Business analysis in the new normal

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IIBA UK Credit Suisse 18th October 2012

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Business analysis in the new normal

  1. 1. Business Analysis in the New Normal IIBA at Credit SuisseIIBA UK ChapterOctober 18th, 2012
  2. 2. WelcomeCathryn GrahamBusiness Engineering Job Family Lead, EMEA IIBA UK Chapter October 18th, 2012
  3. 3. Business Analysis in the New Normal The Importance of Simplicity in Design − Matt Searle − Business Architect for the Strategic Risk Program spanning Trading, Chief Risk Office and Chief Finance Office How Business Architecture reduces complexity − Gillian Christie − Head of Business Architecture and Innovation, based in New York Response to Regulatory Drivers − Miles Barker − Lead BA for Dodd Frank, former Director of UK Chapter of the IIBA IIBA UK Chapter October 18th, 2012
  4. 4. Defining the “New Normal”: low growth and increasing volatility IIBA UK Chapter October 18th, 2012
  5. 5. Simplicity in Design Matt Searle – Credit SuisseIIBA UK ChapterOctober 18th, 2012
  6. 6. “There are two ways of constructing a software design. Oneway is to make it so simple that there are obviously nodeficiencies. And the other way is to make it so complicatedthat there are no obvious deficiencies.” -- C.A.R. Hoare IIBA UK Chapter October 18th, 2012
  7. 7. “Perfection in design is achieved not when there is nothingmore to add, but rather when there is nothing more to takeaway.” -- Antoine de Saint-Exupéry IIBA UK Chapter October 18th, 2012
  8. 8. “The difference between a good and a poor architect is thatthe poor architect succumbs to every temptation and thegood one resists it.” -- Ludwig Wittgenstein IIBA UK Chapter October 18th, 2012
  9. 9. “Any intelligent fool can make things bigger, more complex,and more violent. It takes a touch of genius - and a lot ofcourage - to move in the opposite direction.” -- Albert Einstein IIBA UK Chapter October 18th, 2012
  10. 10. “Simplicity does not precede complexity, but follows it.” -- Alan J. Perlis IIBA UK Chapter October 18th, 2012
  11. 11. Addressing Business Complexity Gillian Christie – Credit SuisseIIBA UK ChapterOctober 18th, 2012
  12. 12. The nature of the Investment Banking industry is changing, resulting inthree primary external drivers that impact strategy Challenge Implications for Investment Banks 1. The fundamental shape of the business is Create a more efficient front to back cost model to Market changing, with an emphasis on increasing volume protect profitability at competitive (and compressed) margins External Drivers 2. Regulators are demanding a cleaner, more straight Demonstrate progression towards a clearly Regulatory forward Operating Model. They want to see a defined roadmap and simplified target state across planned target state the Front to Back Operating Model Client requirements appear to diversifying. Some want bespoke products and value personal As the shape of the industry changes, it’s critically 3. relationships and service. Others require fewer important that we listen and respond to customer Client advisory services, knowing what they want to buy demands, accepting that those may be contrary and and from whom they will buy diverse through the period of industry change IIBA UK Chapter October 18th, 2012
  13. 13. The complexity of the current infrastructure was driven by product alignedrevenue generating opportunistic investments to exploit high marginswithout regard to cost to maintain Attributes Legal Entities  Rapid time-to-market for new products LE LE LE LE LE LE LE LE a ta LE LE LE LE LE LE LE LE D and functionality f. Re  Capable of responding quickly to dynamic business priorities  Product-aligned development (e.g. multiple risk systems)  High complexity and TCO  Multiple “sources of the truth”  Line-of-business governance  Limited Business / IT accountability for the platform TCO IIBA UK Chapter October 18th, 2012
