Information Champions: The People, Product & Services Framework
Creating Information Leadership in the Banking Industry
Bernard Sia (email@example.com)
Information tends to take a life of its own with the proliferation of disparate vertical, niche based and point information solutions introduced throughout the life time of the business. Instead of managing the complexity, organizations allowed the complexity to bury nuggets of intelligence where the effort to identify the proverbial needle becomes more expensive than the negative results of making off the cuff decisions backed only by hunches. Management consultants have attempted to provide horizontal based best practices and process abstractions that unfortunately, have not been able to relate to the business and thus turn academic; resulting in artifacts resting atop dust ridden shelves. The solution lies in orientating the business decision making through business seeing glasses versus technological myopia. In summary, the ability to truly demarcate and identify the value chain of the organization to uncover essential business advantage. The objective of this document is to produce a banking picture of how decision making should be supported and enhanced by information. We aim to produce an actionable model that can be adopted immediately provided that there are leaders who know where the organization should be and acts on meeting these goals.
THE PROBLEM STATEMENTS
MATRIX MADNESS, KINDA LIKE HELIUM As Helium can exist as a superfluid at 2.17 degrees Kelvin (-271 Celcius) where liquid viscosity disappears, exhibiting zero friction and thermal conductivity skyrockets; the same principles apply to organizational accountability that lacks a central figure head. The situation requires tremendous energy to bring the excited state of hot and gassy molecules to exhibit superfluidity; as an analogy, the performance levels required from a performing organization. Thus having multiple organizational units accountable for similar sets of information will only lead to conflict and situational deadlocks and misalignment. Throw in a matrix reporting structure and madness ensues. BUSINESSES AND PEOPLE ARE NOT STATIC: DYNAMISM REQUIRED Various researchers have shown how conflicts, disasters and issues lead to unfreezing moments (Bruland, 1982), (Carley and Harrald ,1997), (Dutton, 1986); which unfortunately, is a sad but a very real phenomenon of managing a virtual concept that exists only in the mind the business organization. Only through conflict can we see that the mirage of stability is not real, organizations require continuous change and fresh inputs. An organization is not in the logo, in its walls, or departmental units; the organization is fluid and the virtual nature means that the CEO must heard mists to coalesce into some semblance of transitionary reality. In line with that spirit, any form of structural rigidity is also an illusion of control as it will only lead to myopism in both vision and restrict the dynamism required to perform.
Figure 1 - Typical Static people configuration for Business/Application Services
A) Customer Fronting Business Users B) Superusers manages the business application C) Information Technology supporting the system
Direction of Services offered
This problem is reflected above, where a superuser group in B) is typically created to offload information processing from actual customer fronting business people. Although still kept within the business structure, the model is static . Superusers slowly but surely devolve into IT-speak; losing the business knowledge edge that the team initially had. Instead of forcing down and evolving information needs, Superusers begin to defend the inefficiencies and issues of IT. The biggest symptom of this happening is with organizations where the Superusers are equated to the system, for example, Superuser A is in charge of the CRM system or Data Warehouse. When the structure stagnates, further symptoms appear; for e.g. data inaccuracies, inability to identify information needs and improvement projects which are summarily rejected by management because the team has lost the business-speak required to quantifying and justify the improvements. IN ORDER TO BUILD THE FUTURE, WE NEED TO BE COGNIZANT OF HISTORY Alas, to address how strategically a virtual concept like business can be directed, the business needs to know where it stands today and where it needs to be tomorrow; in relation to its competitors, itself, its customers and stakeholder expectations. The information management unit of the organization needs to build upon lessons learned much like how software evolves from one feature set to the next. Take the iPhone for example, and how Apple has continuously injected incremental improvements into a single branded product. An organization that does not have a productization mindset will suffer the curse of repeating history. So we beg the question of whether a company has a soul, can it reflect and improve or choose to live only by the moment? And to answer the rhetoric, the soul is within the product and services that the organization provides, the ability to evolve and improve upon the product feature set consciously and with deliberate intent. So information evolution and the intelligence to make decisions from collective corporate information and evolving these requirements as the company grows is a fundamental feature of productizing information. An organization without an information soul will be perpetually damned.
INFORMATION AS A DYNAMIC SERVICE PRODUCT
In summary, we need to transition the existing environment where businesses own and influence information technology adoption to a clean separation between business and IT per the figure below:
Figure 2 - Information as a Service
The vision is a service and function oriented approach where Information Owners displaces Information Systems Owners . The definition, evolution and lifecycle of usefulness of the information will fundamentally be an information governance activity that resides within the business.
