Business Engineering
Emerging Trends
SystemicLogic News FeedWhy do we need CMS now?
“We are drowning in information and thirsting for knowledge.” John Naisbitt, Megatrends 2000.
In the past decade advances in ICTs have resulted in an explosion in the generation of both structured and unstructured information. The prime driver of content management and the development of content management applications has been the quest by Information Age companies to streamline information assets in order to gain enterprise knowledge needed to realise business goals. This is because for contemporary institutions, content management systems (CMS) offer the promise of optimal solutions for holistically creating and managing enterprise content and mostly for organising, interpreting and integrating content for reuse. There has been an urgency to identify and implement solutions that enable organisations to rationalise their chaotic information terrain, to gain competitiveness and business agility through effective administration of the information resources. However, given the hype surrounding CMS, the increasing vendor market consolidation and the penetration of Open Source alternatives in the market, selecting the right system and successfully implementing a CMS project can be Mammoth tasks for IT managers. SystemicLogic's experience in a number of CMS projects for large corporate organisations has proven right the reality of this challenge. Some clients, for example those using Microsft Sharepoint have expressed discontent with the solution. The million dollar question is: Do we blame the software or implementors or both? If so, how can large entities make the right CMS choice (whether proprietary or Open Source) and at the same time ensure CMS projects deliver real value to business and not only to IT?
Implementation: Cant we begin with an 'end in mind'?
While there are several best-practice checklists for implementing CMS out there, SystemicLogic's experience in both Open Source and proprietary products, indicate that many clients are failing to successfully deploy CMS. Firstly, a majority of implementors rarely begin by envisioning the end goal of their projects. They lack a vision of the bigger picture and can not explicitly identify key business values that must be attained after closing their CMS projects. There is need to ensure that CMS is used as “a means to an end' by implementing it as part of a broader information and knowledge management strategy. Secondly, there is little realisation of the complexity of content management among clients. CMS projects transcend various facets of the information management discipline (data, records, document, knowledge management). Thus certain issues such as usability, data and information architecture needs to be taken into account before considering purchasing off-the-shelf solutions. In addition, the integrative nature of content management require a careful and detailed study of how CMS will merge with many business processes and how it will interface with other information systems such as document and records management. SystemicLogic has noted that conducting an in depth organisational self introspection to understands content management needs, defining the future business direction, building a strong business case for the project as well as understanding CMS issues, are key to successful implementation.
CMS Selection: Do we need to clear hype to make right choices?
Absolutely!There is a big confusion about the functionalities that characterise CMS and about the differences with less performing products such as web content management systems, document and records management systems and enterprise content management systems. More often than not the crux of the matter is the confused nomenclature and the ever growing list of acronyms within the information management discipline. Not every IT manager understands the metamorphosis of information elements from data to information, to content and through to knowledge and enterprise wisdom not to mention the intrinsic difference between the terms. This affects solution selection decisions.
Distinguishing between these terms is the starting point in getting functionalities of CMS straight. It is fundamental in ensuring you match particular content management needs and the appropriate CMS solution or a set of CMS applications. This strategically helps minimise the major CMS project risk: misalignment of content management requirements with unsuitable products. Moreover, increasing numbers and diversity of both proprietary and Open Source products exacerbates the complexity of the software selection and roll out puzzle. Thus high client dissatisfaction from selecting the wrong systems and serendiptious happiness resulting from stumbling across the right application, are two most common situations likely to face IT project managers. CMS knowledge arms organisations to appropriately respond to risks that may cause project failure, for example, confusing the CMS project and the broader website project, ignorance of content management issues, assumptions CMS products, or failure to distinguish between requirements and selection criteria.The vendor market: Do we know what to look for in CMS?
A number of Open Source products have also penetrated this technology area which is increasingly becoming mission-critical for current knowledge-based organizations. However, the market is replete with products that offer individual content management components. Some vendors who have even capitalised on the hype and are claiming to offer CMS when in actual fact some do not provide basic end-to-end content management processes, making life difficult for would-be CMS clients. True CMS have to support all the phases of content creation, management, presentation and distribution, content control and content individualisation. These life cycle phases include collection , management and publication processes.
