10 Lessons for success 1. „Establish a robust project leadership.“ 2. „Do only start an IT Mega Project once the bank can stand double the planned budget.“ 3. „Build a conservative business case.“ 4. „Prepare yourself that your program will not deliver on all objectives.“ 5. „Make yourself familiar with your IT Landscape of your project.“ 6. „Understand what problems do you want to solve with your mega project.“ 7. „Take your time – not PPT, but make use of a test environment of your target IT Landscape.“ 8. „First build some prototypes to learn about your core challenges.“ 9. „Make yourself fit for the target landscape“ 10. „Deconstruct your IT Mega Project in several smaller delivery units, that each create value, build on each other and help to achieve the common objectives.“ Do not repeat know failures Set unrealistic objectives Set political objectives Provide not appropriate time for testing Assign inexperience program management Overestimation of one‘s own capabilities Too much optimism Believe you are unique

1. IT Mega Projects in Banking
Frank@FrankSchwab.de
by Frank Schwab

2. These slides are the intellectual property of Frank Schwab,
imacor, copyrighted © 2013, with all rights reserved.
You may use the slides as you would use a book or an article,
i.e., in small excerpts (called 'fair use') and only with full and
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You may not reproduce or use any part of the slides, including
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© of slides

3. Source: Wikipedia

4. Source: Letters of Plinius the Younger
Pliny to the Emperor Trajan: “The citizens of Nicomedia, Sir, have spent
3,318,000 sesterces, on an aqueduct, which they abandoned before it was
finished and finally demolished.”

5. Pienza, Italy
„You did well, Bernardo, in lying to us about the expense ...“
Pope Pius II to Bernardo (Architect), 1462

6. Frauenkirche Dresden
Planned: 88.000 Taler (1726)
Actual: 288.000 Taler (1743)
Change of scope
Stone instead of wood/copper
Consequence:
High maintenance costs

7. Kitzbühel, McKinsey Training Center

8. 10 Years later than planned
14 x more expensive than planned

9. Reasons for failure
¨ Optimism
¨ Overestimation of one‘s own capabilities
¨ Underestimation of political power

10. in time
in budget
in scope

11. Frank Gehry‘s Success factors
Digital models
Realistic
cost estimation
Tight collaboration
with crafts
Organisation of the
artists
On time
on budget

12. IT Systems
are not
buildings

13. Projects
in
comparison

14. Example: financial project risks
Cost increase
Rail IT Olympic Games
Source: Bent Flyvbjerg and Alexander Budzier 2013, Oxford University
45 % 107 % 219 %
Occurance 9 of 10 5 of 10 10 of 10
Benefits -51 % -29 % n/a

17. Source: Bent Flyvbjerg and Alexander Budzier 2013, Oxford University
6 % 18 % 6%
Example: financial project risks
Cost increase
Rail IT Olympic Games
45 % 107 % 219 %
Occurance 9 of 10 5 of 10 10 of 10
Benefits -51 % -29 % n/a

18. Prof. Bent Flyvbjerg, Oxford
“The most project
managers are
either idiots or
liars. "
Source: Spiegel Online, 10th January 2013

19. Learn from
past projects

20. IT Mega Projects
in Banking

21. > 100 Million USD
> 3 Years

22. > 150 Case studies

24. Do not repeat
know
mistakes
Better
understand
the
fundamentals
Identify early
warning signs
Learn about
success
factors

25. Magellan
High Performance CBS Platform
Deutsche Bank
SAP BS 8.0 and Intel GRID
1,3 Billion Euro Program
Project start: January 2010
First modules Q2/2012
Planning 2005 to 2010

