Essence of IT Integration in Business Strategic Planning

M. Tareq BashirSamba Financial Group, O&TPPM Head, AGMEmail: tareq.bashir@samba.com

Cairo- May 5th, 2008

IT History in Business Support

In 70’s: IT was Computational Tools In 80’s: IT was Operations Support Arm In 90’s: IT was Business Solution Provider In 2000’s: 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]

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]

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:1. Forecast the change and evaluate its probability2. Identify its impact on the business strategic goals.3. Position to transform the change into opportunity.4. Trigger a fulfillment action plan in short time.5. Refine the action plan as ambiguity level shrinks6. Measure the strategic objectives achievement level.

You should be able to:1. Forecast the change and evaluate its probability2. Identify its impact on the business strategic goals.3. Position to transform the change into opportunity.4. Trigger a fulfillment action plan in short time.5. Refine the action plan as ambiguity level shrinks6. Measure the strategic objectives achievement level.

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:1. Net Income for the Equity (NIE), Return on Equity (ROE)2. Revenue-to-Expense Ratio (RTE)3. Return On Assets (ROA), Return On Investment (ROI)4. Net Commissions Income (NCI)5. Total Operating Income (TOI), 6. Total Operating Expenses (TOE) 7. Earning per Share (EPS)8. Customers Deposits

Samples of financial and Performance Measures:1. Net Income for the Equity (NIE), Return on Equity (ROE)2. Revenue-to-Expense Ratio (RTE)3. Return On Assets (ROA), Return On Investment (ROI)4. Net Commissions Income (NCI)5. Total Operating Income (TOI), 6. Total Operating Expenses (TOE) 7. Earning per Share (EPS)8. Customers Deposits

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:

1. Grow vertically or horizontally against probable gains2. Shrink against high probable loss risks3. Acceleration or de-acceleration based on risk levels.4. Transforming business to address customer

expectations5. Balance risk taking within investment portfolio 6. Or other objectives

Possible Strategic Objectives could be combination of products objectives as:

1. Grow vertically or horizontally against probable gains2. Shrink against high probable loss risks3. Acceleration or de-acceleration based on risk levels.4. Transforming business to address customer

expectations5. Balance risk taking within investment portfolio 6. Or other objectives

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:

1. Demand Management2. Capacity Management3. Block out unjustified investments4. Scoring Projects ROI and Prioritization5. Manage the Portfolio Risks at Enterprise Level6. Tracking Projects from initiation till ROI is realized

IT investment council sets the strategic objectives for the PPM to screen and track projects fulfillment:

1. Demand Management2. Capacity Management3. Block out unjustified investments4. Scoring Projects ROI and Prioritization5. Manage the Portfolio Risks at Enterprise Level6. Tracking Projects from initiation till ROI is realized

Demand management CycleSUSTAINED BUSINESS VALUE

Businessprocessneeds

Strategic

Tactical

Applications,services,products

ProjectPortfolio

Management

Servicecatalog

Serviceportfolio

management

Operational

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urc

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ana

gem

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Fin

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lm

ana

gem

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ITchargeback

Projectportfolio

Demandcapture

demand

demand

demand

Applicationportfolio

management

Assetmanagement

Strategic Planning Modeling

Strategic Plan is Weighted Decision Tree.

Position Goal Probability Calc.Action Plan

P0

P2

P1 G1

G2

G3

Action Plan (Cost, Duration, Risk Value)

AP1(C1,D1,R1)

AP6(C6,D6,R6)

AP5(C5,D5,R5)

AP4(C4,D4,R4)

AP3(C3,D3,R3)

AP2(C2,D2,R2)

AP7(C7,D7,R7)

Pr0

Pr2

Pr3

Pr1

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?

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?

The Opportunity Qualifications

A business opportunity should be qualified by its value, contribution to strategic goals, timing, realization duration, and risks of regulations, competitor’s 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.

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.

Why IT can give you better hits?

The right IT Infrastructure should help you in:

1. Maintain business fitness2. Improve your positioning3. Hit the opportunities of maximum ROI4. Reduce wasted energy and cost5. Repositioning will be easier6. Reduce the risk value in faulty hits

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 organization’s position by:1. Strengthen organization structure to bridge between

functions, eliminate ownership conflicts and fill gaps.2. Speed up time to market and enhance solution offering3. Expand parallel opportunities handling bandwidth 4. Minimize operating cost and adaptation impacts5. Cut people cost and overheads in reacting to a change6. Improve measurability of business performance7. Improve reporting on strategic objectives realization

IT foundation should secure the organization’s position by:1. Strengthen organization structure to bridge between

functions, eliminate ownership conflicts and fill gaps.2. Speed up time to market and enhance solution offering3. Expand parallel opportunities handling bandwidth 4. Minimize operating cost and adaptation impacts5. Cut people cost and overheads in reacting to a change6. Improve measurability of business performance7. Improve reporting on strategic objectives realization

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:

1. Processes, 2. Communications3. Interfaces,4. Applications,5. Operations,6. Databases7. Security8. Infrastructures

IT standards are including:

1. Processes, 2. Communications3. Interfaces,4. Applications,5. Operations,6. Databases7. Security8. Infrastructures

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

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

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.

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.

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:1. Networks that gives the banks wide reach2. Hardware that expands with volumes growth 3. Uniform security layer that prevents cracking risks.4. Databases that maintain reliable business information.5. Transaction Monitoring Middleware 6. Applications that maintain homogeneous integrated

links and avail reliable encapsulated business services.7. Self service channels that attract customers use.8. MIS system that presents facts, trends analysis,

business segmentation and probability calculation.