EMC (Documentum), Vignette (V7) and Microsoft Office SharePoint are some of the leading proprietary software (Gartner, 2008). However, The Open Source CMS Award 2008 also identified Drupal and Joomla! as Open Source leaders (while Plone, dotCMS and DotNetNuke are maturing.SystemicLogic has compared different systems in the Open Source category relative to each other based on how well they match particular clients' requirements. The study indicated that some solutions like Alfresco, XOOPS and Typo3 are becoming mature enough to warrant implementation within an enterprise IT infrastructure framework. It recommended that for CMS implementors, it is ideal to evaluate community based and commercial based Open Source solutions along side commercial alternatives as part of a tender process. Evidence of the growing maturity of Alternative Source products point to the fact that it would be no surprise to find that some may prove to be the best CMS solutions for sizeable organisations.
However, the cross-cutting nature of content management means that solutions offering a full content life cycle management are gaining the lead as more companies are better understanding the concept and are focusing on whole-of-enterprise integration of information management capabilities.Establishing companies are beginning to consider end-to-end solutions as compared to partial CMS solutions. Needless this does not provide a hard and fast rule in selecting nor implementing the systems. Choosing the bigger software is not always the better. The better is to seek first to understand the particular content management problems to be solved and then seek to be understood by CMS vendors. Depending on the as-is environment, an organisation might prefer to select a couple of best-of-the-crop systems and apply a federated implementation approach. In some cases it might be prompted to chose one or two applications to avoid duplication of effort if existing solutions perform similar content management functions.
Winding It Up
There is no doubt selecting CMS required more than basic software selection acumen. Understanding and defining specific content management requirements, knowing content management concepts and specific business drivers of CMS project, and an intelligent survey of the content management software market can place IT managers at a vantage point to derive desired return on investment in CMS.
Watch this space for the next Open Source feature on Form Solutions.
All modern organisations, in existence for any length of time, will have built up a portfolio of technology assets. Often these assets are acquired without a guiding blueprint; with many developed, customised and altered to fit each organisation’s specific context, at a point in time. A key responsibility for technical architects is to understand the health of the current technical environment in their organizations. This understanding allows them to prioritise and address those areas which are most in need of intervention, whether the interventions be incremental corrective actions or investments in wholesale replacement of infrastructure or applications. SystemicLogic, has many years’ experience in conducting asset health assessments for its clients. Some have progressed to having assessments performed at regular intervals. These help monitor the success (or otherwise) of corrective actions, or place a measure on the degradation of assets, often the result of urgent enhancements which may not be architecturally well aligned.
SystemicLogic makes use its health instrument as the underlying framework to conduct assessments.
From earlier this year, this framework has been supplemented by an analysis system which supports each assessment. The system records the criteria and results for each making re-applying such assessments far more efficient. The implicit standardisation facilitates monitoring of trends over time. A set of standard templates also allows an initial assessment to be constructed quickly, and to serve as a jump-start - which can then be customised to include additional criteria for a specific customer situation.
Additionally, the following types of assessments are also performed:
- SOA readiness
- Business fit of existing applications
- Technical obsolescence
- Evaluation of COTS products
- Providing a factual basis for decision making and for prudent management of an organisation’s technology assets
- Supporting an integrated technology planning process
- Ranking assets across a variety of dimensions, allowing decisions such as which to keep and which to retire
- Supporting organisation’s operational risk assessment efforts
Developing a really compelling offering into a competitive market is a challenge. Today, the offering, as we term it, is a unique combination of services and products which form the overall proposition to an organisation’s customers. Within a competitive market the uniqueness, coolness, functionality, price and value adding services, in combination, will determine the success or otherwise of an offering in a given market.
The challenge however does not end with the design and development of the offering. If the market perceives that the proposition is not what it is made out to be, and the promise is not being fulfilled, the offering can quickly lose its appeal and destroy any reputation that was staked out in the market. In a partially dematerialised world, the providers of the various products and services will typically be global, brought together in an ecosystem providing the capabilities supporting the offering.
SystemicLogic’s innovation approach considers the offering as well as the capability in assessing and defining market offerings. We have found numerous examples where customers prefer standard offerings supported by excellent capability, rather than “innovative” offerings underpinned by capabilities that are less predictable. This is supported by the recent findings on customer perceptions of basics versus innovations in banking. The Bank Channel concludes that getting the execution right is the differentiator! The corollary is that few, or perhaps none, have got the basics really right yet.
Shepherding an ecosystem of service providers and products is not easy, and in today’s environment adds complexity which did not exist before, when organisations were the producers and all required capabilities were under their direct control. Automation, as in business process management and service oriented computing solves some, but not all issues. As a minimum organisations have to consider the ecosystem in terms of people, processes and technologies across different organisation boundaries and how these support “customer service”. Ultimate accountability for delivering service ought to be clear; guiding the customer to different providers of capability can cause confusion and dilute the brand, and must be handled with care.