In fo rm
Figure 3 A Balanced State of Existence sans Intermediaries (e.g.-> Info System owners)
SOLUTION CASE STUDY: THE BANKING INDUSTRY
In identifying information needs for the banking industry we must begin with identifying how value traverses through the banking business. For purpose of simplicity we will only cover 4 aspects of banking, namely Retail, Wholesale, Investment and Insurance. We will also perform a high level abstraction of how banking functions as a financial intermediary between business to business, customer to business and customer to customer; fundamentally, the lubricant that facilitates economic transaction and vis-à-vis national growth. An important paradigm for the reader to adopt is that this is seen from a 3rd party external view of the bank and should not be confused with how the bank examines itself internally. After which we will then analyze informational needs required to both monitor and control the processes for performance. Secondly, we will disregard whether the services are delineated by Islamic or conventional banking. The figure below attempts to capture the essence of banking (from a customer standpoint) and we will then explain how the services are consumed. Note that we will cover how the banks work with regulators subsequently. In summary, economic activities are circular in nature, much like night and day; people buy and sell goods, and buying can be fuelled by financing attained through loans, or should the consumer be a corporate entity, avenues to attain funds through listing appear. Banks facilitate this by providing credit and payments infrastructure, investment banking underwriting services, enabling even more buying and selling, thus perpetuating the cycle. In short, banks should continuously ask the question, What business are they in? ; what is the bigger picture? Are banks in the loans or banking business?
Or are banks really in the business of business ?
Figure 4 Abstraction of Major Banking Services
Flow of Transaction Banking Services Other Banking Services (e.g. Leveraging )
Note: Trustees, Will writing, estate management, venture capitalism are ignored for simplicity, and wealth management services are also left out on purpose. The Insurance businesses are also simplified, and claims process are also hidden and abstracted as part of facilitating a payment transaction. There are also more complex activities in investment banking that de-risks financial exposure through securitization and structured products that we will not cover.
Description At the end of the day, people and businesses need to pay for consumption. Customers conduct investing activities through shares, bonds, options etc. Customers also require financial protection through insurance products Corporate customers conduct larger payments Corporate customers also require a means to track payments that they receive, also to manage their trade receivables. A corporate customer may also acquire another corporate entity, and this transaction may require funding as well as advice from the banks Customers also require more funding for business growth through private debt securities and/or equities
Ultimately, all the activities above will result in money changing hands.
A Simplified View of the Banking Value Chain
Now we shift the paradigm inwards, where the major activities above can be explained through the following value chains. Major Value Chain Description Major Business Line Retail Banking and Whole Sale Banking Input Output Value Added Objective
To marry retail/corporate customers deposits with financing needs of both other retail and corporate customers (This can be viewed in reverse from a financing standpoint) To provide a bundled corporate banking services that can expediently assist and reinforce the monetary transactions of businesses
Financing and credit
y The ability to widen the gap between the cost of maintaining deposits, and the profits of providing credit. y The ability the lower the cost of providing these services y The ability to provide competitive financing (compared to competitors) y The ability to provide an end to end corporate banking experience and package that is facilitative to business efficiency.
Whole Sale Banking
Deposits, Payments, Receivables
Financial Advice, Product bundles
To marry retail and corporate investors with organizations seek financing through private debt placements or securities or convertibles To provide advisory and consultancy services on corporate mergers and takeovers To provide a payments and remittance infrastructure
Retail/Corpo rate Banking
To provide financial protection to customers
Entity, Location, Monetary Amount Risk Aggregate
y The ability to create a brand (professionalism, knowledge, expediency) y The ability to understand the business and its value and articulate that to potential customers. y The ability to perform all of the above at the most competitive fees. y The ability to value a takeover/merger target y The ability to structure a leverage takeover and the necessary fund raising activity required, suited to the risk appetite of the customer as well as its day to day business operations. y To provide the most competitive rates and expedient as well as convenient experience for this service
y To provide the most competitively extensive protection program for the customer while lowering the claims, while still maintaining an expedient and pleasant experience for the claims process.
Figure 5 - Two viewpoints that needs to be factored to perform strategic and operational analysis External Paradigm: How a bank affects and profit from surrounding micro/macroeconomic forces
External Paradigm: Business Services
Internal Paradigm: The Value Chain
Bank s Relationships with Regulators and other external Stakeholders
As the relationship is fairly straightforward we can summarize the interactions within the table below. Key Activities To contribute to national level monetary and financial stability (M1, M2, M3) Basel Requirements Output Tier-1 Capitalization & Risk Weighted Asset Ratios, other financial data Tier-1 Capitalization & Risk Weighted Asset Ratios, other financial data. Operational/Corporate Risk reporting. Customer credit standings etc. Parties Central Bank
Central Bank, IBS.
Credit and Exposure Standings Anti Money Laundering & Terrorism Reporting Listing Activities New Financial Product innovations
Flagged financial transactions and Central Bank accounts. Underwriting details Securities Commission Product Specifications (credit card, Central Bank funds etc.) Misc. Compliance Requirements Data Protection Act Central Bank, Securities documentations etc. (long list) Commission Note: Table items are illustrative only and not a comprehensive representation of regulatory interaction activities.
WHAT NEEDS TO BE MEASURED?