27. Lesson 1
„Establish a robust
project leadership.“

28. Common Wealth Bank of Australia – Budget planning
580
2008
830
2009
1,100
2012
Source: CBA Press releases

29. Lesson 2
„Do only start an IT Mega Project
once the bank can stand double
the planned budget.“

30. Feb 2009 Apr 2013
Euro 18.15 Euro 71.45
Source: Yahoo! Finanzen
+293 %
Common Wealth Bank of Australia

31. COMMERZBANK
Source: manager magazin online, 25th November 2009
Integration of Dresdner Bank
+ 500 Million Euro

32. Integration of 1,400 IT Applications within 1.000 Days
Target landscape Several releases
Migration
Tests
Governance
Migration in 2 steps
1) Customer data first
2) Product- and balances by Big Bang
¨ High test efforts
¨ Multiple test environments
¨ End-to-end tests of critical systens
¨ Strong IT/Business Team
¨ Permanent adaptation of project
management
¨ Transparent decisions
Source: Frank Annuscheit, Group COO Commerzbank, Finance Forum, Wiesbaden, 2011

33. Quelle: Frank Annuscheit, Group COO Commerzbank, Finance Forum, Wiesbaden, 2011
Success factors
Strong senior management involvement
High transparency for all employees and project stakeholders
Fast and transparent decisions
Decoupling & equalization
Central management & decentral implementation
Inform & listen

34. 31/8/2008 30/4/2013
Euro 17.49 Euro 1.07
Source: Yahoo! Finanzen
-94 %

35. Surgery successful,
patient dead

36. Lesson 3
„Build a conservative
business case.“

37. High failure rates in core banking system transformations
Program abortedTransformation
successful
25 %25 %
50 %
Transformation delivered,
but costs and time doubled

38. Lesson 4
„Prepare yourself that your
program will not deliver on all
objectives.“

39. Why?

40. Product
Price
Decision
Contract
Collateral
Account
Customer
Transaction
Output
Archive
Booking
Position
Identity
Collection
Loan system in branches
CRM

41. Security
Product
Pricing
Decision
Contract
Account
Customer
Contact
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Retail Loan
Internet
CRM
Product
Pricing
Decision
Contract
Collaterals
Account
Customer
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Retail Loan
Branch
CRM
Product
Pricing
Decision
Contract
Collaterals
Account
Client
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Corporate
Loan Branch
CRM
Security
Product
Pricing
Decision
Contract
Account
Client
Contact
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Corporate
Loan Internet
CRM
Security
Product
Pricing
Decision
Contract
Account
Customer
Dealer
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Consumer
Loan Extranet
CRM
Product
Pricing
Decision
Contract
Collaterals
Account
Contact
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Customer
Retail Mortgage
Branch
Product
Price
Decision
Contract
Collateral
Account
Customer
Transaction
Output
Archive
Booking
Position
Identity
Collection
CRM
Product and Silo Thinking

42. Security
Product
Pricing
Decision
Contract
Account
Customer
Contact
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Retail Loan
Internet
CRM
Product
Pricing
Decision
Contract
Collaterals
Account
Customer
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Retail Loan
Branch
CRM
Product
Pricing
Decision
Contract
Collaterals
Account
Client
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Corporate
Loan Branch
CRM
Security
Product
Pricing
Decision
Contract
Account
Client
Contact
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Corporate
Loan Internet
CRM
Security
Product
Pricing
Decision
Contract
Account
Customer
Dealer
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Consumer
Loan Extranet
CRM
Product
Pricing
Decision
Contract
Collaterals
Account
Contact
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Customer
Retail Mortgage
Branch
Products are implemented
redundant and inconsistent
across product lines and
channels

43. Credit Banking Customer/Sales Investment Risk Shared services
Access channels
Clearing &
Settlement
Governance & Control
Treasury Corporate
IT landscape of a typical retail bank – functional view
Cooperation Mobile BranchInternet Call Centre Self service Service Centre
Workflow / Order processing Order distribution
Product
Price
Account
Contract
Transaction
Market data
Price
Order
Product
Contract
Position
Insurance
Portfolio
Brokerage
Product
Price
Decision
Contract
Collaterals
Recovery
Position
Clearing Booking
Payments
Booking Settlement Corporate Actions
Securities
Market
Liquidity
Credit
Counterpart
Trading
MIS
HR
Intranet
Security
Output
Documents
Archiving
Identity
General ledger Financial Analysis
Financial Reporting
AML
Legal reporting
Compliance
MIS
Risk
Customer
Sales
Contact
Provision
Central Products
Reporting / MIS
Complaints
Advisory
Service
Tax
Central Price
CRM
Rich functionality