The trickiness of getting this right was borne out recently yet again (through personal experience) when attempting to have an iPhone’s discharging battery problem addressed. The message from the network operator who sold the device, and Apple, the provider of the device, were not consistent. Accessing Apple’s services was a mission, and the customer experience left a lot to be desired! Excellent opportunities for improving capabilities still present every day!
The advent of Internet and communication technology has significantly transformed the business of banking. It has also stimulated the development of Core Banking (CB) solutions that drive key banking operations. CB systems provide transaction processing and account management functions underpinning traditional and contemporary banking products and services. These systems ideally allow all products, processes, channels and customer relationship management tools to be integrated and administered through a central database of a bank, with branches and channels as delivery points. Innovations in the core banking IT systems capacitates a banking institution to develop, process, and manage its basic financial products and services effectively.
Drivers of CB Systems Reform : Global
Banking organisations are driving towards core banking systems transformations to re-establish themselves. Banks and other financial institutions are currently experiencing a number of challenges and pressures that are prompting reviews of legacy core banking applications with a focus to either totally or partially replace, or incrementally modify them.
Market changes
As market pressures transform operational models in retail banking, IT transformation has become even more critical. Core systems renewal including architecture, systems, and functions will clearly be the main step towards operating model transformation for back-office-cross-country consolidation, global knowledge sharing, global marketing practices, and so on. The current economic downturn has pressured several organisations into freezing new developments in an attempt to save costs and optimise efficiencies. This will place a damper on initiatives relating to core banking transformation and risks the termination of projects that already boast of significant investment.
Technology changes
Internet and Web2.0 technologies have substantially elevated the impetus for core banking systems renewal. These technologies are essentially viewed as instrumental in the realisation of Bank 2.0 goals. The Internet has changed the way clients buy financial products since it has allowed them to compare offers and prices very easily, from anywhere at any time – a simple illustration of its potential. Web 2.0 technologies promise to enable banks to build faster, more flexible and less expensive IT systems and leverage Service Oriented Architecture (SOA) and Open Source solutions. Reality however highlights that many of the journeys are still in their infancy. SOA as a prime example has had significant hype associated with it and business stakeholders are not seeing the benefits of their initial investments. SAP and Microsoft based solutions (to name a few) represent capabilities that have only recently entered the banking space and aims to provide significant flexibility to customers. Findings do however suggest that technological change (as an influencer) is an important consideration, but that the problem in transforming core banking lies with existing complexity, skill and organisational maturity.
Profitability and competitive advantage
Banking organisations are also facing a critical challenge to future competitiveness and profitability. Their core banking IT systems were developed in-house over decades and built on proprietary technologies that are now becoming outdated, are performing poorly and are draining resources. In numerous cases, banks are trying to function with a patchwork of legacy systems that are not integrated into other key solutions and also require frequent and costly maintenance. For these reasons banks have started to consider transformation of their systems in total or partial. According to Forrester, sixty-nine percent of European banks have either started to renew their overall application landscape or have concrete plans to do so.
Key questions remain with regard to the impact of over focusing on cost saving initiatives in the short-medium term:
- Are IT projects not delivering value and therefore (as a cost centre) merely being put on hold or scaled down until the economic climate changes?
- What impact will sudden knee-jerk reactions have on medium term outcomes?
Agility in face of mergers and acquisitions
A wave of mergers and acquisitions, greater economic growth and political stability, and the aggressive expansionist efforts of their counterparts are driving banks, especially in Latin America and the Caribbean, to embrace a wide variety of new technologies. Many have legacy systems that are difficult to maintain and complex to change at a time when banking divisions are aggressively looking to launch new products and embrace different business models. Hitherto, Latin American banks have lagged behind other institutions in renewing their core banking systems partly because they have developed so much technology in-house, leaving them with a particularly “tangled web” of systems. Stock markets and GDP growth rates are booming in Latin America, increasing revenues and paving the way for major overhauls. Mergers and acquisitions have only accelerated the trend and the ability to integrate, interface and to quickly amalgamate has been made difficult by legacy systems in back offices.
