Essence of IT Integration in Business Strategic Planning

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Essence of IT Integration in Business Strategic
Planning

• M. Tareq Bashir
• Samba Financial Group, OT
• PPM Head, AGM
• Email tareq.bashir_at_samba.com
• Cairo- May 5th, 2008

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IT History in Business Support

• In 70s IT was Computational Tools
• In 80s IT was Operations Support Arm
• In 90s IT was Business Solution Provider
• In 2000s IT is Business Strategic Distinction
  Power

If IT Investment cannot empower business
strategic planning with trusted dynamics, then IT
investment is definitely a questionable
cost. Jeffrey Kaplan, Strategic IT Portfolio
Management
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Business Strategic Planning

• Business Strategic Planning is Dynamic Computed
  Alternative Plans that helps Transforming the
  Environmental Challenges into Opportunities to
  achieve the Business Strategic Goals.

• You should be able to
• Forecast the change and evaluate its probability
• Identify its impact on the business strategic
  goals.
• Position to transform the change into
  opportunity.
• Trigger a fulfillment action plan in short time.
• Refine the action plan as ambiguity level shrinks
• Measure the strategic objectives achievement
  level.

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Strategic Planning Objectives

• Strategic Planning Main Objective is to Maintain
  the organization Ability to Improve its Financial
  and Performance measures under the Environmental
  Changing Parameters.

• Samples of financial and Performance Measures
• Net Income for the Equity (NIE), Return on Equity
  (ROE)
• Revenue-to-Expense Ratio (RTE)
• Return On Assets (ROA), Return On Investment
  (ROI)
• Net Commissions Income (NCI)
• Total Operating Income (TOI),
• Total Operating Expenses (TOE)
• Earning per Share (EPS)
• Customers Deposits

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Organization STOP

• The most suitable strategy should lead to
  achieving the strategic objectives considering
  the organization STOP
• (Structure, Technology, Operations, People)

• Possible Strategic Objectives could be
  combination of products objectives as
• Grow vertically or horizontally against probable
  gains
• Shrink against high probable loss risks
• Acceleration or de-acceleration based on risk
  levels.
• Transforming business to address customer
  expectations
• Balance risk taking within investment portfolio
• Or other objectives

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IT Projects Portfolio Management

• The most governed model of managing IT investment
  is Project Portfolio Management models to screen
  and prioritize IT projects

• IT investment council sets the strategic
  objectives for the PPM to screen and track
  projects fulfillment
• Demand Management
• Capacity Management
• Block out unjustified investments
• Scoring Projects ROI and Prioritization
• Manage the Portfolio Risks at Enterprise Level
• Tracking Projects from initiation till ROI is
  realized

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Demand management Cycle
SUSTAINED BUSINESS VALUE
Business process needs
Applications, services, products
IT chargeback
Resource management
Financial management
Project Portfolio Management
Project portfolio
Strategic
demand
Service catalog
Service portfolio management
Tactical
demand
Operational
demand
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Strategic Planning Modeling

• Strategic Plan is Weighted Decision Tree.

Action Plan (Cost, Duration, Risk Value)
AP4(C4,D4,R4)
AP2(C2,D2,R2)
G1
P1
Pr2
AP5(C5,D5,R5)
AP1(C1,D1,R1)
P0
Pr0
Pr1
G2
AP6(C6,D6,R6)
P2
Pr3
AP3(C3,D3,R3)
G3
AP7(C7,D7,R7)
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Strategic Plan Positioning

• Strategic Planer should position Correctly the
  organization STOP to achieve cheaper and faster
  opportunities catching.

• Ask the questions that improve your position
• How the organization Structure can absorb
  changes?
• How long the structure takes to react to the
  change?
• How to build Technology that gives me advantage?
• How to minimize the Operations impact?
• How to prepare People agility to catch the
  opportunity?
• How long it takes to realize the goals after the
  catch?
• How I can reposition in a better STOP after the
  catch?
• If I miss, can I catch an alternative
  opportunities?

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The Opportunity Qualifications

• A business opportunity should be qualified by its
  value, contribution to strategic goals, timing,
  realization duration, and risks of regulations,
  competitors positioning and market acceptance.

• Avoid attacking false and dead opportunities
  with
• market does not need it yet.
• ROI is suspicious and cost is high.
• Regulatory grounds are shaky.
• Competitors are ready to eat most of it.
• Will lead you to a wrong position.
• Beyond your ability to realize its value within
  reasonable time limits.