Any business service offered will have to balance between the 3 factors below, banking is not an exception.
Figure 6 Micro Service/Product Operation Forces of Business Efficiency/Speed Efficiency can mean speedy delivery & happy customers or highly robotized and stringent adherence to processes, leading to unhappy customers
Efficiency through automation could either mean, lower process costs, or high maintenance costs, eating into profits
Revenue & Margins
Customer feels short changed should profit margins be exceptionally high and banking rates are uncompetitive
In order to make sustainable decisions that maintains this precarious balance; succinct and accurate information about the business performance is required. Hence we ask the reader the following questions, and it must be answered through the following order of prioritization:-
a) Do you know the decisions that need to be made?
Do you know how frequently these decisions are made?
Do you know the information that is required to support the decision?
Do you trust the information provided?
Do you have the information?
If the answer for the first question is not available, we should not proceed with any strategic uses of information and work on operational needs only (keep the lights on activities). Any attempt at strategic uses will only lead to wasteful IT centric implementations with little value as the organization lacks the strategic maturity and will to profit from the information. Interpreted differently, the business has no soul; it functions like a machine. Another key takeaway is organizations that spend an inordinate amount of time gathering thousands of fields without knowing why the business makes the decisions that they do. Organizations that begin their information management journey from the bottom up will be lost in the diarrhoea of data. Lastly, the act of measuring and extracting information can also lead to behaviours that sacrifices one area for the other. For example, most KPI systems fail to address corporate performance holistically, information are typically massaged to look good and the KPI becomes an end in itself. Finally, the company falls into the trap of reporting a KPI that has no correlation with actual business performance. A good information management system and process are able to attain the required information for decision making without injection of decision making bias as well as disrupt the natural ecosystem of the business flow.
BREAKING DOWN THE CASE: AN END TO END VALUE CHAIN ANALYSIS
For the example below we will break down the first value chain, bridging of depositors which has money with creditors that require money into its individual processes.
Major Value Chain Description To marry retail/corporate customers deposits with financing needs of both other retail and corporate customers (This can be viewed in reverse from a financing standpoint) Major Business Line Retail Banking and Whole Sale Banking Input Deposits/ Savings Output Financing and credit Value Added Objective y The ability to widen the gap between the cost of maintaining deposits, and the profits of providing credit. y The ability the lower the cost of providing these services y The ability to provide competitive financing (compared to competitors)
Although as explained above, that business activities looped back into it self, the internal intermediary processes can be strung out and analyzed further.
Figure 7 - From Deposits to Loans
We are thus able to perform several key decisions to improve business performance; the triple forces described previously apply as yardsticks. Major processes within the value chain are in orange and secondary activities spawned from the major processes are in yellow. The subsections below describe potential information reporting aggregation.
PRODUCT ADOPTION PERFORMANCE
We can boil down production adoption performance into several areas, for example:a) Conversion rate of new product marketing activities
b) Performance of current product, i.e. large number of NPLs is a symptom (which can be caused by systemic economic factors or overzealous sales) and having 10 million depositors is not indicative of a performing bank should the average deposit size be 1 dollar. c) Ability to ascertain the elasticity of investing on one or more of the 2 factors (customer & efficiency), and how it impacts the bank s bottom line.
Key decisions that can be made are:a) New product innovation in deposit and savings to increase funds flowing into the bank s coffers.
b) Investments that need to be made into marketing activities and the potential returns that it will provide. c) Defining what is competitive in terms of services and fees when compared to other banks and deciding on a targeted marketing approach to corner the market for a particular product.
d) Accepting and rejecting operational improvement projects e) How banking products should be branded and evolve from one function set to another. f) g) Decommissioning or collapsing non-performing products. Adjusting product parameters to increase profits through pricing
Without delving into the details, a holistic 360 view of banking customers will uncover further opportunities for the banks to purvey their products. A key point here is that customer experience is highly correlated with product performance (i.e. the overall service package experience). Secondly, customer analysis should ultimately focus on customer buying behavior to capitalize on providing more services to facilitate the activity. The psychological analysis and understanding allows the bank to compel customers to put money in the bank, be it for investment purposes or for pure savings. Lastly, the bank needs to understand the economic value chain of business to ensure that although money passes from one customer to another; physically, money stays within the bank. It is not who the customers are, but who the customer buys from and all the way up and around the economic chain.
Financial performance typically occurs at the end of the business transaction, in particular the example below. We say so because only upon the first payment of a loan product can the bank earn revenues through interests. Should we be examining a payment infrastructure value chain, revenues are recouped immediately through fees charged from each transaction.