  14. 14. The aspirational Target Operating Model (TOM) supports the strategies ofbusiness and technology Hedge Corporate Banks Funds Inst. Inves. s UHNW HNW Retail Attributes Client Sol. Enterprise Content Portal  Dramatically reduce complexity due to Trading Order Management reduced number of business rules Intelligent Order Routing  Lowest RtB and TCO without forcing one Banking solution for all Bespoke Post Hybrid Flow Trade Risk  Allows for a more rapid response to regulatory and market changes Risk Cross-product Risk and Collateral Management Finance Finance and Product Control  Enables cross-product reuse Ref. Data Common Shared Reference Data  Allows for opportunistic revenue generating investments without adversely impacting the strategic core platform  Single golden source for client, product and book data to reduce reconciliations IIBA UK Chapter October 18th, 2012
  15. 15. Investment Portfolio choices Outcomes of Different Investment Priorities BAU Model If we continue to manage our cost base 1 and investment budget without a long- term vision, our maintenance costs will Current State outpace our business growth Legal Entities LE LE LE LE LE LE LE LE a LE LE LE LE LE LE LE LE at D f. ReRTB Spend App. Rationaliz ation Optim iz ed Model Using the Aspirational Target Aspirational TOM Business Architecture Operating Model Optim iz ed Model Hedge Inst. Corpor UHN as a tool to align IB Securities Entity Neutral Globalizing from Banks Funds Inves. ates Investment Bank W HNW Retail investment Reference Data and Market Data Client Only investing Enterprise Content Portal prioritization Reference Data and Market Data Client Facing 1800 current Sol. Order Management Trade Execution strategically towards applications to Trading Intelligent Order Routing reducing business Risk Management reducing technology 200 – 300 strategic Banking and technology Post Validation and Enrichment complexity would be Trade Flow Hybrid Bespoke Risk complexity will Collateral Management and Margining Collateral Management and Margining very costly and could enable successful Clearing stifle business Risk Cross-product Risk and Collateral Management business delivery Settlement Finance Finance and Product Control Finance growth opportunities Ref. Data Common Shared Reference Data and a lower RtB Benefit Realiz ation IIBA UK Chapter October 18th, 2012
  16. 16. Investment Portfolio choices Outcomes of Different Investment Priorities BAU Model If we continue to manage our cost base and investment budget without a long- term vision, our maintenance costs will Current State outpace our business growth Legal Entities LE LE LE LE LE LE LE LE a LE LE LE LE LE LE LE LE at D f. ReRTB Spend 2 App. Rationaliz ation Optim iz ed Model Using the Aspirational Target Aspirational TOM Business Architecture Operating Model Optim iz ed Model Hedge Inst. Corpor UHN as a tool to align IB Securities Entity Neutral Globalizing from Banks Funds Inves. ates Investment Bank W HNW Retail investment Reference Data and Market Data Client Only investing Enterprise Content Portal prioritization Reference Data and Market Data Client Facing 1800 current Sol. Order Management Trade Execution strategically towards applications to Trading Intelligent Order Routing reducing business Risk Management reducing technology 200 – 300 strategic Banking and technology Post Validation and Enrichment complexity would be Trade Flow Hybrid Bespoke Risk complexity will Collateral Management and Margining Collateral Management and Margining very costly and could enable successful Clearing stifle business Risk Cross-product Risk and Collateral Management business delivery Settlement Finance Finance and Product Control Finance growth opportunities Ref. Data Common Shared Reference Data and a lower RtB Benefit Realiz ation IIBA UK Chapter October 18th, 2012
  17. 17. Investment Portfolio choices Outcomes of Different Investment Priorities BAU Model If we continue to manage our cost base and investment budget without a long- term vision, our maintenance costs will Current State outpace our business growth Legal Entities LE LE LE LE LE LE LE LE a LE LE LE LE LE LE LE LE at D f. ReRTB Spend 3 App. Rationaliz ation Optim iz ed Model Using the Aspirational Target Aspirational TOM Business Architecture Operating Model Optim iz ed Model Hedge Inst. Corpor UHN as a tool to align IB Securities Entity Neutral Globalizing from Banks Funds Inves. ates Investment Bank W HNW Retail investment Reference Data and Market Data Client Only investing Enterprise Content Portal prioritization Reference Data and Market Data Client Facing 1800 