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Why IT can give you better hits?
The right IT Infrastructure should help you in

• Maintain business fitness
• Improve your positioning
• Hit the opportunities of maximum ROI
• Reduce wasted energy and cost
• Repositioning will be easier
• Reduce the risk value in faulty hits

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IT Improves Organization STOP

• IT should unleash business innovation in
  strategic planning, monitoring opportunities,
  scoping solutions and realizing target benefits.

• IT foundation should secure the organizations
  position by
• Strengthen organization structure to bridge
  between functions, eliminate ownership conflicts
  and fill gaps.
• Speed up time to market and enhance solution
  offering
• Expand parallel opportunities handling bandwidth
• Minimize operating cost and adaptation impacts
• Cut people cost and overheads in reacting to a
  change
• Improve measurability of business performance
• Improve reporting on strategic objectives
  realization

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IT Standards Is Time and Cost saving

• IT reaction time is relative to standardization
  level of the organization that allows products to
  integrate efficiently, people to communicate
  easily, vendors to engage smoothly and
  measurements to reflect truth.

• IT standards are including
• Processes,
• Communications
• Interfaces,
• Applications,
• Operations,
• Databases
• Security
• Infrastructures

• IT standards References
• CMMI, PMI, ITIL
• EMV, XFS
• ISO, XML
• J2EE, Web Sphere,
• PCI DSS
• Oracle, Sybase, SQL
• VISA MasterCard
• UNIX, WINDOWS,

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Business Process Modeling

• For effective business-IT alignment, BPM is a new
  practice that extend the business requirements
  and systems analysis into common meta-data
  presentation layer, common transaction flows,
  common business rules and operations fulfillment
  terms and conditions.

The traditional business analysis practice are
subject to change and the business should work in
sting his global rules, operations requirements
and systematic flows. Business intelligence is
the outcome of the defined BPM implementation on
an IT dynamic Infrastructure. Together business
leaps to higher level of solution offering
freedom dimensions.
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Strategic IT Infrastructure Components

• IT infrastructure should be aligned with business
  strategic plans. The cost should be recovered
  over multiple opportunity's achievements.

• Strategic IT Infrastructure modules are
  integration of
• Networks that gives the banks wide reach
• Hardware that expands with volumes growth
• Uniform security layer that prevents cracking
  risks.
• Databases that maintain reliable business
  information.
• Transaction Monitoring Middleware
• Applications that maintain homogeneous integrated
  links and avail reliable encapsulated business
  services.
• Self service channels that attract customers use.
• MIS system that presents facts, trends analysis,
  business segmentation and probability calculation.

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Strategic IT Infrastructure Components
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Service Oriented Architecture (SOA)

• Applications Architected to integrate business
  blocks in a flow that offer an integrated
  business service.

• How SOA units are built
• Build IT applications functional blocks with
  standardized interface and well defined
  functions.
• List the application blocks in a catalogue with
  documented business logic description.
• Use workflow engine to integration these blocks
  in a structured business flow. This flow is
  providing a total business service.
• Load these business services into a Transaction
  Integration Engine that controls the services
  execution.
• Request the service by message through the
  Enterprise Service Bus.

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Business Services

• How a business service look like?

• A business service should have
• Interface definition in form of input/output
  message format,
• Security validation, Access rights verification
  and data formatting checks
• Business rules and risk controls validations
• Business workflow of integrated steps each is a
  functional application block (could be from
  different applications)
• Checking on execution results (error checking)
• Service Performance measures logging

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Business Services is Assembling Game

• Reuse concept reduces overheads and cut time to
  market tremendously.

S(n) Service Workflow Integration Vector
Functional Blocks Repository
Formatting
FB1
FB2
Workflow Engine
Validation
FB4
FB3
S(1)
Verifications
FB8
FB7
FB6
FB5
S(2)
LOADING
S(3)
Processing
S(n)
FB11
FB10
FB9
Logging and Error Handling
FB14
FB13
FB12
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Building Functional Blocks

• Applications should maintain a core for
  operational purpose and functional blocks for
  service offering.

• What is a functional block
• Checking customer credentials
• Checking account balance
• Checking limits for product/channel
• Debiting/crediting account
• Processing Check book request
• Logging audit trail record
• Ordering check book
• Applying fees
• Sending SMS notification to customer
• Etc.

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Services should be Dynamically Built

• If business has the right application functional
  blocks, building business services should be cut
  and paste process, test, refine and
  implementation.