Outsourcing and Offshoring – Finding the “Rightshore” and “Rightsource” balance
The World Retail Banking Report 2007 indicates that a large proportion of banks are outsourcing their IT functions and development, and that maintenance and operations are usually the primary concerns. Almost half the retail banks studied have offshoring practices, mostly in back-office and IT functions. External research findinds predict that these practices will largely expand in the next five years regardless of business function. In future, retail banks expect to see a substantial portion of their IT and support function staff offshored. Thus banks need to align their core banking systems to the future banking operational model in which outsourcing and offshoring will dominate.
How Much Systems Renewal is Feasible?
Although a majority of legacy systems in most banks are fast becoming obsolete, complete overhaul of the existing back office system that support core banking is a challenging exercise. While a number of banks are contemplating core banking systems reform, CEOs and CIOs are quite aware of the titanic financial and human resource commitment demanded by renewal projects. Core systems reform projects are suffering significant overruns and past failures of such initiatives in the industry compromise their confidence.
One of the primary influencers is skill. Many banks initially consider core banking renewal as a “new look” built on top of existing capabilities. Banks have however realised that process development on replacement systems cannot simply be based on legacy capability (i.e. legacy processes). It is this context that banks are now driving process re-engineering efforts to better serve customers and clients. The challenge lies in the skill sets of analysts and to produce these new processes. The bottom line – the way of doing banking resides in the systems affecting people's perception of how the world works, not how it should work.
Another dimension of renewal relates to the type of system asset. Third party packaged applications will most certainly be unfeasible to replace due to the investment and intellectual property poured into the solutions over many years. Rebuilding these applications will in most cases not be cost effective. Replacing internally owned self-built capabilities does however provide a more feasible option, but will need to be weighed against (among others) cost factors.
Large banks
The Boston Consulting Group carried out a survey on European banks in 2006 to glean on their preference regarding IT reform. Most participants favored a phased approach whereby legacy systems would be replaced module by module or in several waves instead of the “the big bang” migration. Off-the-shelf software solutions are preferable for small banks that often focus on certain customer segments or specialise in specific product portfolios. A majority of European banks also indicated preference to host/mainframe technical platform vis-a-vis reverting to a different platform during the course of renewal, and that ongoing application development would be better done in-house for the new system, with only desktop services and first level support being largely outsourced. development of new functionality and application maintenance could then also be offshored in selected areas (i.e. “rightshore”). Even Microsoft, a distinguished player in the software industry, has recommended a phased approach to renewing core systems. A significant emphasis does however need to be placed on the co-existence of new development methodologies with the old. Organisational planning maturity needs special attention.
Small to mid-sized banks
Small and mid-sized banks appear to be more inclined to undertake major core systems replacement projects. However, banks and vendors are mostly taking interim steps, wrapping existing legacy systems in 'SOA-Service consumer' front-ends, while handling the issues with middleware as opposed to totally migrating to a new core. The need to achieve greater economies of scale force most small and some mid-sized institutions to outsource IT to service providers that can offer them more centralised customer information files, which feed from the back-end and communicate with Web-based, intuitive interfaces powered by modem servers for a reasonable price. Nevertheless, improvements in integration, software features and functionalities, recent vendor consolidation and advancing technology are positioning smaller banks to demand more flexibility in core banking solutions from vendors.
Case Studies of Systems Renewal
(a)Nedbank required a smooth upgrade to mySAP ERP application to take advantage of new functionality and platform and ensure Web access for customers. It also required immediate attention to issues Error-free go-live, thanks to SAP Ramp-Up services and support and a direct link to SAP through SAP Ramp-Up coach. Benefits included implementation on time, 20% under budget, no interruption to business users whatsoever, enhanced employee productivity via simpler interfaces, faster processes, better management reporting, resulting in more effective decision making and enhanced customer service.
(b)Syndicate Bank, a large Indian public-sector bank chose i-flex's FLEXCUBE and IBM's infrastructure technologies and implementation services in order to upgrade its banking systems. As part of the transformation, i-flex and IBM provided a comprehensive IT plan, mission-critical applications and integration services. The solution has also flawlessly supported the bank's launch of new products.
(c)Santander migrated all of the group’s core systems onto a single platform and then plans to develop an entirely new Java-based application in-house and expects to reap savings of about € 250 million annually.
(d)Postbank, the largest retail bank in Germany, has been working with SAP to create a new core banking system. Postbank anticipates total investments of about € 300 million and is already achieving annual savings of about € 50 million.
(e)ABN Amro's Indian subsidiary selected Infosys as the vendor to phase out an older solution. Interestingly, ABN Amro has been able to achieve considerable cost savings in operations, and has also created some innovative additions.
