Build vs Buy and everything in between. ..on the agenda for this session

Transcription

1 Build vs Buy and everything in between ANZ approach to selection of a Cash Management Platform (CMP) supplier Dan Kirtley, Program Director CMP Mark Townley, Business Director - CMP Technologies Customer Summit Florida, USA, February on the agenda for this session A bit about Australia and New Zealand Banking Group Limited (ANZed) An outline of our framework and process for selection of a cash management platform supplier Examples of some analysis tools and methodologies used in assessing supplier information, shortlisting and final selection In hindsight some things we might have done differently Last but not least, a couple of Aussie blokes with funny accents! 2 1

2 A bit about ANZ(ed) We are one of the five largest and most successful companies in Australia and the largest bank and company in New Zealand First began in Australia in 1835 and now have global assets of $290 billion, 1223 worldwide points of representation and ~ 30,000 staff Annual profit last year of $3.68 billion (up 16.2% on the previous year) and a world leader in cost to income management (45%) across global financial institutions We operate primarily in Australia, New Zealand, the Pacific and a significant and growing investment in Asia. We also have representative offices in the USA, Europe and Middle East and large technology and operations centre presence in Bangalore, India ANZ has the highest score for large Australian corporations and all four major banks on the Hewitt Staff Engagement index Highly recognised for community initiatives such as staff volunteering, adult financial literacy and local community investment - recently winning the Prime Ministers Award for Business Community Partnerships. We are the clearing bank for ~45% of global AUD/NZ currency transactions and facilitate more than one quarter of all corporate payments in Australia. We have been awarded Cash Management House of the Year Insto award for the last two years. 3 What s the problem? How much should we spend? Aging Technology - 16bit modem/dial-up ANZ Online application Core systems complexity and lack of middleware flexibility All Australian major banks launching corporate internet banking products in the next 12 months Cash Management is missing component to Corporate internet banking suite Ongoing need to be quicker to market with new internet channel products Institutional Corporate Business Investment Analysis NPV (3-5yrs) of: Deposit (Margin & Fees) revenue growth at risk Deposit Runoff/Retention revenue at risk Other associated customer product revenues (if primary transaction banking relationship is lost) 4 2

3 The selection journey - from Desktop to RFI Oct 2005 Vendor Literature Search Jan 2006 Feb 2006 Mar 2006 Apr 2006 Preliminary Review Workshop Product Demonstration Workshops Detailed RFI Review Workshops Scoring & Evaluation Shortlist 5 to 3 ANZ Strategic Sourcing engaged to conduct a global vendor/supplier review with information compiled from: Gartner Reports Internet Industry and Personal Reference Contacts 5 leading suppliers identified - Letter of Invitation and RFI s issued Shortlist 10 to Questions across the following sections weighted in order or priority and importance Business Criteria Administration Security Audit Logs Payments Information for Clients Receivables Registration Vendor Information Escrow Statement of Work Licence & Development Costs Documentation & Training Technical Criteria Operations Management Data Retention Systems Architecture Vendor Support Professional Services Maintenance - Hardware Software Maintenance Versions, Releases, Upgrades, Fixes, Bugs, DRP Hardware, Physical and Logical Architectures 5 The selection journey - Workshops to Recommendation May-June 2006 July 2006 August 2006 February week Vendor Selection Workshops & Reference Site Visits Supplier B Site visits for preferred Supplier to consist of a combination of phone linkup and personal visits to appraise offerings in business environment. Matrix of Detailed Requirements & Event maps Business criteria Technology criteria Operational Criteria Contractual requirements Preferred Supplier Selection Details of functionality, customisation effort, Contractual position, & Cost estimates = draft contract & SOW Preparation of SOW and Contracts Steering Committee Recommendation Finalise Contract & Commercial Negotiations with selected Supplier Update / Revise Supplier Financial Forecasts Contract Negotiations Complete Analyse & Design Phase Executed Contract(s) Preferred Supplier decision 6 3

4 ssessment Framework 7 Selection Criteria Weighting 8 4

5 Business Requirements Prioritisation The Cash Management business reviewed each area of functionality over a period of workshops and rated each requirement or feature for: Immediate customer need (Must Do) Future releases (Need to do) Other desirables (Nice to do) Release 1 would contain those items that had an immediate customer need (and sellable value) with future releases to occur on a periodical basis (max 6 months) An important constraint that also had to be accommodated as part of the releases plan was the middleware integration (CPR) into enterprise systems A release plan and scope was then drawn up by the project team and signed off by the business Business Requirements 9 The challenge of RFI assessment Administration 16.67% BTP RFI Weighted Section Scores Security 16.67% Audit Logs Operations Management Systems Architecture Vendor Support Payments Information for Clients Receivables Registration Documentation & Training 9.17% 20.00% 70.00% 10.00% 16.67% 10.00% 7.92% 10% 8.33% Administration Security Audit Logs Operations Managem ent Systems Architecture Vendor Support Paym ents Inform ation for Clients Receivables Registration 2.0 Documentation & Training E D C B A Statement of Work 2.08% 10 5

6 even down to final two the choice was not clear cut further analysis required Systems Architecture Std. Dev. - Raw Scores by Section Security Payments Vendor Support Audit Logs Information for Clients Documentation & Training Operations Management Registration Administration Receivables Difference 11 Paper vs People, Words vs Wisdom Product (Functional) Gap Analysis Traditional RFI/RFP Approach (Paper & Words) Business Requirements Technical and Infrastructure Requirements Support & Maintenance Project methodologies and processes Resource skills and Availability Company and product performance and references some other things we sought to test (People & Wisdom) Level of understanding of our market & business People & Cultural Importance of the project (for both of us) Partnership Value Substance and Style of key personnel Proven ability to deliver and execute to commitments Real Time flexibility in responding to change Fit and adaptability of product strategy roadmap beyond the current project Willingness to challenge and suggest alternatives to us 12 6