current Sol. Order Management Trade Execution strategically towards applications to Trading Intelligent Order Routing reducing business Risk Management reducing technology 200 – 300 strategic Banking and technology Post Validation and Enrichment complexity would be Trade Flow Hybrid Bespoke Risk complexity will Collateral Management and Margining Collateral Management and Margining very costly and could enable successful Clearing stifle business Risk Cross-product Risk and Collateral Management business delivery Settlement Finance Finance and Product Control Finance growth opportunities Ref. Data Common Shared Reference Data and a lower RtB Benefit Realiz ation IIBA UK Chapter October 18th, 2012
  18. 18. Investment Portfolio choices Outcomes of Different Investment Priorities BAU Model If we continue to manage our cost base and investment budget without a long- term vision, our maintenance costs will Current State outpace our business growth Legal Entities LE LE LE LE LE LE LE LE a LE LE LE LE LE LE LE LE at D f. Re 4RTB Spend App. Rationaliz ation Optim iz ed Model Using the Aspirational Target Aspirational TOM Business Architecture Operating Model Optim iz ed Model Hedge Inst. Corpor UHN as a tool to align IB Securities Entity Neutral Globalizing from Banks Funds Inves. ates Investment Bank W HNW Retail investment Reference Data and Market Data Client Only investing Enterprise Content Portal prioritization Reference Data and Market Data Client Facing 1800 current Sol. Order Management Trade Execution strategically towards applications to Trading Intelligent Order Routing reducing business Risk Management reducing technology 200 – 300 strategic Banking and technology Post Validation and Enrichment complexity would be Trade Flow Hybrid Bespoke Risk complexity will Collateral Management and Margining Collateral Management and Margining very costly and could enable successful Clearing stifle business Risk Cross-product Risk and Collateral Management business delivery Settlement Finance Finance and Product Control Finance growth opportunities Ref. Data Common Shared Reference Data and a lower RtB Benefit Realiz ation IIBA UK Chapter October 18th, 2012
  19. 19. The aspirational TOM enables a long term strategy for investmentprioritization, while transitional state operating models enable eachbusiness line to pursue opportunistic innovation 2012 Current Logical Architecture Model Legal Entities LE LE LE LE LE LE LE LE ta LE LE LE LE LE LE LE LE Da f. Re . … Transitional State . ? … … . Aspirational Target Transitional Operating Model State Client … Trading Transitional Banking Post State Trade Flow Hybrid Bespoke Risk As long as we build toward the aspirational TOM, we have still invested intelligently with outcomes with interim business benefits Risk Finance Ref. Data IIBA UK Chapter October 18th, 2012
  20. 20. Our response: Enable Business Architects across the Bank to drivetransformation towards the target state Transforming Managing the Bank the Innovation Cycle Value Proposition Business Architecture And Innovation Telling the Establishing Story a common language IIBA UK Chapter October 18th, 2012
  21. 21. Transforming the BankWe run a jointly sponsored IT/Business design governance committee Issues escalated to DAWG and Issues Ratify and escalate IB DA m andated IB Design Authority DAWG decisions on Issues escalated1: IB FTB design n DAWG > IB DA • Trade Capture Architecture • Back Office Data Sourcing Issues escalated in 2012: • Structured Notes nn DAs > DAWG • Reference Data • Global Book Master • Collateral End to End Decisions on design DAs issues Design Authority nnn open / closed/defer design Working Group issues Decisions  IB DA Escalation  One of the recommendations - will be raised to Program level design the Design Authority for action and resolution coordination and  Closed Design Issues: escalation to DAWG Following four design issues were closed since the last DA update: − […] − […] − […] Prime Risk Reference Dodd Basel III Finance Financing CRO DA Ops DA(SRP) DA Data DA Frank DA DA (CFO) DA DA IIBA UK Chapter Program DAs Functional DAs October 18th, 2012
