How banks reinvent themselves through Enterprise SystemsApril 17th, 2013Prof. Dr. Alexander Mädche & Dr. Benjamin MüllerCh...
Agenda2Agenda1 The Banking Industry2 Enterprise Systems - Conceptualization & State-of-the-Art3 The Banking Enterprise Sys...
ChangingCustomersChangingEconomicConditionsChangingRegulatoryConditionsNewTechnologiesChallenges in the Banking Industry3B...
Two Approaches: Flexibility vs. Standardization4StandardizationEfficiencyFlexibilityEffectiveness“Doing the right things …...
What does standardization mean in retail banking?Have the ability to (produce) offer your products and services asefficien...
What does flexibility mean for retail banking?Have the ability to differentiate from your competitors!Offer adequatecustom...
7StandardizationFlexibility Platform concept andstandardization behindthe scenesANDFlexibility anddifferentiation at thein...
Agenda8Agenda1 The Banking Industry2 Enterprise Systems - Conceptualization & State-of-the-Art3 The Banking Enterprise Sys...
Service-orientedSystemsModule1Module2Module3Module4SOA MiddlewareMdule xModule1Module2Module3Module4IntegratedSystemsERPMo...
What are Enterprise Systems?10▶ Large‐scale integration of data and processes▶ All of a company’s functional areas and bey...
Good news on ES implementations?11SAP project woes impact Ingram Micros profits – twice… Net income stood at $56.3 million...
Beyond Dualism, towards Duality12▶ Socio-technical systems as a holistic perspective▶ Influenced heavily by organizational...
The centrality of the “use” link13ITAssetsIT DepartmentITImpactsOrganizationalPerformanceCorporation MarketITExpenditureIT...
From Expenditure to Assets:The Important Role of UsabilityDefinition Usability (ISO 9241-11): The extent to which a produc...
From Expenditure to Assets:Platform-based Flexible Extensions15Provide a standardized core platform and allow for flexible...
OrganizationalIndividualAdaptationAppropriationAssets to Impacts: Adoption, Adaptation, and Appropriation16Adoption……“Caus...
EnterpriseSystemOn the Fit between Organization and Technology17Latent structuresOrganizational cultureControlRolesSurface...
Forms of Enterprise System Fit18Strong and Volkoff (2010)Functionality misfits1Data misfits2Usability misfits3Role misfits...
Fit matters to ensure short-term Benefits and Adoption …▶ Functional fit as an important prerequisite for actual adoption▶...
… and contribute to the emergence of ES Benefits over thelong term▶ Long-term organizational benefit are impacted by integ...
Agenda21Agenda1 The Banking Industry2 Enterprise Systems - Conceptualization & State-of-the-Art3 The Banking Enterprise Sy...
Market & EnvironmentOrganizationTechnologyES-based Implications for Banking Transformation22CustomersCore BankingPlatformF...
Banking Enterprise Systems CoC: Overview23Network Establish an academicand professionalnetwork to intensify thecooperatio...
Banking Enterpise Systems Center of CompetenceWeb Page & Community24▶ Get up-to-date and state-of-the-art information onba...
Agenda25Agenda1 The Banking Industry2 Enterprise Systems - Conceptualization & State-of-the-Art3 The Banking Enterprise Sy...
Summary26• Enterprise Systems are socio-technical systems.The interplay betweenorganization, individuals, and technology n...
Prof. Dr. Alexander MädcheUniversity of Mannheim | Business SchoolInstitute for Enterprise Systems (InES)L 15, 1-6 | 4th f...
References ISO/IEC. 9241-11 Ergonomic Requirements for Office Work with Visual Display Terminals (VDT)s-Part II Guidance ...
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How banks reinvent themselves through enterprise systems

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How banks reinvent themselves through enterprise systems

  1. 1. How banks reinvent themselves through Enterprise SystemsApril 17th, 2013Prof. Dr. Alexander Mädche & Dr. Benjamin MüllerChair of Information Systems IV, Business School and Institute for EnterpriseSystems (InES), University of Mannheim
  2. 2. Agenda2Agenda1 The Banking Industry2 Enterprise Systems - Conceptualization & State-of-the-Art3 The Banking Enterprise Systems Center of Competence4 Contacts2
  3. 3. ChangingCustomersChangingEconomicConditionsChangingRegulatoryConditionsNewTechnologiesChallenges in the Banking Industry3BankingIndustry
  4. 4. Two Approaches: Flexibility vs. Standardization4StandardizationEfficiencyFlexibilityEffectiveness“Doing the right things … … doing the things right.”
  5. 5. What does standardization mean in retail banking?Have the ability to (produce) offer your products and services asefficient as possible!Streamline andstandardizeprocessesbased on bestpractices……and increaseautomization anduse of standardsoftware.“Any customer canhave a car paintedany colour that hewants so long as itis black!”(Henry Ford)5
  6. 6. What does flexibility mean for retail banking?Have the ability to differentiate from your competitors!Offer adequatecustomer service… …and therightproductsat therighttime……inthe rightchannels.Need to do it atall costs?