44. IBM Mainframe
Sun Server
Intel blade
Tandem
Thin clients
Fat clients
AIX Server Server Farm
Every technology
of every decade

45. C++
3270
MI
Red
Dot
Cross
Beam
Struts
jsp
PHP
18 Windows!

46. Example Workflow
NOS öffnen ► Kunde suchen
NOS-Übersicht ► Partner / Adressen ► Anzeigen / Ändern ► Bestätigung ►
Änderung der Telefonnummer? ► bestätigen / Ändern ► Ausdruck bestätigen ►zurück
zur Übersicht
NOS-Übersicht ► Produkt / Ändern ► Einlagen / Termingeldprolongation ►
Daten ändern ► bestätigen ► zurück zur Übersicht
Einmeldung in KIM ► Starten von KIM ► Anmeldung ► Kunden suchen ► neuen
Eintrag wählen ► Daten einpflegen ► Abschluss anlegen ► Daten eingeben ►
bestätigen ► zurück zur Übersicht
¨ Customer approaches service desk
¨ Customer informs the bank about address change
¨ Advisor notifies a due “time deposit” in the customer’s portfolio
37 Clicks

47. Complex

48. Complicated

49. Complexity takes a large share
Operation
& maintenance
70%
Regulation 12 %
Complexity 10 %
Innovation 1 %
Business model 7 %
Sources: BCG, Datamonitor, McKinsey, imacor

50. Most banks
underestimate
complexity
They just
do not know about

51. Allied Irish Bank
CBS Transformation
Started: 2007
Stopped: 2010
AIB sues Oracle : 84 million Euro

52. Do not repeat past failures
STOP Set unrealistic technological objectives
STOP Assign inexperienced program management

53. Overestimation of
one‘s own
capabilities

54. “AIB is post-crash bank with pre-crash cost structure.
The bailed-out lender's loan losses
have shrunk since the crash, but it's operating
costs have risen.”
31 March 2013

55. Merger of three banks in 2002:
Dai-ichi Kangyo Bank
Fuji Bank
Industrial Bank of Japan
Technical integration in April
Breakdown of money supply
Loss of 1.8 Billiion Yen
6 month to recovery
Mizuho Bank, Japan

56. Wrong architecture
Programming failures in 2
critical modules
Inappropriate time to test
3 CEO did know about, but
kept political target date
Main reasons

57. Politics
Optimism

58. STOP Set political objectives.
STOP Inappropriate time to test.
Do not repeat past failures

59. ING
¨ Wholesale Banking in 35 countries
¨ Planned: 3 Years
¨ Stopped in 2005
¨ Start in 2002

60. Reasons for failure
¨ Underestimation of complexity
¨ Wrong technological decision
¨ Overestimation of one‘s own
capabilities

