Financial Services institutions have grown much more complex—including product, process, system, channel, organizational, & regulatory complexity. This is driving significant costs into the organization—especially IT/IS costs—while also impeding the organization’s agility and increasing operational risk. Traditional approaches are not well suited to address this issue. Their tendency to add resources & processes to manage the issue simply adds to the complexity. In addition, bottom-up, boil-the-ocean approaches are overly cumbersome and typically don’t address the broader interactions, where the larger opportunities usually lie. Finally, technology-driven solutions rarely achieve desired results, as they focus on the tool and not the issue. We offer an alternative—a systematic but streamlined, top-down, and multi-dimensional approach to unlock transformational opportunities others would miss

1. Reshape Your IT Spend, Increase Agility, &
Defend Against Operational Risk
Financial Services Group

2. Executive Summary
• Financial Services institutions have grown much more complex—including product,
process, system, channel, organizational, & regulatory complexity
• This is driving significant costs into the organization—especially IT/IS costs—while
also impeding the organization’s agility and increasing operational risk
• Traditional approaches are not well suited to address this issue:
– Tendency to add resources & processes to manage the issue simply adds to the complexity
– Bottom-up, boil-the-ocean approaches are overly cumbersome and typically don’t
address the broader interactions, where the larger opportunities usually lie
– Technology-driven solutions rarely achieve desired results, as they focus on the tool and
not the issue
– Traditional process improvement efforts focus on individual processes in isolation, not on
the interaction between processes, which is where complexity resides
• We offer an alternative—a systematic but streamlined, top-down, and multidimensional approach to unlock transformational opportunities others would miss
• Wilson Perumal & Company is the leader on complexity—we literally wrote the book!
Wilson Perumal & Company, Inc.
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3. Why our focus on IT? Systemic issues around cost, agility,
& risk are wrapped around IT/IS
Issue
IT Spend:
Complication
Implication
IT Spend
Costs (especially IT)
are growing geometrically with the
level of complexity in
the business
IT costs are the
outcome of complexity
across business
Technology-driven
solutions will not root out
this complexity and often
add more cost
Agility
Organizations are
finding it difficult to
execute their strategy
given the complexity
in their business
IT complexity limits
agility across the
organization (IT is a
major driver of this
issue)
IT complexity must be
addressed by also
attacking process &
organizational complexity
in the business
Risk
Operational risks are
growing geometrically
with the level of
complexity in the
business
Increased risk is
another complexity
outcome that most
firms look to address
through the IT lever
IT is only part of the
issue/solution; focusing
mostly on IT can be
expensive yet insufficient
to managing risk
Wilson Perumal & Company, Inc.
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4. Key Takeaways
• Technology will continue to change the way we do business in unanticipated
ways—but when you don’t know what the future holds, how can you fill the gaps?
• Companies want to use technology to reduce operating costs, minimize risk, and
gain market share—but we see that both IT spend and risks are growing!
• Many IT teams are locked in an unending cycle of firefighting and backlog
because new projects increase product, process, and organizational complexity
elsewhere in the system
• Unchecked, the unseen additional complexity costs multiply exponentially
• Adding resources, processes, and systems to attack the issue often just adds to the
complexity and the problem, in a vicious cycle
• Companies are at the point of asking themselves: Is this really working? Is there
a better way?
Wilson Perumal & Company, Inc.
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5. Agenda
• The top-down vs. boil the ocean approach
• Trends facing IT
• Key elements of our approach
Wilson Perumal & Company, Inc.
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6. Typical approaches to address IT quickly become “boil
the ocean” efforts with lesser benefit
• IT has permeated the organization, and is now a critical piece of anybody doing anything
– Starting with Sarbanes-Oxley, IT became the financial backbone, and has since grown in
magnitudes of importance and dependency throughout the rest of the organization
– The spread of IT dependency has typically been incremental, with no holistic strategy to
govern the layers upon layers of development
– Year-over-year advances in software, computing power, data mgmt, and device interaction
make predicting needs (i.e., your “future state”) very difficult
• The organization is so dependent on IT, that it can be daunting to unwind the complexity
– Traditional approaches aim at identifying all the gaps (exhaustive and lengthy)…
– Then developing a plan to close all the gaps (more exhaustive and lengthy)…
– Consuming significant time and resources, and adding risk, before impact is possible…
– And aim more at static solutions, than developing the capabilities to continue to grow benefits
• To tackle the dual issues of complexity and dependency you need a plan of action that
delivers results quickly AND provides flexibility for future change
– Our top-down multidimensional approach takes a broader perspective, but with more focused
actions to achieve impact more quickly
– Is built to evolve, to capture ongoing and greater levels of benefit
Wilson Perumal & Company, Inc.