In practice, financial performance will be taking revenue as well as cost information across all activities of the bank; making it one of the most complex areas of information management. Ideally the financial system is a component of an integrated ERP system consisting of human resources, procurement, and budgeting as well as materials management. Key decisions that need to be made are:a) Investment Appraisals Should the company be spending money on a particular project proposal or spend it elsewhere? Is there a standard formula and calculation used that is understood by everyone in the organization, NPV, IRR and Cost of capital, Discount rate used, does in factor in taxation, inflation...?
b) Budget Performance Should there be corrective actions made to reinforce budget utilization or should the money be reinvested into treasury/trading activities? c) Financial Performance Which area of business provides the biggest revenue to the bank, and are there growth potential? Can the bank invest more to extend its market penetration? How much should it spend (goes back to investment appraisal)?
d) Cost Management , Treasury Performance etc the list goes on.
RISK AND EXPOSURE
In order for the bank to ascertain the limit of how far it can extend itself financially through business financing, information from the following processes is required. Looked at differently, a bank who is truly in control of their risk and exposure information is able to tether at the brink of oblivion knowing confidently where the tipping point is - a definitive competitive advantage.
Figure 8 - Information Set required to ascertain level of Financial Risk
Regulatory reporting should be in principle, the easiest to define as the parameters are determined for the banks by regulators. If the bank is able to perform the 4 different information gathering and decision making above efficiently and accurately, regulatory reporting is simply an easy extension.
IS IT REALLY THAT SIMPLE?
Naturally the answer is no; specifically because customers interface with the bank through various means:
If we just examine the first portion of the activity, we can already see the need for a physical presence, through a retail branch and others specified in the figure. For each of the touch points, the bank needs to monitor service level availability and performance. As we break down each interaction steps even further, the permutation for measurements multiplies and leads to information noise. Management needs to filter out what is of value and separate the chaff from the wheat. We will see later how this is handled as operational needs in the organization structure section.
INFORMATION AS A SERVICE AND THE SERVICE PROVIDER MODEL
Earlier we mooted the solution as the separation of business from IT in information provisioning; in particular IT as the information service provider to the business. However, information itself is not owned by IT, but by the respective business units. To reiterate and simplify, the model looks like this (upward arrows represent direction of information flow and downward arrows, instructions and key decisions):Corporate Bigwigs Information Owners Information Service Provider
The simple premise is that businesses cannot fully embrace IT, and IT personnel will not be able to fully understand and manage the complexities of the business. We should logically leave the two to focus on what they do best.
ROLES AND RESPONSIBILITIES OF AN INFORMATION OWNER
Information owners should be as close to the business as possible, preferably the business themselves, in the case study, we take the example of financial performance reporting, the information owner must come from the CFO s office, the person needs to identify informational needs for financial decision making as well as pre-empt those requirements. Examples below are defined as an information owner for Financials. Responsibilities Data Dictionary/Definition Manager Information Lineage and Transformation Description To ensure that terms used for financials are institutionalized throughout the enterprise. To be the keeper for all financial formulas and transformation that represents the final management reporting to the corporate stakeholders. From the initial business source to the final consumer. For example, the financial information owner should be able to tell the CFO that the discrepancy in the Southern region comes from a specific branch. All information provided to the corporate stakeholders is a service/product . As a product manager the person needs to maintain a continuous evolution of features, culling those that are no longer wanted, and adding more features as required. For example, today; there may be only 3 gearing ratios used, but potentially a recent study shows that 2 more gearing ratios taking into account hybrid convertibles extending all the way to subsidiaries and investments would be a better assessment of liabilities for the bank. To manage the versioning and change management of information published. To ensure data accuracy by quality control activities and feedback to the information service provider. To determine schedules and reporting cycles. Ultimate requirements provider to IT for all financial related data. To maintain records management and data leakage protection principles for the information managed. For example, information classification (secret, departmental only, CEO eyes only, organization only, public). Whether the key information is still in
Information Product Manager
Information Release Manager Information Requirements Provider Information Governance
Information Area Subject Matter expect
draft stage or approved for publication. To aggregate disparate information sources and govern the permutations of financial related information. To ensure nonrepudiation of critical corporate records and ageing e.g. archiving and disposal. In this area, the person should be a Finance subject matter expert, i.e. Management accounting, financial accounting, cost control etc. and should continuously be abreast of the latest trend in the subject area and how it impacts the business. Regulatory requirement expertise will also be required
Key message: The information owner role cannot be static, and should be rotated on a semi-regular basis with frontline financial personnel.
For example, on a yearly rotational basis the Head of Management Accounting & Budgeting could be the Information Owner, subsequently the Head of Treasury etc. The idea is to attain a holistic and continuous enrichment of reporting attributes and quality that is a close as possible to business activities. Another key takeaway is somewhat achieving a Dewey like classification construct of aggregating information subjects together; in this case, financial information.