  7. 7. 7StandardizationFlexibility Platform concept andstandardization behindthe scenesANDFlexibility anddifferentiation at theinterface to the customerFlexibility vs. standardization?Towards Mass Customization and Platform OrientationThrough
  8. 8. Agenda8Agenda1 The Banking Industry2 Enterprise Systems - Conceptualization & State-of-the-Art3 The Banking Enterprise Systems Center of Competence4 Contacts8
  9. 9. Service-orientedSystemsModule1Module2Module3Module4SOA MiddlewareMdule xModule1Module2Module3Module4IntegratedSystemsERPModule1Module2Module3Module4FunctionalSystemsModule1Module2Module3Module3CalculationSystemsHistoric Perspective on Enterprise-wide Application Systems919801960 1970 1990 2000 20101950 TimeSinglePurposeModuleInconsistency,Heterogeneity,Silo-basedDecisions,TCOLimitedfunctionalscopeComplexity,Inflexibility,CompetitiveAdvantage?Governance,Development &MaintenanceCosts, LackingCapabilities
  10. 10. What are Enterprise Systems?10▶ Large‐scale integration of data and processes▶ All of a company’s functional areas and beyond its borderlines▶ Build on packaged software (e.g., ERP, CRM, Business Intelligence,or Portals)TechnologicalSubsystemSocialSubsystemEnterpriseSystem
  11. 11. Good news on ES implementations?11SAP project woes impact Ingram Micros profits – twice… Net income stood at $56.3 million, a drop from $70.3 million in the same quarter theprevious year, Ingram Micro said at the time. The shortfall was primarily attributable todifficulties transitioning to a new enterprise system …PCWorld (2011)PeopleSoft pegged for Fort Worth police pay problems… Police in Fort Worth, Texas says that a recently implemented payroll system is leavingthem shortchanged or even without any pay at all … The system wasnt set up to handlethe odd hours and shifts police officers work …InfoWorld (2010)HPs "Perfect Storm" of ERP Problems… epic tale of HPs centralization of its disparate North American ERP systems onto oneSAP system proves that one can never be too pessimistic … project eventually cost $160mn. in order backlogs and lost revenue - more than five times the projects estimated cost…CIO Magazine (2009)
  12. 12. Beyond Dualism, towards Duality12▶ Socio-technical systems as a holistic perspective▶ Influenced heavily by organizational structures▶ Strong interplay with work practices of individual employees▶ Shaping and being shaped by individuals behavior▶ Most ES projects fail because they fail to transform the organizationEnterpriseSystemSocialTechnological
  13. 13. The centrality of the “use” link13ITAssetsIT DepartmentITImpactsOrganizationalPerformanceCorporation MarketITExpenditureIT Management &Conversion ActivitiesAppropriate /Inappropriate UseCompetitivePositionSoh and Markus (1995), Markus (2004)WORKING  Sound implementation, no major bugs, support in place,running and no significant downtime, …WORKABLE  High usability, all necessary features, complete in terms ofrequirements, training provided, …WORKED  Matched to tasks to enable apply it, used appropriatelyand effectively, actual system usage, …
  14. 14. From Expenditure to Assets:The Important Role of UsabilityDefinition Usability (ISO 9241-11): The extent to which a product can be usedby specified users to achieve specified goals with effectiveness, efficiency andsatisfaction in a specified context of use.You can not tell whether a softwareis usable without considering: the user the goals the context of the task14Appropriate for user, task and context!
