Centre will be established, based on Bluemix, to rapidly provision
and decommission resources as a sandbox environment primarily aimed at hosting
innovation and research initiatives.

Four areas of interest have been selected to exploit the huge potential of Big Data applied
to Marketing, Security, Risk and Cognitive computing.
The Agile Development Centre will further allow to test a new paradigm for application
development to better cope with the increased speed of business requirements, the app
revolution and the rapidity of the evolution of the Banking sector.

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Agile Development Center - Bluemix

The Agile Development Centre is based on Bluemix, the Platform as a Service (PaaS) running on
SoftLayer.

It provides a consistent and integrated environment for building, managing, and running
applications of all types to meet developer expectations:

Focus on writing code in the chosen tool language, not on the underlying
Infrastructure
Be able to deploy updates to their apps in seconds, ensuring apps fail immediately
and visibly to speed up debugging and fixes
Integrate useful APIs into applications
Build mobile ready applications

The highest value is gained when we bring Systems of Engagement and Systems of Record
Data together to deliver insight.

This must be done on a Cloud environment, be secure and get into the flow of data that
feeds the systems of insight. It will be driven by cognitive systems someday, but for now,
these systems will train and inform the cognitive engines of the future.

We have identified the mega trend on confluence of Social, Mobile, and Cloud, and
discussed what this trend meant to us and our Clients in the industry.

Systems of Engagement have already driven enormous transformations, which enable

people to interact more dynamically, more rapidly, fluidly than ever before. With direct
interaction between enterprise and their customers, or among people within an organization
or across organizations, industry players and organizational functions are in flux.

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Vast amounts of data, potentially very valuable data are being generated, captured, and just
beginning to be tapped for insights.

On the other end of the spectrum are the Systems of Record, more structured static
transactions and the traditional data that feeds business enterprises today.

Value can clearly be obtained from both systems, but it is becoming clear that the highest
value is derived from the Systems of Engagement and Systems of Record data, brought
together to generate the insights that can only be found when done at the scale of Cloud.

Only in this way we will deeply understand any process or system at the core of an enterprise.
We call these Systems of Insight which are transforming multiple industries including
Banking.

To build Systems of Insight, we need:

Data: in fact to drive higher margins, we need to place ourselves directly into the flow
of data.
Cloud: Remember all the Systems of Engagement data are born on the Cloud, and if
we want to have all these data in the Cloud, we clearly need to deliver the same level
of security that we traditionally provide in the Systems of Record world.
Watson and Cognitive System: to be the engines that drive the Systems of Insight.

Enterprises need to define a consistent and comprehensive Big Data Enterprise

Architectural Framework to accelerate the adoption and to look at managing the new
paradigm as a logical extension of the existing data assets.

V-TServices commitment is to continuously evolve the current infrastructure to be ready

to host the new paradigms while ensuring scalability, security and accessibility. In one
sentence: getting ready for a very different future.

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V-TServices launched several Proof of
Concepts environments:
in the area of Client Centricity with
IBM Watson Explorer technology
aggregating dispersed information of
UniCredit client with a new 360
degree view for call Center operators;
to demonstrate the values of IBM Big
Data platform, visiting the IBM
Research in Zurich and then with the
deployment of IBM platform
(BigInsight) into a Proof of Concepts
environment.
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Cognitive Computing
The journey on Cognitive Computing started
at the very beginning of V-TServices, with
the visit of top Customer representatives to
the Cognitive Computing Colloquium at
the IBM Research Center in Yorktown
Heights, NY.
The event brought together leaders in
science, technology and psychology to
discuss the coming era of Cognitive
Computing and to craft a shared agenda
among industry, academia and government.
Whats happening in the computing context
is really transformational; the notion of
building machines that can interact
naturally with humans and augment human
intelligence is profound.
The move to this era is being driven by four
synergistic factors: big data, mobile
connectivity, social networking and the
Internet of Things.
We call it the era of cognitive computing.
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Become market leader

V-TServices addresses a systemic issue of the Banking industry, by offering higher
levels of efficiency, combined with innovative solutions which enable competitive advantages
for our Clients.

After 1 year of operations, V-TServices is recognized in the Industry as a new reality

which has no equal in the market in terms of expertise and business model - as demonstrated
by the reaction of other Banks and influencers looking for better understanding of the
business model and the potential impact.

Our multi-local approach is based on an operative structure organized by competence

centers, delivering services in each country, relying on standardization and scalability
guaranteed by an international organization model.

Thanks to its expertise, know-how focused on the Banking sector, V-TServices value
proposition provides a 360 service to its Clients in the areas of: Mainframe, Open Systems,
Storage, Networking, Cross Functional Services.

Moreover, V-TServices Value Creation Center (VCC) monitors the trends of the IT and
Banking sector and identifies, whenever it is needed, the development of breakthrough
technologies, which are rapidly applied on the infrastructure of the served customers.
In light of this capability, the transformation represents a fundamental value of the Company
and a leading element in the excellence path related to the sector in which it operates.

These are the differentiating elements in the V-TServices value proposition:

deep understanding of the Banking business model and logic, including

regulatory requirements, and strong banking skills; this will drive, while delivering
significant savings, an increase in operational efficiency and a reduction of
operational risk
top class skills assets to deliver high quality services
intellectual assets to effectively assess and improve compliancy against Banking
mandatory requirements
an HR environment aligned with the Banking industry employment contracts,
easing the takeover of resources when required
the international scope of V-TServices which enables scenarios outside the
Italian context.

In the first 12 months, with this approach, we have built a significant pipeline of opportunities
within the Italian market.

Part of the V-TServices mission is to become Market Leader in the Banking sector
delivering Value and Industry Leadership to its Customers.

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Value Transformation Services Management Team

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Value Transformation Services S.p.A.

HQ c/o Circonvallazione Idroscalo

20090 Segrate (Milan) Italy
Comprensorio IBM - Building B - Ground Floor
Tel: (+39).02.45372.001

Contacts:
Value Transformation Services Marketing and Communications
communications@v-tservices.unicredit.eu

Value Transformation Services