  22. 22. Establishing a common languageWe provide standard frameworks – our Business Capability Model is used via Models & Toolsto drive transformation Benefits of BCM Business Capability Model (BCM) Benefits of BCM  Provides a consistent  Helps analyze how budgets framework and common are aligned with underlying language across the bank capabilities  Helps define the Target Operating Model (TOM) and  Helps clarifying align IT architecture responsibilities and accountabilities on a functional level  Understand functional redundancy in the application portfolio  Helps define the scope for  Provides a platform for new initiatives and align mapping resources to initiatives business capabilities IIBA UK Chapter October 18th, 2012
  23. 23. Telling the StoryWe train the firm’s Business Architects IIBA UK Chapter October 18th, 2012
  24. 24. Managing the Innovation CycleWe aggregate innovation and encourage new ideas Connect the Dots Crowd Source Innovation Aggregators Innovation Exchange Cham pion Solutions IIBA UK Chapter October 18th, 2012
  25. 25. Regulations and Business Architecture Miles Barker– Credit SuisseIIBA UK ChapterOctober 18th, 2012
  26. 26. Talking Points Who regulation impacts – far more than banking! What Regulation impacts – across organisational boundaries Understanding Regulation 1 – it’s always business process Diversion Understanding Regulation 2 – BA skills and PESTLE Regulation – understanding themes and change Regulation – opportunity from pain (process and service) A case for doing what you really know you should, anyway! Challenging your understanding of business Wrap-up IIBA UK Chapter October 18th, 2012
  27. 27. Who regulation impacts – far more than banking! IIBA UK Chapter October 18th, 2012
  28. 28. Who regulation impacts – far more than banking! The Locom otive Act 1865 - Rem oved by Locom otives on Highways Act 1896 IIBA UK Chapter October 18th, 2012
  29. 29. Regulatory impacts – across organisational boundaries IIBA UK Chapter October 18th, 2012
  30. 30. Understanding Regulation 1 – it’s always the business process IIBA UK Chapter October 18th, 2012
  31. 31. Understanding Regulation 2 – BA Skills and PESTLE IIBA UK Chapter October 18th, 2012
  32. 32. Understanding Regulation 2 – BA Skills and PESTLE …………….. IIBA UK Chapter October 18th, 2012
  33. 33. Understanding Regulation 2 – BA Skills and PESTLE IIBA UK Chapter October 18th, 2012
  34. 34. Credit where credit’s due! ©Crown Copyright . Source IIBA UK Chapter October 18th, 2012 http://www.oft.gov.uk/shared_oft/business_leaflets/cpregs/oft1008.pdf
  35. 35. Standardisation curve IIBA UK Chapter October 18th, 2012
  36. 36. Regulatory Background and Relationships (Reporting) IIBA UK Chapter October 18th, 2012
  37. 37. Regulation – An Opportunity Deploy com m on cross-product securities processing engine RISKS OF TAKING A TACTICAL, Leverage FID TOM to build a SHORT-TERM APPROACH: strategic FI architecture 1. Duplication of efforts Fulfill regulatory Key Goals: * 2. Failure to advance toward a target m inim um s Cross-product architecture Key Goals: collateral management Key Goals: * Connectivity to SEFs and margining LASAR Central clearing for OTC derivatives CVA Same-day / REWARDS OF TAKING A Event-driven transaction and position Joint cash / OTC intraday collateral STRATEGIC, LONG-TERM reporting processing engine APPROACH: Event-driven risk management (CCSS) eCommerce 1. Credit Suisse can save significant money through synergies 2. We can make significant advances toward a target architecture Our initial focus is bounded by regulatory timelines, but the architecture should be built with a view towards immediate operational changes to the Fixed Income business and the long term aspirational enterprise architecture for common cross-product securities processing IIBA UK Chapter October 18th, 2012
  38. 38. System Architecture IIBA UK Chapter October 18th, 2012
  39. 39. Talking Points Challenging your understanding of business Abstraction Commonality New regulation means there may not be an SME IIBA UK Chapter October 18th, 2012
  40. 40. Q&AIIBA UK Chapter October 18th, 2012
  41. 41. IIBA Update Mailing list, please sign up if you have not done so already − Details are on the IIBA UK Chapter website Events coming up: − 25th October: Bristol − 6th November: Manchester IIBA LinkedIn Group − Feel free to join the group! IIBA UK Chapter October 18th, 2012

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