ROLES AND RESPONSIBILITIES OF AN INFORMATION SERVICE PROVIDER
The information service provide is ultimately IT, and quaintly so seeing that the I stands for Information. Responsibilities Data Model Manager/Designer Information Lineage and Transformation Technology Product Manager Description To ensure the data models used are continuously improved and kept abreast with business functions. Tuned for performance and culled for lack of use. To be the keeper for all data mapping between source systems, datawarehouse and business intelligence tools used to generate the reports. The ability to perform bidirectional traceability of data stored in systems used. Again, using the Financial example, the Technology Product Manager will evolve the technology capabilities offered through various dimensions. For example, for version 2.0 the system will now cater for both Islamic and Conventional financial reporting, For version 3.0 it will be able to keep geographical information for each transaction and now can be viewed over a mobile phone. These capability roadmap will be managed by the respective product managers of both the Information Owner and
IT Planning & Operations
Release Manager Platform Subject Matter expect
Information Service Provider. In a nutshell, all requirements for Availability Management, Service Level Management, Incident and Problem Management as well as the continuous operational improvements of the technology platform used. Including Vendor Management, Platform choice, including planning etc. To manage the versioning and control of the technology upgrades. Should IT consciously adopt a technology platform for financial information services, the individual should be a subject matter expert for the technology used, for illustrative example; Oracle FI or SAP FI and is able to map the next evolution and upgrades that is required to meet the demands of the business
Similar activities for both these roles are:1) Change Management, all relevant training and documentation 2) Knowledge Management, continuous upkeep of the capabilities and lessons learned from being an Information Service Provider as well as an Information owner.
1) There will no longer be an overarching information governance unit for the whole bank as the function is embedded to the major functional units. 2) Ownership of information will be a pillared aggregation of key business functions. For example, all financial reporting will be focused on finance, all retail banking performance reporting will be owned by the retail head s office and so forth. 3) Information Owners are Business Subject Matter experts. 4) A business subject matter expert need not be a process expert. A business expert is concerned with revenues, competitive strategies, and customer satisfaction. A business subject matter expert should ideally either hold revenue and/or operating accountability. This will ensure that only reports that are most relevant to business decision making will be produced. 5) Information Owner role should not be a static department with a single permanent head, the head of department should ideally function on a rotation basis. This ensures that the information owner is constantly abreast with changing business needs. The longer the information owner is detached from day to day running of the business, efficiency levels are expected to reduce. 6) The information service provider must work with the information owner to map out the next generation capability set and business value to attain management support. 7) Finally, the service provider model means that all IT investments in providing and availing the information to the required owners at the required service level will be done on a pay as you use cost shared model.
HOW THE OVERAL STRUCTURE WILL LOOK LIKE
Figure 9 - Information Owner Structure and Relationship to Stakeholders
The diagram above provides a highly simplified view of how information ownership (champions) will be spread across the enterprise. 1) Financial Information owner (as a working example) is considered a shared financial service centre. All financial related reporting will go through this unit and should be the responsibility of the financial information owners to provide profitability and earnings numbers to the respective business heads. As financial risk is a subset of finance, it is not displayed as a box of its own. Secondly, financial regulatory reporting is also expected to come from this office. 2) Operational information owners are also considered a shared service centre, where the operations of ATM systems, CDMs etc. are centralized as it services all other banking units. As such, the reporting line to the heads of banking units consists of operation s service level reporting. 3) The Banking Product Info owners for all the lines of banking shall primarily provide product performance information in terms of market reach, customer penetration and profitability (taken from finance, see note 4.) as well as customer information owner. 4) The line towards Finance from Product owners are budgetary figures and estimated targets such that the financial information owners are able to measure targets vs actual and report it back to the banking unit heads, as well made available to the product info owners. As mentioned, all profitability information should be managed by Finance. Lastly, customer information should be managed by a single unit as the interrelation between companies and persons within the organization should be best centralized. A more holistic analytics can thus be achieved.
Finally, the reader may ask, what about the information service provider? Simply, ISP s = IT; and the user should already know that organizational structure best practices for IT is strewn in COBIT, ITIL and various other frameworks, such; we will end our discussion on IT on that note.
POTENTIAL RISKS AND MITIGATIONS
This model is by no means perfect, as it is generally untested, and rarely does organizations which place information as a core focus for decision making exists. Transaction costs of managing and governing the information is also considered too high and not core business activity. The following lists potential issues and mitigations mooted. Risk Description Information owners as business owners do not see the value of managing information. Thus participation and enforcement are weak. Information owners are at a lost of how to proceed Mitigation/Recourse The organization will be doomed to repeat its current existence, but at least management is cognizant of that fact and accepts the repercussions of decision making backed by less than perfect data as it is always faster and convenient.
There will be too many product information owners
There will be too many reports and too much focus on the information instead of running the business Centralization of IT services lead to support issues and backlog.