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7. Our approach takes a broader perspective, but lighter
investment, for faster, more transformational results
Traditional Approach
• Tech-driven (even if business initiated)
• Focus on system solutions
(narrower view)
• Aims at identifying all gaps; then
developing a plan to close all gaps
(broad actions)
• Leads w/ precision (exhaustive)
“What universe of actions will close all my
gaps at some point?”
• Monolithic approach to risk
• Static solution
WP&C “Top-Down” Approach
• Business-led
• Focus across products/services, processes,
& organization (broader understanding)
• Aims at identifying the limited set of
actions that will make most impact quickly
(targeted actions)
• Leads w/ clarity (effective)
“What focused set of actions will get me
the most improvement quickly?”
• Systematic approach to risk (4 sources)
• Builds capabilities to learn & evolve
“Given the complexity facing organizations today, it is impossible to anticipate and design for every
potential failure. Mastery cannot be designed from the start, but it can be discovered bit by bit.”
• Requires significant investment now
for much later results
$$$
$$$$$$$
• Requires lesser investment for earlier
results; continues to grow
over time
$ $$$
$$ $
$
$$$$$
Wilson Perumal & Company, Inc.
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8. Agenda
• A top-down vs. boil the ocean approach
• Trends facing IT
• Key elements of our approach
Wilson Perumal & Company, Inc.
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9. Complexity is the defining issue for many firms today
Pre-Industrial Age
Industrial Age
Post-Industrial Age
“Individual productivity”
“Economies of Scale”
“Complexity Costs”
Cost
Volume
• Energy limited by muscle power
(man or beast)
• Little scale efficiencies
• Efficiency driven by strength
and/or speed of individual
working unit (narrow range)
Volume
Complexity
• Revolution in energy and
machinery (steam, electricity, oil)
create significant scale economy
• Significant growth in variety drives
geometric growth in “complexity
costs”
• Efficiency driven by volume—
”larger is better” (nearly
unlimited range)
• Efficiency driven by balance
between volume and complexity
(complexity is the opposite of scale)
Complexity has grown to the point that it is now often the largest driver of a
company’s cost competitiveness, ability to execute, and level of risk
Wilson Perumal & Company, Inc.
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10. FS IT teams face unprecedented demands
FS IT trends
Implications
Proliferation of mobile and
online financial products
• IT must build and continuously refine front office systems
that directly impact customer satisfaction
• Exponential customer data growth escalates costs
Rapidly changing regulatory
requirements
• Systems must be constantly updated to comply with
new and unpredictable regulations
• Ongoing regulatory change is the new normal
Increasing demand for
real-time analytics
• Real time information on the company operations and
risks is more important than ever
• Complexity and legacy systems hinder efforts
Software as a Service and
Cloud computing
• IT is increasingly relying on providers over which it has
little control, multiplying risks
Disruptive innovation
• Financial startups and tech firms are developing new
business models and leveraging the latest technology to
disrupt incumbents bound by complexity and legacy tech
Bring your own device
• BYOD and decentralized purchasing means IT must support
an ever increasing, constantly changing set of devices
Wilson Perumal & Company, Inc.
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11. FS IT systems are plagued by increasing complexity
Complexity has increased exponentially as FS IT
systems have grown over time, involved more parties,
and support new data intensive products and services
Software
Vendors
Regulatory
Change
• Proliferation of systems supporting new and
old products and services
• Legacy systems and scarce legacy skills
Legacy
Systems
Cloud Data
Hosting
Example of sources of complexity
• Poor integration between systems
New Systems
• Redundant platforms
• Exponential increases in data collection
Duplicate
Platforms
Data Growth
• Differing IT priorities
• Suppliers outside of IT’s direct control, and
cloud hosted data
• Regulatory differences across entities
• BYOD policies and decentralized purchasing
Adding complexity to IT systems has many unintended consequences:
• Spiraling IT costs
• Poor internal and external
customer satisfaction
• Decreased innovation and slower
new product development
• Endless firefighting, backlogs
• Hidden catastrophic risks
• Demoralized employees
Wilson Perumal & Company, Inc.