Strategic IT Infrastructure modules are integration of:1. Networks that gives the banks wide reach2. Hardware that expands with volumes growth 3. Uniform security layer that prevents cracking risks.4. Databases that maintain reliable business information.5. Transaction Monitoring Middleware 6. Applications that maintain homogeneous integrated

links and avail reliable encapsulated business services.7. Self service channels that attract customers use.8. MIS system that presents facts, trends analysis,

business segmentation and probability calculation.

Strategic IT Infrastructure Components

Voice & Data Networks

Channels H/WCentral H/WPersonal H/W

Unified Security and Access Layer

Operational Transactional MIS

Transaction Monitoring Middleware

Integrated Applications

BS1 BS2 BS3 BS4 BS5 BS6

Standard Interfaces

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.

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.

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

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

Business Services is Assembling Game

Reuse concept reduces overheads and cut time to market tremendously.

Functional Blocks Repository

FB1FB2

FB4FB3

FB8FB7FB6FB5

FB11FB10FB9

FB14FB13FB12

Formatting

Validation

Verifications

Processing

Logging and Error Handling

S(n) Service WorkflowIntegration Vector

LOADING

S(1)

S(2)S(3)

S(n)

Workflow Engine

Building Functional Blocks

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

What is a functional block:1. Checking customer credentials2. Checking account balance3. Checking limits for product/channel4. Debiting/crediting account 5. Processing Check book request6. Logging audit trail record 7. Ordering check book8. Applying fees9. Sending SMS notification to

customer10. Etc.

What is a functional block:1. Checking customer credentials2. Checking account balance3. Checking limits for product/channel4. Debiting/crediting account 5. Processing Check book request6. Logging audit trail record 7. Ordering check book8. Applying fees9. Sending SMS notification to

customer10. Etc.

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.

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.

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.

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.

1. Optimizing IT processes derived ROIC (return on Invested Capital) of 10%-15%

2. Reconstruction of Core Products derived ROIC of 2%-3%

3. Inventing new IT capability to enforce business strategic solution modeling achieved 10 folds ROIC

1. Optimizing IT processes derived ROIC (return on Invested Capital) of 10%-15%

2. Reconstruction of Core Products derived ROIC of 2%-3%

3. Inventing new IT capability to enforce business strategic solution modeling achieved 10 folds ROIC

Business direct benefits

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

How does SOA help business?1. It helps business focus on business rules and

business modeling of the services2. It cross between applications and environment to

integrate functional blocks that fulfill one integrated service

3. It helps business construct, reconstruct and generate new services in simple and quick process.

4. It helps business avoid large amount of testing as the functional blocks are well tested.

5. Transfers human knowledge into functional blocks.

How does SOA help business?1. It helps business focus on business rules and

business modeling of the services2. It cross between applications and environment to

integrate functional blocks that fulfill one integrated service

3. It helps business construct, reconstruct and generate new services in simple and quick process.

4. It helps business avoid large amount of testing as the functional blocks are well tested.

5. Transfers human knowledge into functional blocks.

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.1. Quick to integrate as channels are mostly use

message base integration.2. Secure consistency of handling the same service3. Most effective to address volume expansion4. Protects the infrastructure under load sudden

surges.

SOA technology is most fit for channels integration.1. Quick to integrate as channels are mostly use

message base integration.2. Secure consistency of handling the same service3. Most effective to address volume expansion4. Protects the infrastructure under load sudden

surges.

Sample of Samba Financial Group Awards

Euro money: "Awards for Excellence"

Best Bank in Saudi Arabia 1993,1994,19951996,1997,19992000,2001,20022005,2006,2007

Best Private Bank in Saudi Arabia 2004, 2005

Best Debt House in Saudi Arabia 2005

Best Treasury Bank in the Middle East

2006

Best Private Bank for High Net Customers ($10-$30Million)

2007

Best Private Bank for Entrepreneurs 2007

Sample of Samba Financial Group Awards

Global Finance: "Best Emerging Market Bank"

Best Consumer Internet Bank in the Middle East & Africa 2006, 2007

Best Investment Bank in the Middle East & Africa

2006, 2007

Best Integrated Consumer Bank Site in the Middle East & Africa

2004, 2006

Best Integrated Consumer Bank Site in Saudi Arabia

2005

Best Corporate Online Cash Mgt. in the Middle East & Africa

2006

Best Corporate Trade Finance Services in the Middle East & Africa

2007

Best Bank in Saudi Arabia 1999, 2000, 2001, 2002, 2006, 2007

Sample of Samba Financial Group Awards

The Banker: "Best Banks of the Year"

The Banker Technology Awards 2006, 2008

Bank of the Year in Saudi Arabia 2000, 2001, 2002, 2005

Deal of the Year in Saudi Arabia 2005, 2007

Best Corporate Bank in Saudi Arabia (Banker Middle East Awards)

2004

Bank of the Year for the Middle East 2000

Case Study

Initial Public Offering Straight Through Processing (IPO-STP)

Samba was awarded the Banker’s 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.

Samba was awarded the Banker’s 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.

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

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

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)

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)

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.

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.

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

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

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

1. Provided the back end and branch service ahead of the first IPO

2. Absorbed the volume by expanding the network and the number of processors in a very short time

3. Provided e-application to captured subscribers master data in database

4. Used the opportunity to revalidate the data based on provided documentations

5. In two months Internet was ready for STP IPO6. Two months later all channels offered NCCI IPO.

1. Provided the back end and branch service ahead of the first IPO

2. Absorbed the volume by expanding the network and the number of processors in a very short time

3. Provided e-application to captured subscribers master data in database

4. Used the opportunity to revalidate the data based on provided documentations

5. In two months Internet was ready for STP IPO6. Two months later all channels offered NCCI IPO.

Thank you

Q&A