Training on information management is required. Particular information architecture. Within the banking industry, compliance and regulatory requirements will form the basis for structure and control. Naturally, regulations do not run the business! The preamble on banking business servers to illustrate that abstraction of business functions is possible. From the abstraction, products should be aggregated to its core function. Is it a loan product? Is a payment facility? It will definitely be a mistake to split hairs assigning information owners on 50 different loan products, from Islamic to Conventional, from various mortgage products to auto financing packages and assign a product information owner for each one. Indeed, this is the other extreme of the spectrum. And it will be strange indeed to have business owners asking for 1001 reports, the CEO and CFO should be well aware that the moment a head of business comes into a meeting with 50 different slides and inane facts and figures that does not relate to business performance, the function is best vacated to someone more capable in articulate business strategy. IT will have to increase various areas of expertise and minimize skill gaps. These can be done through internal training, new resources, or partnering with vendors. IT will also require a higher level governing structure in the form of Enterprise Architecture to visibly map the improvement and journey that are directly correlated to corporate goals.
CASE STUDY: TRANSITIONING TO THE INFORMATION AS A SERVICE MODEL
We continue with the banking industry case and explain a fictional as-is scenario.
AS-IS SITUATIONS AND PROBLEMS
A fictional bank contains the following departments, its daily tasks and challenges are explained. Unit Name Data Governance, sits under the COO Roles and Achievements Oversees primarily the administration and upkeep of the Customer Master Data Management system. The team has done an exemplar task in maintaining consistency of Customer Information throughout the group, but unfortunately the sphere of influence oddly stops with retail banking. Oversees the enterprise data warehouse that is an extension of a Financial application. Prepares financial reporting to the CFO and anyone else which requires financial reports A program specifically created to upgrade the business intelligence capabilities of the bank and better flexibility for knowledge workers to manage their own reporting and data representation Challenges The team wishes to extend its sphere of governing information throughout the enterprise which unfortunately, has been cornered by other units like Enterprise Information Management and Management Information System.
Enterprise Information Management under Finance
Management Information System Department also reporting to CFO
The team has total control over access of financial information and guards all enhancements to the system. However, issues vary between slow system performance to inaccuracies that requires time for revalidation. Working with IT and the MIS team to trace the problematic record or process failures. Naturally being a tangent activity and somewhat seen as IT driven, the team is fraught with challenges in displaying that the investment has value. The team is also receiving backlash due to broken reports, as another project which replaces the existing Financial Accounting System (a source system) to a new platform. Unfortunately, the rewiring of BI reports that dependent on the source system was not done cleanly enough to stop the broken reports from reaching management. Main gripes include existing reporting systems not tailored to the respective business unit needs. Essentially the practice is first come first serve, where the first business unit who invests on the said infrastructure & solution will hold a virtual monopoly and usage. Forcing the business units to establish their own system. The team is forced to capitulate whenever a new vendor successfully enamours the users and introduces a new reporting tool. Platform rationalization is only marginally successful and remains a challenge due to these factors. Secondly, rationalization exercises are not seen as value adding to the business as it is IT focused
Other Banking Unit s Financial Management structure
Fundamentally responsible for performance reporting, market strategy and aggregated sales reporting up to the business unit bosses.
The team that s responsible for the overall operations of the IT systems as well as configuration of the data warehouse and BI systems.
instead of business focus. But little do business know that these point solutions are escalating IT support and maintenance costs. The challenges and symptoms are all by products of:a) Having the user own a system/solution instead of IT. To some extent, funding the IT improvements. This leads to mine vs your system among the different business units.
b) Allowing various units to handle essentially the same role, e.g. Data Governance roles clashes with other Information units within Finance. c) Inability to deliberately execute the technology investment plan from an IT standpoint as technology selection is user driven instead of IT, leading to ad-hoc point solutions that cannot be reused or extended. Vendor platforms, diversity and complexity skyrockets.
KEY OBJECTIVES & PROJECT TEAM STRUCTURE
Our objective is to establish a business focus information management framework where businesses drive information needs while IT manages the technology landscape behind it. We also need to eliminate structural issues that lead to the symptoms above.
PROJECT APPROACH & STRATEGY
In order to meet the final goal of information ownership by major business functions, we have to start somewhere. The strategy is to gain the most value and set the tone as well as foundation for subsequent implementation, i.e. financial reporting and subsequently move on to other major business units that can be abstracted and realigned. For example, customer information management should be a shared service across the enterprise instead of belonging to retail or wholesale banking separately. 1) Setting the Technical Foundation Because of the disparate point solutions and multiple ownership of systems; head office needs to set the example by funding an appropriate end to end solution that can be shared across the bank. In this case a standard solution for ETL, Data Warehousing and Business Intelligence. If existing investment reusability is possible and the existing platforms can be expanded for this purpose; all the better. Moving forward from there the implementation steps are similar to generic green-field enterprise information reporting and data warehousing implementations but with a brown field influence in impact analysis. a. b. c. d. e. Establish a map and portfolio of all source systems in the bank and key data sources. Establish a standard integration/extraction process Establish a data model that can be expanded cleanly and quickly. Establish a reporting subscription and publication model. Establish a demand management process to address new information needs from other units across the bank.