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12. Complexity is leading to greater operational and
business risk for financial services firms
• Complexity multiplies weak points and
increases risks, particularly of system
outages and security breaches, and
hides catastrophic risks, such as fraud
and rogue trading
• Current approaches take a static,
compliance-focused and technologybased approach to risk that cannot
combat the constantly changing
nature of risk
• Proactively detecting and eliminating
risk requires a systematic approach to
building operational excellence and
implementing operational discipline to
transform behaviors and processes in
the organization
“Nasdaq CFO Says Complexity Is
Obstacle to Smooth Markets”
“TD Bank’s Mobile Site, ATMs Running Again
After Hour-Long Outage”
“Regions Bank website outage caused by cyber attack”
“Hackers hold bank to ransom over stolen data”
“Credit Suisse fined over algo failures”
“Banks Must Boost Risk Oversight After Trading
Scandal, FSB Says”
“UBS Fined $47.5 Million in Rogue Trading Scandal”
“Crackdown on insurance fraud exposes $1.7B
of bogus claims”
Wilson Perumal & Company, Inc.
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13. CEO’s are beginning to recognize the issue,
but are less sure about how to attack it
In a recent survey, CEO’s identified
complexity as the primary challenge they
face. Nearly 80% said they expect high
levels of complexity over the next five
years. Yet far fewer felt prepared.
“Complexity dramatically
increases cost and risk of failure.
It is like a cancer that eats away
at efficiency and profitability.
– Andy Beal
Chairman & CEO, Beal Bank
COMPLEXITY
Complexity
affects your:
And has
implication
on your:
(Examples)
Cost
Structure
Product
Portfolio Mgmt
Execution
& Growth
Operating
Model Design
Business &
Operational Risk
Process
Performance
Risk Mgmt
Transaction
Asset
Supply Chain
IT Strategy
Speed
Utilization
Margin
Strategy & Mgmt
Business Process
Improvement
Network
Channel Strategy
Redesign
Optimization
Management
Customer
Data Protection Organizational
Systems
Experience
& Mgmt
Effectiveness
Wilson Perumal & Company, Inc.
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14. Agenda
• A top-down vs. boil the ocean approach
• Trends facing IT
• Key elements of our approach
Wilson Perumal & Company, Inc.
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15. Addressing IT strategy requires three key elements
1.
Address the fundamental Complexity of the issue
– Taking a multi-dimensional approach by managing
product, process, and organizational interactions
Key elements of
our approach
– Understanding what you offer, how you offer it, and
how to structure and operate to maximize
performance
2.
Applying lean to IT (“lean IT”)
– Implementing lean principles and tools
into IT and IT-supported processes
3.
Creating a High-Reliability Organization (HRO)
– Implementing a systematic approach to
managing the four sources of risk
– Leveraging human performance as a barrier to risk
(establishing a culture of high-reliability)
Wilson Perumal & Company, Inc.
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16. Organizational, process, & product complexity
interact to constrain performance
• Complexity exists along the
dimensions of the cube
Non-value add
‒ Can be good or bad
‒ Too much is bad
‒ Companies almost always
have too much
Value add
The
Complexity
Cube:
• Complexity costs exists on
the faces of the cube
‒ Results from interactions
between the dimensions of
complexity
Organization
Organization
Process
Product
Complexity is
the number of
things:
Number of
systems, entities,
vendors, etc.
Number of
processes, steps,
handoffs, etc.
Number of products
and services you
offer
Too much
complexity is
certainly bad:
• Redundant systems
• Poor performance
• Functional silos
• Duplication
• Rework
• Work-arounds
• Poor service
• Customer confusion
• Unwanted products
Total
complexity
costs
0
The cost of complexity
grows geometrically
0
Wilson Perumal & Company, Inc.