7 1 week in depth product and technical demonstration workshops were set-up for the final three suppliers to get a real life view of the product (and the company as a potential development partner) Scenarios were scripted to actually mimic the product being set-up, customers being set-up and then customers using the product Product Set-up Customer Set-up Role & User Set-up Transaction Initiation Transaction Reports Account Reports Audit Reports 13 Workshops assessed the product to requirements across all categories and grouped into four categories Percent of total requirements Business Requirements 100% (OTB) Implies a requirement has an As Is out of the box fit (OTB), no change required Above the line Higher % is better Technical Requirements 51 99% Implies a requirement needs Medium to Small Effort to fill the gap 21 50% Implies a requirement needs Large to Medium Effort to fill the gap 0 20%(NOTB) Implies a requirement does not have an out of the box fit (NOTB) Below the line Lower % is better Supplier B 14 7

8 An initial assessment then compiled of the final three suppliers to assess degree of likely development effort Configuration Customisation Core Product Changes Change becomes more disruptive the closer it is to the core product, adding risk and requiring significant testing to mitigate impact As Is 'out of the box makes up 43% Configuration makes up 22% Customisation makes up 35% Minimal core product changes As Is out of the box makes up 32% Configuration makes up 22% Customisation makes up 23% Core product changes of 23% Percentage of Functional Requirements Estimated Total Change Effort Required 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 35% 22% 43% 23% 23% 22% 15% 15% 37% 32% 33% Supplier B As Is OTB Configure Customize Core Product? Supplier B As Is out of the box makes up 33% Configuration makes up 37% Customisation and core changes cannot be determined as the supplier has not provided sufficient information 15 In addition to business functionality an architectural assessment was conducted Client Needs Simple Access Complex Portal Access Integrated B2B Access Experience with integration points for single sign on/transaction signing Client Access Capabilities Business Services & Product Management Capabilities (CPR) Banking Products & Services FX online Internet Banking Platform Admin Publish Events Alerts Failed items CTM Single Security/Identity & Transaction signing infrastructure View Personalised Portal Workflow View Transaction Process Mgt Batching & Scheduling Payments Processing Translation & Validation Handles multiple host replies including rejects Orion Cache Tandem CAP CIM Middleware Payplus MTS Cheque pay Midanz B2B Integration Value-Add solutions Info Services Balances &Statements Vouchers/detailed items Analytics SI & Mantec Reference Reconciliation Billing/Pricing Experience with portal integration via web services Host to Host capability but not seen by ANZ Mature reporting services Integration infrastructure stream proposes adopting a tools based approach for service orchestration 16 8

9 a technology assessment Poor Acceptable Strong Transaction Integrity and Confidence Solution Adaptability Manageability and Supportability Performance and Scalability Policy Alignment and Compliance Security Structural Maturity core product is structurally very mature allowing for ease of enhancement. All were rated as acceptable as they have the capability to meet and integrate with ANZ security requirements. has a strong policy alignment as they adhere to technical standards. Supplier B 17 and a Support & Maintenance Assessment Incident and Problem Management System stability, support structure and processes Service Level Management Compliance to service levels and management of third parties Release and Change Management Release process and ability for ANZ to influence product roadmap Availability & Capacity Management Capability of diagnostic tools and error message customisation Communication Training capability, user group capability and face to face communication General Ease of maintenance, disaster recovery capability, support and development delineation Supplier B 18 9

10 Summary Outcomes: Shortlist 3 to 1 Weakest Strongest Functionality Four key pillars of assessment Technology Support and Maintenance Strategic Differentiators Cost to Deliver Time to Deliver (R1) Supplier B 19 Final Supplier Recommendation (and rationale) Better Requirements Fit Core Product Maturity = Lower Change Effort = Less Development & Testing Higher Delivery Confidence and Better ROI Lower Cost & Lower Risk Shorter Integration Timeline = Faster Speed to Market 20 10

11 Next Steps: Engagement with for a 12 week Analyse and Design phase Analyse and design provided an opportunity for BT to further develop their understanding of the ANZ requirements and ascertain how the WebSeries product could meet our requirements The deliverables from this phase were: Detailed Statements of Work (deliverables and costs); Detailed Release 1 Schedule; Revised Project Management Plan for Release 1; Product configuration parameters; Functional Specifications for Release 1; Indicative costs and timeline for Release 2 based on BRD Supplier and ANZ responsibilities and roles; Solution Architecture, interface definitions for security and enterprise systems; Test Strategy and Product Quality and Acceptance Criteria 21 In hindsight; if we had to do it again During the detailed supplier selection stage we would seek sample documentation from suppliers for all stages of the project delivery On the technical side we would have detailed scenarios to test flexibility of product around configuration and customisation Involve more operation departments in the workshops such as Payment operations, FX operations etc Provide supplier s with a better overview of the complexity of our enterprise systems Provide supplier s with a better understanding of the peculiarities of the Australian cash management and payments market 22 11

12 Some Final Points of Clarification We don t drink Fosters (ask for a Crownie ) There are no Outback Steak Houses (there are very few restaurant chains, Melbourne is the international culinary and café capital of Australia) There are no Kangaroos in the CBD (not that I have seen before 1.00am anyway) We do however have the 10 most venomous creatures in the world (present company excluded) A shrimp is a Prawn (don t ask for a shrimp or people will associate you with Forest Gump) Yes it is compulsory that we have to wrestle a crocodile before we turn 21 (thanks Paul and Steve) 23 Please feel free to talk to us about any of the content or topics raised today. Thank you for your time and attention. 12