Establish a modelling process to be able to quickly simulate how information can be rapidly provided to the business. Establish a governance process to ensure that data dictionaries and definitions are steadily institutionalized. Establish a rapid testing process that can weed out data inaccuracies and ensure quality. Establish a training program to ensure technical personnel are continuously abreast with the technology used. Remove/Consolidate reports that are underutilized.
g. h. i.
2) Setting the Business Foundation a. Establish a key product champion in finance that can steer and direct this engagement and ensure compliance by other units. Manage expectations of the key project stakeholders that clear leadership is required. Form the business team that will drive the change throughout the financial reporting structure. This will be the core change management and training team. Prioritize value statements, quantify those statements and ensure corporate sponsorship that these values can be translated when the information is available. Also explain how. Ramp up the breadth of financial management skills required to manage the transition as an financial information owner.
b. c. d.
PROJECT TEAM STRUCTURE
To reiterate the message of the framework, the structure is fragmented into major business units and considering the crux of banking lies with finance, the first information owner should be the CFO s office and a bank is too highly regulated, and too visible to not have a performing financial reporting and analytics team. We also assume that this structure will form the basis for all financial reporting and dashboards to the respective heads of business unit and eventually the CFO. It s simply unacceptable to allow the head of Retail Banking to receive a report that s totally different from the CFO s numbers.
Note: PMO and procurement roles are hidden to not clutter the discussion. Business Roles Role Name CFO (Program Sponsor) Head of Retail Banking Head of Wholesale Banking Wholesale Banking Financial Lead + Change
Retail Banking Financial Lead + Change
Financial Business Architect (SME)
Responsibilities To provide steering, direction and decision tie breaking/resolution To provide steering, direction and ensure that Retail Banking financial reporting interests are reflected accurately. To provide steering, direction and ensure that Wholesale Banking financial reporting interests are reflected accurately. To ensure that requirements of Wholesale Banking financial reporting are captured and provided to the IT/Business Analysis. To provide feedback, participate and coordinate the necessary change management activities within Wholesale Banking come deployment of the new reporting standards. To ensure that requirements of Retail Banking financial reporting are captured and provided to the IT/Business Analysis. To clearly articulate and envision business value and key decisions that will be made from each information set. To provide feedback, participate and coordinate the necessary change management activities within Retail Banking come deployment of the new reporting standards. The primary business domain expertise on financial reporting, ensuring compliance to regulatory reporting, ensuring standards in reporting, and requirements are gathered accurately and reflective of the needs of the business. To provide financial reporting methodologies and best practices. To design a reporting structure that is easily
Business Project Manager
understood and flexible and to ensure that the terminologies are institutionalized throughout the enterprise. To capture and document business requirements as well as necessary screen shot to ensure accuracy and context of the requirements are not lost. The document shall be clearly understood by the business. Able to handle workshops and manage conflicts of interests during those sessions, able to keep the sessions moving. To ensure the coordination and alignment of the respective business units. To ensure that the project charter, scope, plan and deliverables are endorsed as well as adhered to by the business participants. To collectively manage project issues, risk and scope change management with the IT project manager. To provide project communications to relevant steering & stakeholders. To lead procurement activities. To lead procurement activities and negotiations. To perform vendor management during implementation.
Technical Roles Role Name IT Project Manager
IT Business Analyst
IT Change Management/Deployment Solution Lead
Responsibilities To ensure the coordination and alignment of the respective business units. To ensure that the project charter, scope, plan and deliverables are endorsed as well as adhered to by the technical participants. To collectively manage project issues, risk and scope change management with the Business project manager. To provide project communications to relevant steering & stakeholders. To lead procurement activities and negotiations. To perform vendor management during implementation. To work with the Finance Business Architect (SME) in translating business requirements into specifications that can be worked on by the DW & BI leads. To work together with Finance Business Architect (SME) in clearly defining business requirements. To ensure that the solution provided are tested for accuracy, stability, consistency, availability & performance and to manage the bug tracking and closure exercise during UAT and pre-live tests. To also perform release management of fixes post live until handover is over. To ensure successful training of both the business users in acclimatizing to the new reporting standards. To ensure that the overall platform design and standards comply with the roadmap and direction of Enterprise Architecture, and to cohesively glue the implementation of the project; covering aspects of ETL/DW/ BI Reports and the Infrastructure. To work with ETL/DW/BI/Technical lead to define a logical roadmap of subsequent evolution. To design the reporting screens and prepare specifications of how the ETL processes will be presented. To design the data models required for the Datawarehouse. To be an SME on the ETL and Datawarehouse tool. To design the reporting screens and prepare specifications of how the BI report will be presented. To design the reports based on the technical constraints of the BI Tools.
