'A Practical Application of Enterprise Architecture – the Ecobank Example by Kims Sifers, LV

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A Practical

Application of

Enterprise

Architecture in

Commercial

Banking – the

Ecobank Example Kims Šifers Principal Business Consultant

Cards, Tieto Financial Services

[email protected]

© 2012 Tieto Corporation

Contents • Introduction

• Strategy

• Operating Model

• Enterprise Architecture

• Engagement Model

• Fruits of Unification and Lessons Learned

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Introduction • Presentation based on Enterprise Architecture as Strategy:

Creating a Foundation for Business Execution (Hardcover) by Jeanne W. Ross, Peter Weill, David C. Robertson

• A Practical Application of Enterprise Architecture in Commercial Banking – the Ecobank Example

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http://hbr.org/search/Jeanne+W.+Ross

http://hbr.org/search/Peter+Weill

http://hbr.org/search/David+C.+Robertson


Ecobank Strategy: Build the

platform – 1985-2011 • Pan-African full service banking group

• 32 African countries

and France

• $17.2 billion assets

• 8.4 million customers

• 23,355 employees

• Strategic alliances

• Single IT platform

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Ecobank Strategy: Develop scale

in key markets – 1985-2011 • Focus on performance:

• risk management

• customer service

• capacity building

• Optimize balance sheet: • diversify funding sources

• optimize capital allocation

• Develop key businesses

• Proactive inorganic opportunities to build market share

• Target key customer segments

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Ecobank Strategy: Growth

acceleration – 2012-2014 • Seek to be Top 3 in all markets and #1 in key parameters

• Exploit international opportunities

• Capture efficiency & process improvements through centralization & outsourcing

• Investment in key growth drivers

• Fill out holes in network

• Enhance profitability & operating efficiency

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Ecobank’s Strategic Challenge • In Commercial Banking you need to minimize costs – this

comes from operational efficiency

• Every affiliate (Ecobank country) was doing its own thing • Very expensive from a procurement and operational point of view

• Uneven risk and quality

• EcoBank and Africa is very large – 29 different countries and cultures – Africans are different

• Ecobank understood that efficiency had to be improved and cost reduced

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Ecobank Strategic Thinking • The leading Ecobank Information Technology and Operation

Managers come from CitiBank

• Ecobank Managers implemented an Enterprise Architecture Strategy as they had in CitiBank

• Large Multi-International Customers act in similar ways

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Steps in Implementing Enterprise

Architecture I. Operating model – Global Business Processes are

dependent upon Business Goals

II. Enterprise architecture – This is dependent upon on the Operating Model chosen

III. IT engagement model – You cannot implement an Enterprise architecture without project governance

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I. Operating Model

Business

Process

Integration High Coordination Unification

Low Diversification Replication

Low High

Business

Process

Standardization

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More Details about the Operating

Model:

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High

Coordination

Shared customers, products, or suppliers

Impact on other business unit transactions

Operationally unique business units or

functions

Autonomous business management

Business unit control over business process

design

Shared customer/supplier/product data

Consensus processes for designing IT

infrastructure services; IT application

decisions made in business units

Unification

Customers and suppliers may be global or

local

Globally integrated business processes

often with support of enterprise systems

Business units with similar or overlapping

operations

Centralized management often applying

functional/process/business unit matrices

High-level process owners design

standardized processes

Centrally mandated databases

IT decisions made centrally

Low

Diversification

Few, if any, shared customers or suppliers

Independent transactions

Operationally unique business units

Autonomous business management

Business unit control over business process

design

Few data standards across business units

Most IT decisions made within business

units

Replication

Few, if any, shared customers

Independent transactions aggregated at a

high level

Operationally similar business units

Autonomous business unit leaders with

limited discretion over processes

Centralized (or federal) control over

business process design

Standardized data definition but data locally

owned with some aggregation at corporate

Centrally mandated IT services

Business process Integration

Low High

Business process standardization


Diversification • This where EcoBank started through a series of

mergers: • Few, if any, shared customers or suppliers

• Independent transactions

• Operationally unique business units

• Autonomous business management

• Business unit control over business process design

• Few data standards across business units

• Most IT decisions made within business units

• However, there are cases when diversification should be applied because e.g. Business unit control over business process design

• IT must serve business

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Unification

• This is what EcoBank wanted to Achive – EcoBank

wanted to absorb its mergers • Customers and suppliers may be global or local

• Globally integrated business processes often with support of enterprise systems

• Business units with similar or overlapping operations

• Centralized management often applying functional/process/business unit matrices

• High-level process owners design standardized processes

• Centrally mandated databases

• IT decisions made centrally

• This is preferred because economies of scale are gained and a common way of doing things – easier to control and understand

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I. Ecobank’s Operating Model

Considerations • Ecobank operates in 32 countries

• Ecobank had strategic goals in relation to Tieto to: • Improve Risk Management and Customer Service

• Build capacity

• Get to a single IT platform

• Ecobank, taking into consideration Strategic Goals, chose the Unification Operating Model

• After choosing the Operating model, the Next Step is to choose the Enterprise Architecture

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Strategic Business Reasons for

Unification • Common Business Processes – but it is not so easy

• Easier to train staff

• Higher quality level

• Easier Statistical Analysis

• Result of Common Business Process are lower costs

• Common Security Platforms – trust is key for the bank • PCI DSS Certification – based on procedures and their

implementation - harder with different technical procedures

• Chip (Smart) Card – to reduce Fraud losses from counterfeit cards

• Easier to Launch New Products across the Group – EcoBank is Pan African • EcoBank Private label cards – upgrading to CPA

• Instant Debit Cards

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II. The Four Stages of Architecture

Maturity • Business Silos architecture: where companies look to maximize

individual business unit needs of functional needs

• Standardized Technology architecture: providing IT efficiencies through technology standardization and, in most cases, increased centralization of technology management

• Optimized Core architecture: which provides company wide data and process standardization as appropriate for the operating model

• Business Modularity architecture: where companies manage and reuse loosely coupled IT-enabled business process components to preserve global standards while enabling local differences

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Enterprise Architecture as Strategy: Creating a Foundation for Business Execution (Hardcover)

by Jeanne W. Ross, Peter Weill, David C. Robertson 256 pages. Publication date: Jun 07, 2006, page 71

http://hbr.org/search/Jeanne+W.+Ross

http://hbr.org/search/Peter+Weill

http://hbr.org/search/David+C.+Robertson


II. Ecobank Enterprise Architecture • Ecobank wanted to attain Business Modularity

• You cannot get there at once – “it is a journey”

• Business Silos means every affiliate making their own IT decisions – this is expensive

• Ecobank firstly implemented Standardized Technology: • IBM Servers, AIX, and Oracle

• More efficient both from a Procurement and Operational point of view

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II. Ecobank Enterprise Architecture • