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At BCS Consulting, we are focused on delivering complex business change projects in banking and the financial markets that exceed client objectives and deliver impressive results.

At BCS Consulting, we use our deep domain knowledge and experience to help clients define and deliver large scale business and technology change initiatives.

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At BCS Consulting, we work in partnership with clients to deliver solutions that work in practice.

Thinking

At BCS Consulting, we like to share our informed thoughts and opinions on the latest developments in the financial services marketplace.

    Tail wagging the dog

    Jonathan Evans
    Jonathan Evans

    • Back in the early 1990s, as I was starting my first ‘grown-up’ role as a financial controller, SAP (Systemanalyse und Programmentwicklung) was fledging from a spotty teenager into a serious contender on the international enterprise application software stage. I remember quite clearly at the time the Enterprise Resource Planning (ERP) industry marketed their solutions as being “infinitely tailorable to your business”. They conveniently omitted that this was only possible if you were prepared to change all of your existing processes and procedures to align with their systems architecture. As a rational person, this always struck me as a major concern – surely IT solutions should be supporting the business…not the other way round?

    As a fellow practitioner of rational thinking put it, “make sure the dog is wagging the tail. All too often, companies forget that the purpose of an ERP implementation is to support the long-term strategy of the business.”

    Fast forward 20-odd years, having witnessed (from a distance!) a plethora of spectacular ERP implementation failures – most recently in financial services – and I now find myself  wondering if the ERP industry was right all along; would its proposition of tailored solutions be more successful and ultimately more cost effective?

    Banks face a number of stumbling blocks when designing new systems to meet the evolving business and regulatory demands:

    • Banks often have a poor understanding of existing processes and procedures because up-to-date process maps and documentation rarely exists
    • Processes that are in place tend to be inefficient, ineffective and poorly controlled
    • Ill-matched legacy systems have been cobbled together over the years, leading to a data morass which requires an army of outsourced staff to perform endless, and often seemingly meaningless, reconciliations
    • In addition to creaking legacy systems, many banks are heavily dependent on poorly controlled end user computing (EUC) solutions
    • In many cases there is a lack of transparency of how existing systems support current regulatory requirements

    Failure to first restructure existing processes into slick, well controlled routines is equivalent to building a skyscraper on sand. An ‘off the shelf’ ERP system – one that is already supported by standardised, tested, and controlled processes and procedures – could well be a better option, and may illicit a number of additional benefits:

    • The European Banking Authority (EBA) has been aiming to improve the consistency of reporting across the industry (e.g. COREP and FINREP) requiring the development of their Data Point Model (DPM) and XBRL Taxonomies to enable data transmission between competent authorities. An out-of-the-box solution, albeit tailored to the individual business, will assist banks in meeting the increasingly stringent regulatory demands for consistent data sets
    • A new set of standardised processes and procedures, combined with ready-to-go, homogenised training packages, will promote the change in culture required for any major transformation initiative to be successful
    • ERP systems have built-in, tried and tested, systemic controls, eliminating the need for manual reconciliations between legacy systems and highly complex workflows
    • Consistency of ERP platforms will improve staff mobility across the industry, reducing reliance on a small number of individuals with specialist, non-transferrable, legacy systems knowledge

    To undermine the case for such system deployments some would argue that the effort and associated costs of cleaning up existing, legacy data to back-fill a new system would be prohibitive. However, considering the billions of pounds currently ‘wasted’ annually on shoring up existing systems to provide regulator-quality data, the introduction of a new system could force the issue to improve data quality once and for all and stop throwing good money after bad.

    A successful ERP system implementation will still need careful and expert project management.  All too often these large-scale programmes are impeded by insufficient planning and budgeting, inability to properly engage key business functions, and a lack of appreciation of the change impact. Most importantly, the organisation needs the appetite to change – successful ERP implementations still represent a huge upheaval that cut across almost all facets of the organisation – getting buy-in across the board is no mean feat; in fact you could say it’s even tougher than the tail wagging the dog.

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