(f)Jih Sun turned to Temenos T24, running on Windows Server 2003 which supports which supports some 2.4 million accounts and 1.4 million customers across 49 branches
(g)Banco Azteca, the fastest growing bank in Mexico, serving nearly a million customers through 850 branches across the country, had a critical component of its banking services migrated to a 64-bit Microsoft Windows Server 2003 platform.
CB Systems Reform: Future Expectations
Next generation core banking solutions face high expectations from user communities.
Realising one bank ,one architecture
In a few years ahead banks will most likely consist of a wide range of back-end applications supporting core banking. Thus internally the applications will deliver separate products and services but should converge so the customer can seamlessly hop from one application to another without feeling the difference. One bank one architecture concept is seen as a potential benefit of technology convergence and standardisation. Open standards and integration middleware will most likely dominate future core banking systems terrain giving way to the intelligent information networks that will transform banking business into a truly customer-centric operation. The overall solution could embrace IP Telephony, customer care, wireless, IP ATM's and kiosks, IP video surveillance and content delivery network.
Design and architecture of the systems should facilitate rapid response to change which is often going to be driven by frequent redesign of business processes. A focus will be placed on enabling data integration for various purposes such as cross selling, customer relationship management, regulatory reporting and internal management information system at lower cost.
The remaining challenge (through decades) resides with how an organisation can actually identify and separate the common aspects of banking capability from its variations. This is a particularly difficult mindset to adopt especially when businesses are focused on differentiation and often reject the idea of “commonality” in their own context.
Enabling multi-tasking
Next generation CB systems will also be expected to perform several functions which most current ones are falling short. These shortcomings include allowing product innovation, bundling, flexible pricing, integration of third party products and real time transaction processing. They should be able to provide a comprehensive database for all business segments that support customer centricity and a functionality that allows smooth IT integration of new product launches in order to accelerate the time to market new offerings.
Open Source-driven
After the legacy and the ERP era, the Open Source era appears to advance at a steady pace. Ideally banks want to develop software by leveraging commoditised capability i.e. find Open Source components easily at no or low prices, and once integrated these components can represent a majority of bank core system software. The effect will be low technology costs for banks that could be translated into low fees for high quality products and services. One of the challenges is in the evangelical view that Open Source can replace all software offerings. In niche vertical banking markets, Open Source has no representation or meaning, and will only play a more significant role in the foreseeable future in horizontals (i.e. CRM and Productivity).
Conclusion
In order to keep up with dynamics of global markets, technology and growing competitive forces, transforming core banking IT systems has become a pending reality for banking and financial institutions of all sizes. However, renewing banking platforms involves prudent requirements analysis, software selection, application development and integration, and technology decisions. Its success depends on top management involvement in the different transformation phases, the availability of operational managers with futuristic mindset and continuous communication inwards and outwards.
Check related articles on on our research portal...
- Technology in Banking: Breaking Down Technology Barriers
- Emerging Technologies and Innovation in Banking: Drivers for Growth
- The next generation: Progress in core banking technology
- Core Banking Infrastructure Renewal
...and on Slide Share
For a couple of years now the University of Pretoria's Gordon Institute of Business Science (GIBS) has worked with SystemicLogic executives in the area of Innovation. It is against this back ground that SystemicLogic is proud to be associated with the recent success at GIBS.
For the sixth consecutive year, GIBS has been ranked as one of the World's top business schools by the prestigious UK Financial Times. GIBS was placed 38th in the rankings and is the only African business school to achieve this accolade. The ranking, announced earlier last week by the Financial Times, is based on the performance of GIBS’s Executive Education and Company-Specific Programmes (CSP).
Professor Karl Hofmeyr, GIBS director of CSP, was delighted to see GIBS’s hard work pay off. “We are very pleased to share our success with the companies, government departments and state-owned enterprises with whom we work in partnership. Our standing among the best schools in the world is particularly important for us at this time in South Africa, as we continue to strive to provide world-class executive education with a strong practical orientation. We are particularly proud to be one of only four business schools to be ranked from emerging economies,” Hofmeyr said.
Innovations across GIBS have undoubtedly contributed to its burst into the global sphere of excellence in business education. Given the sustained synergy between GIBS and SystemicLogic, the future of innovation in business education remains orange. GIBS is poised to continue making inroads up the excellence ladder.
“We would like to thank you for your support, and assure you that we continually innovate to ensure that we bring you best practice and cutting edge business education,” GIBS acknowledged in a letter to SystemicLogic's CEO Jay van Zyl.