Complexity
16

17. Financial services companies are most challenged on
the Process-Organization face of the cube
Product / Process
Process / Organization
Organization / Product
Where
complexity
arises
Where
complexity
hides
Symptoms:
Organization
Organization
• Frustrated customers
• Poor customer service levels
• Long lead times/queues
• Complex bloated organization (no
complete picture)
• Many unprofitable products
• High inventory levels
• Product shortages
• Product surpluses /
markdowns
• Frequent changeovers /
eroded capacity
• Service / quality levels below
par
Where
complexity
takes root
Organization
• Marketing and sales efforts diffused
over products / geographies
• Lots of activity but not much
outcome
• Tangled web of IT symptoms
Sprawling physical footprint with poor
asset utilization
• Difficulty seeing or managing tradeoffs across functional boundaries
• Operations struggles to keep up with
the ‘cats and dogs’ of the product line
• Complex use of systems impede
processes & decision making
• Fragmented supply base
• Slow decision-making and
information flow
• Poor product availability
• 3rd-party distributors resist efforts to
focus the product line
• Efforts to consolidate network
stymied by current needs
Wilson Perumal & Company, Inc.
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18. Lean IT
How can we do IT better?
• Only 30% of IT projects succeed*
• Lean principles and tools revolutionize IT
operations in the same way that they have for
manufacturing
• We help FS IT departments build a culture of
Continuous Improvement using Lean tools such as
Visual Management, Work Flow Organization and
Objective Definition
• Lean tools streamline and accelerate system
maintenance, new product development, and
improvement deployment
The Lean IT Pyramid for
Complex Environments
Flow/
Pull
Systems
Thinking
Voice of the
Customer
Using Lean IT methods can help you implement an efficient, agile IT model
* Standish Group CHAOS Report
Wilson Perumal & Company, Inc.
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19. Complexity Value Stream Mapping identifies
opportunities to reduce waste, risk & enhance service
• It is critical to focus IT attention on the entire processes of delivering customer value
• Complexity Value Stream Maps lay out the end-to-end capability to provide a
services/products and identify unnecessary costs and service gaps
Complexity Value Stream Map Example
Applying Complexity Value Stream
Maps can help identify:
Value added
steps
Key:
•Line colors: products, combinations
•Box colors: different systems
•Red lines: NVA handoffs/steps
–
–
–
–
–
Duplication and overlapping capabilities
System and process bottlenecks
Hidden or unnecessary costs
Underutilized resources
Opportunities to increase
customer value
– Opportunities to up/cross-selling
customers
– Security weak points
Lean can help FS IT manage the system application portfolio to
greatly improve speed and efficiency of core business processes
Wilson Perumal & Company, Inc.
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20. High-reliability rests on having multiple
robust layers of defense…
“Defense in Depth” is the US Nuclear Navy’s multi-layered approach to
safety and operational performance:
Robust Equipment
Well designed, maintained, and tested,
equipment—but it is impossible to design
equipment that will never fail…
Rigorous Procedures
…and equally impossible to devise procedures
that will cover all contingencies...
Well-Trained Operators
…so the last layer of defense is having welltrained operators with a thorough
understanding of the plant and its capabilities
“Teaching” conveys knowledge, but “Training” drives behavior
Most organizations are most challenged on this last layer of defense (culture)
The US Nuclear Navy stands out for its superb safety and operational record despite
the complexity of its operation and environment; its lessons have been successfully
applied to other organizations to dramatically increase organizational reliability
Wilson Perumal & Company, Inc.
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21. …which is driven through a systematic approach to
Why is Operational Discipline Important?
managing risk and a culture of operational discipline
Management
System
Operational
Discipline
• A systematic approach to
managing the four sources
of risk
• The individual behaviors &
collective practices of the
organization (i.e., culture)
• Manages the precursors of
low frequency, catastrophic
events the same as the
events themselves
HighReliability
• Rests on proven pillars that
define and govern individual
and collective behavior
Most organizations fail for one or more of the following reasons:
1. Not having an effective risk-based management system
2. Not directing the mgmt system at the precursors for low freq., catastrophic events
3. Not establishing a culture of OD centered around the right fundamentals
Wilson Perumal & Company, Inc.