ETL&DW Lead (Note that for complex tasks, this role could be split into two) BI/Reporting Lead
Technical Infrastructure Lead SI Applications Vendor SI Technical Vendor
To be an SME on the BI reporting tool s capabilities To lead and manage technical vendors engaged in preparing the necessary infrastructure (servers, software, networks and security) required for the new system to run. To perform configurations based on the specifications provided by the BI/Reporting Lead and ETL/DW Lead To perform the delivery, installation, configuration and testing preparation on the infrastructure components specified by the technical leads.
WHAT HAPPENS TO THE ACTORS
1) IT will be part of the technical team in white. 2) Enterprise Information Management unit should technically be able to function as the Financial Business Architect, provided that they have the relevant skill set and still tightly engaged as an operating area of finance, e.g. Management Account, AR/PR, Treasury etc. If that skill set is lost, then they would be best merged into the IT team as Business Analysts. 3) The MIS team can be absorbed into the technical and/or business implementation team as Testers, Business Analysts and Change Management due to their exposure to the technology product. 4) The existing Data Governance unit will be merged into IT as experts in data quality and institutionalization of data dictionaries for IT. They will be the SME to spread the gospel of data governance and records management principles to the business as well. The team will lead respective Information Owner Governance personnel to ensure cross pollination and institutionalization of governance principles.
TRANSITIONING THE BUSINESS STRUCTURE POST LIVE
Once the project has completed, the Financial Business Architect will need to be maintained for a short period of time and function as the Information Owner. The person however, will plan to handover his reign to a specific head of business in Finance during the end of their tenure. Ideally to ensure that the financial reporting standards are continuously improved upon and tuned to capture the key decision needs of the other financial units. For example, Treasury in Finance is fundamentally different from the team managing Procurement or Accounting. As the Head of unit also has a day job, there will be a need to create a more permanent Financial Information Governance Team. This team will build upon the standards already defined during the implementation and ensure
that the dictionary of terms used, traceability of information sources and conflict resolution and troubleshooting of discrepancies are done together with the IT people. They are also the requirements personnel to specify new business specifications to IT. Financial Info Release Management should assist the Financial Owner in planning out new sub projects and improvement with the IT team; they will coordinate with the rest of finance in deploying these new features and work with IT in coordinate releases and managing the release process. For example, roll out, training. These two boxes will fundamentally collapse the roles and responsibilities mentioned in Roles and Responsibilities on an Information Owner . For example the Financial information Product Management role is a combination of both these boxes.
HOW IS IT DEPARTMENT S STRUCTURE?
Fundamentally unchanged, but the operating paradigm needs to. Instead of being a cost centre it will be a profit centre, with reasonable margins that is sufficient to be reinvested back to the overall IT system improvements. To avoid conflicts of interest, the IT personnel s KPI CANNOT be judged from margins made but through the overall accuracy, performance and stability of the system. This will avoid overzealous IT managers from pegging margins generated to their bonuses. The service provider model will also reduce the need to depend on business for upgrades and improvements and all funding decisions will be a CFO decision. It also decouples the influence of business in determining for IT the technology they would prefer to use. The bank will transfer all asset ownership to IT, whereupon a cost plus allocation model will charge back the cost of maintaining existing systems including a margin that is sufficient enough to snowball into funds that can be invested back into system improvements. The calculation of the said margin and cost allocation model is beyond the scope of this model and needs to be revisited separately. However, it is crucial for this to happen to break the cycle of me vs. Your system that is prevalent amongst multi subsidiary and large corporations. The key question here is whether the IT organization has the maturity and exposure to be managed as a profit centre.
SUMMARY AND CONCLUSION
We began the journey with 3 problem statements, having multiple organizations managing overlapping set of data but owning various systems; the static nature of organizational departments, particularly information management; and the organizations lacks an information soul, the non-existence abstraction and productization of information to be consumed by various areas of banking; resulting in leadership gaps and users who are unable to drive requirements and improvements. So we laid out the solution that began with leadership, the embracing business functions as the ultimate owners of information and not the system. An idea that is largely influenced by Enterprise Architecture principles of starting with the strategic intents, business aspirations and needs before we can even provide IT solutions to meet these goals. To end, we reemphasize that the info-owner role is not an ivory tower position and perpetual, the information owner needs to be rotated through the particular business line that owns the subject area. Lastly, there s a need to
decouple business from IT and for IT to function as an information solution provider to business. Let IT chart its own destiny, and in order to do that, a mechanism that drives improvements through a self sustaining charge back cost plus model is required.
APPENDIX : SAMPLE PROCESS FOR INFORMATION SERVICES PROVISIONING
APPENDIX - SOURCES
Bruland, Tine. Industrial conflict as a source of technical innovation: three cases. Economy and Society 112 (May 1982): pp. 91-121. Carley, Kathleen M., and John R. Harrald. Organizational Learning under Fire: Theory and Practice. American Behavioral Scientist 40, no. 3 (1997): pp. 310-332. Dutton, Jane, E. The Processing of Crisis and None Crisis Strategic Issue. Journal of Management Studies 23, no. 5 (1986): pp. 501-517.