61. We will make it

62. 70 % of all car
drivers think they
are the better car
driver

63. The same:
bankers
and
project managers

64. Overestimation of
one‘s own
capabilities
Politics
Optimism

65. Why?

68. Racket and Ball are 11 Euro.
The racket is 10 Euro more
expensive than the ball.
How much is the ball?

70. Prof. Daniel Kahnemann
Emeritus, Princeton University
Nobel prize in economics, 2002
“Prospect theory”

72. The art of war
Do only fight if
you are well
aware of the
terrain

73. Lesson 5
„Make yourself familiar with your
IT Landscape of your project.“

74. 000100 IDENTIFICATION DIVISION.
000200 PROGRAM-ID. HELLOWORLD.
000300
000400*
000500 ENVIRONMENT DIVISION.
000600 CONFIGURATION SECTION.
000700 SOURCE-COMPUTER. RM-COBOL.
000800 OBJECT-COMPUTER. RM-COBOL.
000900
001000 DATA DIVISION.
001100 FILE SECTION.
001200
100000 PROCEDURE DIVISION.
100100
100200 MAIN-LOGIC SECTION.
100300 BEGIN.
100400 DISPLAY " " LINE 1 POSITION 1
ERASE EOS.
100500 DISPLAY "Hello world!" LINE 15
POSITION 10.
100600 STOP RUN.
100700 MAIN-LOGIC-EXIT.
100800 EXIT.
"Hello world!"
#include <iostream>
int main()
{
std::cout << "Hello, world!n";
}

75. Source: Code City, Dr. Richard Wettel, 2010

76. What problems are solved?

77. Regulation
Basel II
Basel III
Basel I
MiFID II
WpHG
BörsG
MiFID I
Dodd Frank
SolvV
SOX
AML
Abgeltungssteuer

78. Need to forfill
regulatory requirements

79. Digital Natives

80. 2011 20162012 2013 2014 2015
662
Million
> 4 Billion
Source: Cisco, 2012
Number of Internet enabled mobile devices

82. New customer behaviour

83. Number of German banks
Source: Deutsche Bundesbank
1990 20112000
0
2,000
4,500

84. IT costs per user per year in USD
200
Bank Google
3,4
Facebook
3,8
eBay
7,4

85. Banks need to be prepared for
further consolidation

86. Long term competitiveness

87. Retirement

88. R I P

89. Keep the bank running

90. Lesson 6
„Understand what
problems do you want to
solve with your mega
project.“

91. Example
Bank plans IT-Transformation across 8 countries
Product management
IT
Head quarterCountry heads
Management
Project members Provider
Bank

92. Corporate
Strategy
All leaders
involved

93. Assumed solution
Selection
of
standard software
as
strategic platform
for
the future

94. Complications

95. Example: CBS replacement

96. ?

97. Credit Banking Customer/Sales Investment Risk Shared services
Access channels
Clearing &
Settlement
Governance & Control
Treasury Corporate
IT landscape of a typical retail bank – functional view
Cooperation Mobile BranchInternet Call Centre Self service Service Centre
Workflow / Order processing Order distribution
Product
Price
Account
Contract
Transaction
Market data
Price
Order
Product
Contract
Position
Insurance
Portfolio
Brokerage
Product
Price
Decision
Contract
Collaterals
Recovery
Position
Payments
Clearing Booking Booking Settlement Corporate Actions
Securities
Market
Liquidity
Credit
Counterpart
Trading
MIS
HR
Intranet
Security
Output
Documents
Archiving
Identity
General ledger Financial Analysis
Financial Reporting
AML
Legal reporting
Compliance
MIS
Risk
Customer
Sales
Contact
Provision
Central Products
Reporting / MIS
Complaints
Advisory
Service
Tax
Central Price
CRM
Functionality GAPs

98. CBS share of Total IT Landscape
CBS
Minimum = 10 %
Maximum = 100%
Average = 61 %
Standard deviation = 23
CRM
Mobile
Call Center
Branch
Securities
Finance
Reporting
Settlement
Internet

100. Chinatrust Commercial Bank Taiwan
Oracle
Retail- and Corporate Banking
210 branch, thereof 70 abroad

101. Adopt, not adapt

102. Complications
¨ Low knowledge of standard software
¨ In standard software implemented processes
¨ New implementation approach
¨ Adopt
¨ Parametrisation
¨ New partner

103. Problem

105. Vergleich
Mount Everest
Everest

107. „Take your time – not PPT, but make
use of a test environment of your
target IT Landscape.“
Lesson 7