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22. The Mgmt System is a framework for systematically
eliminating the sources of poor execution
Key Value
Drivers
OE is defined by
measurable business
performance across
specific value drivers
Four
Sources of
Risk
There are only four
sources of risk for failure
to perform against the
value drivers
Common
Causes of
Failure
Specific Key
Controls
Speed
Examples
Expectations don’t
exist
Data Quality
Specific key controls
exist to prevent these
causes of failures
Examples
Cost
The four sources of risk
tend to fail for the same
reasons regardless of
the type of operation
Vision/Procedures
Lack of knowledge
People
Processes
Productivity
Technology
Security
Change
Compliance
Wrong incentives
Technology not
capable
Resources not
allocated
Process not capable
Inadequate
management of change
*Operational Excellence Management System
OEMS*
Elements
Training/Certification
Performance Mgmt
Planning/Scheduling
Management of
Change Process
Key controls are
organized into
Elements to facilitate
implementation and
management
Leadership
Employee Commitment
Risk ID
Risk Control
Training &
Communication
Culture
Configuration Control
Organization Structure
Continuous Improvement
Process Control Plan
FMEA
Wilson Perumal & Company, Inc.
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23. A culture of reliability: Stop catastrophic loss and
minimize other operational threats
• Today’s complex company makes it impossible for management to monitor all
aspects of operational risk, but catastrophic risk must be controlled
– Identify what is most important to the well being of your company
– Focus on what could go wrong to cause outsized loss
– Implement an effective system to indentify and stop activities that could lead to
catastrophic loss
• Operational loss prevention requires an organizational strategy not an IT strategy*
– Integrity – employees are reliable
– Level of Knowledge – not just what but why
– Questioning attitude – always ask questions; what might go wrong?
– Formality – a seriousness, a privileged trust; rigor in communications
– Procedural Compliance – Conduct work as prescribed
– Forceful team backup – reinforce, act as each other’s keeper
Are you 100% certain your company is immune to catastrophic loss—do you know
what could cause this kind of loss in your company?
* Drawn from the US Nuclear Navy’s Pillars of the Program
Wilson Perumal & Company, Inc.
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24. In an HRO the pillars work together in an integrated
fashion to create a culture of reliability
A questioning attitude
enhances acquisition of
knowledge
Knowledge beyond your own
area expands your ability to
back up your co-workers
Integrity
Integrity
means you can
be relied upon
Watch Team
Backup
Level of
Knowledge
Knowledge provides
the base to question,
and to spot out-ofthe-ordinary
Questioning
Attitude
Questioning attitude helps
you find better ways
Questioning Attitude
helps you spot what
others may have missed
Procedural
Compliance
Formality
Formality ensures a
questioning attitude is
productive
Formality means following the process to improve
the procedure when you find a better way
Wilson Perumal & Company, Inc.
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25. Few consulting firms have the combination of
expertise to help clients get this critical issue right
Right
Combination
of Expertise
•
•
•
•
Complexity
Lean / process
Strategy & Operations
Financial Services
Unique
Experience
•
•
•
•
Beal Bank (most profitable bank in the US)
George Group (leader in developing lean in the US and Europe)
US Naval Nuclear Propulsion Program
Track record of applying Navy pillars to other companies
Talented
Resources
• Top performing strategy consultants from Bain, BCG, and McKinsey (Best of
Bain, George Group Engagement Leader of the Year)
• Experienced operations professionals from leading companies
• Former CFO and Director of Strategy & Risk Mgmt from Beal Bank
Track Record
of Success
• “This is a landmark project…you guys were exactly what we needed.” – Lead
strategist, top-five financial services firm
• “WPC’s approach to complexity is the most direct route to an efficient,
profitable enterprise” – CEO Diversey
Wilson Perumal & Company, Inc.
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26. How can we help you?
Strategy
Complexity Operations
Sample of Our Services:
Strategy
Complexity
Operations
• Corporate Strategy
• Complexity Mgmt
• Operational Excellence
• BU Strategy
• Complexity Agenda
• Process Transformation
• IT Strategy
• Process & Organizational
simplification
• Plant Transformation
• M&A Due Diligence
• Revenue Optimization
• Operating Model Design
• New Market Entry
• Product Profitability
• Customer Profitability
• Portfolio Optimization
• Lean IT
• Supply Chain Mgmt
• Conduct of Operations
• Customer Retention
• Risk Management
www.wilsonperumal.com

27. Contact Us:
www.wilsonperumal.com
contact@wilsonperumal.com
North America
Europe
Two Galleria Tower
13455 Noel Road, Suite 1000
Dallas, TX 75240
Longcroft House
2/8 Victoria Avenue
London, EC2M 4NS
972-716-3930
+44 (0)203 206 1496