LIBOR

Creation :

 Created in 1980s by BBA , as banks calls for a reliable source to set interest rate for
derivatives

 1st Libor rate was announced in 1986 for 3 currencies – US $ , British Sterling , Japan Yen

Whatis it :

LIBOR stands for London Inter Bank Offered Rate .It serves as a benchmark that gives the
indication of the rate at which banks can borrow from London Interbank market for a given
period of time

 The interbank borrowing is undertaken by financial institution either to make profits or

to cover short term liquidity shortfalls

 Basically, it represents a cost of funds – an average of what the banks believe they have
to pay to borrow a reasonable amount for a specific short period.

Usage :

 Currently servers as a benchmark rates for millions of contract worth billion of dollars
all around the world everyday

 Used as a base rate in professional financial market covering the financial products like
options, swap &future.

 TOO used by Banks as the base rates while setting up the interests rates for savings ,
loans and mortgages .

Example

Suppose an Indian company CBB wants to borrow money from the international market
The lender will charge LIBOR+ X% , depending on the risk profile of the company CBB and the
country where X will be the Risk Premium .

1. SBR 2 – SCM IT
 Make use of the balanced scorecard/ KPI in place to understand the gap

Constant Review Meeting / Informal discussion with team members

Delegate authority to the next level personnel

Feedback mechanism to know what is going wrong

Include 3rd party vendors

Strong Contingency Plan in place

Identify the resource not adhering to the process and put them into improvement program

Succession Planning – If PM goes on leave then someone to look after

2.

3. Early Training Programs – The training for the new ERP system would be started well enough
in parallel with the UAT, as starting the Training at the time of GO Live will extend the timing
for the usage and hence the implementation

Mark the Customization Level – Customization in an ERP system should be done till some
level. Much more customization into a ERP system will lead to integration problems with
other systems.

Reduced Reliability on Vendor (Oracle ) – There should be a collaboration among the

vendor the company , so that the decisions that are taken should be mutual and both the
parties should understand what is going on with the system .

Sound In house Technical Expertise – Omantel did not had inhouse technical expertise ,
which stopped them to have a edge over Oracle and cleary understand the technical
requirements that are needed for them .