108. Survey: Chief architects of banks
Question:
„What would you different if you
would do it again?“

109. New
Standard-
software
Integration
environment
Migration
programs
New
Front End

110. „First build some prototypes to
learn about your core challenges.“
Lesson 8

111. „If you think
it's expensive
to hire a
professional to
do the job, wait
until you hire
an amateur.“

113. Check list

114. Quality
people
strong
communication
skills
broad banking
knowledge
solution-
oriented
deep
IT knowledge
convincing
project
experience

115. „Make yourself fit
for the target landscape“
Lesson 9

116. Increasing regulatory
requirements
Chaning customer behaviour
Need for change
Consolidation Legacy IT Landscapes
IT Mega Projects

117. Faster
changing
environment

118. 0
-50
+50
+100
+200
Increase of costs in %
Month36
Example: Project portfolio
12 24

119. „Deconstruct your IT Mega
Project in several smaller delivery
units, that each create value,
build on each other and help to
achieve the common objectives. “
Lesson 10

120. Apollo 11

121. Uniqueness

122. Scope ¨ Private Banking
¨ Roll out in 3 countries
¨ 18 months implementation time
¨ Accounts, Deposits, Payments, Securities
Challenges ¨ Data migration concerning existing silos of
redundant and inconsistent data
¨ Ensure employees continued cooperation
within the program
¨ Ensure a smooth and complete knowledge
transfer
¨ Different tax issues and client reporting
requirements of migrated countries
Description
Objectives ¨ Increase operational efficiency and maximize
synergies within the group
¨ Migrate all countries to the same common system
¨ Improvement of CRM, risk management, and
compliance
¨ Reduction of complex interfaces and decrease the
number of technical and platform skills required
Best Practice Patterns
Background ¨ Private & Corporate Banking
¨ 34 branches in 26 countries
¨ CHF 110 billion assets
Temenos T24 at Schroders, Switzerland
Big Bang Approach
Established Change
Management
Prepared Business
Processes
Shared Strategy
Open Communication
concerning Job Cuts
Real Partnership
Be the Reference
Bank

123. Shared Strategy
New Operating
Model
Executive buy-in
Measurable
Benefits
Phased
Implementation
Established Change
Management
Real Partnership
Strong
Governance
Be On-SiteQuality People
Minimum
Customization
Prepared Business
Processes
EXAMPLE – Bank specific best practice framework
Pre-Design Design Implementation

124. Summary

125. Learn
from past
projects

126. 10 Lessons
1. „Establish a robust project leadership.“
2. „Do only start an IT Mega Project once the bank can stand
double the planned budget.“
3. „Build a conservative business case.“
4. „Prepare yourself that your program will not deliver on all
objectives.“
5. „Make yourself familiar with your IT Landscape of your project.“

127. 10 Lessons
6. „Understand what problems do you want to solve with your
mega project.“
7. „Take your time – not PPT, but make use of a test environment
of your target IT Landscape.“
8. „First build some prototypes to learn about your core challenges.“
9. „Make yourself fit for the target landscape“
10. „Deconstruct your IT Mega Project in several smaller delivery
units, that each create value, build on each other and help to
achieve the common objectives. “

128. Do not repeat know failures
Set unrealistic objectivesSTOP
Set political objectivesSTOP
Provide not appropriate time for testingSTOP
STOP Assign inexperience program management

129. Overestimation of
one‘s own
capabilities
Politics Uniqueness
Optimism

130. Shared Strategy
New Operating
Model
Executive buy-in
Measurable
Benefits
Phased
Implementation
Established Change
Management
Real Partnership
Strong
Governance
Be On-SiteQuality People
Minimum
Customization
Prepared Business
Processes
EXAMPLE – Bank specific best practice framework
Pre-Design Design Implementation

132. Success= 1% Inspiration + 99% Perspiration

133. Do you want to know more?
Frank@FrankSchwab.de
http://www.FrankSchwab.de