What is a service Integration Vectors Dynamic
workflow structure that define for a specific
service what is the sequence of executing the
application functional blocks, how to validate
their execution success and to take a decision on
the execution results to commit the updates or
revert back then to respond back to requestor
with standard response message.
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Enterprise Service Bus (ESB)

• The Engine that has the responsibility to handle
  the messages between SOA components and connect
  the various types of middleware, meta data
  depositories, registers and interfaces. Workflow
  Engine will execute the services according to its
  designed flow.

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Derived Value from IT Investment

• In 2002, Mainstay surveyed 450 companies across
  financial, energy, health care, manufacturing ,
  retail, products and Telco on IT value of their
  projects. The sample was from USA.

• Optimizing IT processes derived ROIC (return on
  Invested Capital) of 10-15
• Reconstruction of Core Products derived ROIC of
  2-3
• Inventing new IT capability to enforce business
  strategic solution modeling achieved 10 folds ROIC

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Business direct benefits

• Business under this infrastructure has the
  freedom to attend an opportunity with minimal IT
  development work.

• How does SOA help business?
• It helps business focus on business rules and
  business modeling of the services
• It cross between applications and environment to
  integrate functional blocks that fulfill one
  integrated service
• It helps business construct, reconstruct and
  generate new services in simple and quick
  process.
• It helps business avoid large amount of testing
  as the functional blocks are well tested.
• Transfers human knowledge into functional blocks.

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Channels Integration Objectives

• Once Customer passes engagement stage he/she
  prefers reliable self-services and self-services
  are cheaper than attended services.
• So you should offer more self-services because it
  make business sense.

• SOA technology is most fit for channels
  integration.
• Quick to integrate as channels are mostly use
  message base integration.
• Secure consistency of handling the same service
• Most effective to address volume expansion
• Protects the infrastructure under load sudden
  surges.

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Sample of Samba Financial Group Awards
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Sample of Samba Financial Group Awards
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Sample of Samba Financial Group Awards
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Case Study

• Initial Public Offering Straight Through
  Processing (IPO-STP)

Samba was awarded the Bankers Magazine of BEST
BANK TECHNOLOGY in 2006. Samba has innovated
the first worldwide straight through model for
IPO across all the channels from Customer to the
IPO Floatation Manager on-line/ real time/ on all
channels.
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IPO as a Challenge

• 2004 STC IPO was a new business that required a
  large number of staff during few weeks. Cost of
  ownership is much higher than revenues

• Regulator mandated very complex process.
  Application checking, signatures, copy of
  national ID, listing of family entitled members.
• Samba managed this challenge by recruiting
  temporary resources (200) in equipped tents.
• Customer satisfaction was poor and cost was very
  high

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IPO as an Opportunity

• 2004 Etisalat IPO was a business opportunity to
  collect customers data and come closer to the
  strategic objective of expanding the customers
  base.

• Samba introduced the e-application that allows
  the subscriber to fill application online then go
  to branch to verify and complete the
  subscription.
• Convinced the regulator to accept e-application.
• Then Samba built customer database that worth the
  effort. We cut few minutes and few SAR as well
  per transaction.
• SMS was used to notify the customer of the
  allocated shares.
• The IPO was covered 51 folds (51 Billion SAR)

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IPO is a strategic IT alignment

• 2004-2005 business recognized that the IPO will
  continue and IT should put a solution to process
  on Channels

• A new model was set that cover Samba as a
  receiving bank and as floatation manager.
• Infrastructure to interface with the regulator
  and all other banks in case of being FM were
  established.
• Service model through all the channels were
  presented to the regulator while building was on
  going. Risk of change was high.
• Passed the solution to other banks to avoid shade
  of monopoly.

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IPO achievement

• Samba has successfully participated in more than
  25 IPO and Right Issues as a receiving bank or
  IPO manager since the first IPO in 2004.

• Reduced branch transactions from 100 to 10
• Reduced average transaction cost by 75.
• Reduced resources involved from 240 to 5
• Reduced average transaction time from 12 min to
  2-3 sec.
• Capability to participate in multiple IPO(s)
  concurrently.
• IPO helped expand accounts base significantly

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Technology Alignment in IPO

• Business had the right vision and strategy and
  technology enforced the plan in gradual steps
  that improved the strategic position to reach
  together the business goals

• Provided the back end and branch service ahead of
  the first IPO
• Absorbed the volume by expanding the network and
  the number of processors in a very short time
• Provided e-application to captured subscribers
  master data in database
• Used the opportunity to revalidate the data based
  on provided documentations
• In two months Internet was ready for STP IPO
• Two months later all channels offered NCCI IPO.

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QA
Thank you