  15. 15. From Expenditure to Assets:Platform-based Flexible Extensions15Provide a standardized core platform and allow for flexible extensions servingthe different users to achieve their specific goals.Platforms are defined as an “…extensible codebase of a software-based system that provides corefunctionality shared by the modulesthat interoperate with it and theinterfaces through which theyinteroperate.”(Tiwana et al., 2010)EcosystemModule …InterfacesModulePlatform
  16. 16. OrganizationalIndividualAdaptationAppropriationAssets to Impacts: Adoption, Adaptation, and Appropriation16Adoption……“Causes andmotivation”“Realizingbenefits”“The dust hassettled”“Preparing for Go-Live”“Choosing acourse ofaction”“Go-Live”“Individualstrying to usethe system”“Trial and error”“Reflect, learn,and improve”…“Flurry of excitement”“Gainingmomentum”Conversion Use
  17. 17. EnterpriseSystemOn the Fit between Organization and Technology17Latent structuresOrganizational cultureControlRolesSurface StructuresInterfacesUsabilityDeep StructuresFunctionalityDataPhysical StructuresOrganizationTechnologyFITStrong and Volkoff (2010)
  18. 18. Forms of Enterprise System Fit18Strong and Volkoff (2010)Functionality misfits1Data misfits2Usability misfits3Role misfits4Organizational culturemisfits6Control misfits5e.g., task structure different between system and business processe.g., attributes scattered across multiple sourcese.g., system requires extra steps that introduce difficulty in entering informatione.g., ES roles inconsistent with skills available, create imbalances in workloade.g., controls embedded in ES provide too much control stifling productivitye.g., ES requires ways of operating that contradict organizational normsFIT
  19. 19. Fit matters to ensure short-term Benefits and Adoption …▶ Functional fit as an important prerequisite for actual adoption▶ Socio-technical perspective requires careful consideration of change▶ Tight interplay between technology and business improvements▶ Allow benefits to emerge once adaptation and appropriation have stabilized▶ Generally not one, but a series of major, interrelate improvement projects19FunctionalFitOvercomingOrganizationalInertiaSeddon et al. (2010)
  20. 20. … and contribute to the emergence of ES Benefits over thelong term▶ Long-term organizational benefit are impacted by integration, processoptimization and improved access to information▶ However, long-term benefits can only be realized through continues projectsuccesses of each project20OrganizationalBenefits fromES ProgramBenefits fromProject “n”IntegrationProcessOptimizationImprovedInformationAccessSeddon et al. (2010)
  21. 21. Agenda21Agenda1 The Banking Industry2 Enterprise Systems - Conceptualization & State-of-the-Art3 The Banking Enterprise Systems Center of Competence4 Summary21
  22. 22. Market & EnvironmentOrganizationTechnologyES-based Implications for Banking Transformation22CustomersCore BankingPlatformFlexibleApps
  23. 23. Banking Enterprise Systems CoC: Overview23Network Establish an academicand professionalnetwork to intensify thecooperation andknowledge exchange,support careerdevelopment andstrengthen emotionalties.Education Offer a universally-recognized educationprogram incl. certificationopportunities forstudents.Research & Innovation Carry out researchfocusing on the lifecycle ofbanking enterprisesystems and drive futureretail bankinginnovations enabled byBES.BES-CoCProf. Dr.AlexanderMädcheDr.BenjaminMüllerSvenHollmichelJensLauterbachCore team at University of MannheimWe develop and network people, interfacing between business vision and state-of-the-art technology solutions driving future banking innovations enabled byEnterprise Systems.
  24. 24. Banking Enterpise Systems Center of CompetenceWeb Page & Community24▶ Get up-to-date and state-of-the-art information onbanking enterprisesystems▶ Network with peers inpractice & research andbecome partner of thenetwork
  25. 25. Agenda25Agenda1 The Banking Industry2 Enterprise Systems - Conceptualization & State-of-the-Art3 The Banking Enterprise Systems Center of Competence4 Summary25
  26. 26. Summary26• Enterprise Systems are socio-technical systems.The interplay betweenorganization, individuals, and technology needsto be managed on a continuous basis.1• The flexibility through standardization paradigm isimportant for Banking Enterprise Systems.2• The Banking Enterprise Systems Center ofCompetence provides state-of-the-art informationand establishes a network3
  27. 27. Prof. Dr. Alexander MädcheUniversity of Mannheim | Business SchoolInstitute for Enterprise Systems (InES)L 15, 1-6 | 4th floor | 68131 Mannheim | GermanyPhone +49 621 181-3606 | Fax +49 621 181-3627maedche@es.uni-mannheim.dehttp://eris.bwl.uni-mannheim.dehttp://ines.uni-mannheim.deContacts27Dr. Benjamin MüllerUniversity of Mannheim | Business SchoolInstitute for Enterprise Systems (InES)L 15, 1-6 | 4th floor | 68131 Mannheim | GermanyPhone +49 621 181-3607 | Fax +49 621 181-3627mueller@es.uni-mannheim.dehttp://eris.bwl.uni-mannheim.dehttp://ines.uni-mannheim.de
  28. 28. References ISO/IEC. 9241-11 Ergonomic Requirements for Office Work with Visual Display Terminals (VDT)s-Part II Guidance on Usability," ISO/IEC 9241-11,1998 (E). Markus, M.L. 2004. "Technochange Management: Using It to Drive Organizational Change,"Journal of Information Technology (19:1), pp. 4-20. Seddon, B. P. B., & Calvert, C. (2010). A Multi-Project Model of Key Factors AffectingOrganizational Benefits from Enterprise Systems. Management Information Systems Quarterly,34(2), pp. 305–328. Strong, B. D. M., & Volkoff, O. (2010). Understanding Organization-Enterprise System Fit: A Path toTheorizing the Information Technology Artifact. Management Information Systems Quarterly, 34(4),pp. 731–756. Soh, C., & Markus, M. L. (1995). How IT Creates Business Value: A Process Theory Synthesis.ICIS 1995 Proceedings. Tiwana, A., Konsynski, B., & Bush, A. A. (2010). Research Commentary - Platform Evolution:Coevolution of Platform Architecture, Governance, and Environmental Dynamics. InformationSystems Research, 21(4), pp. 675–687.28

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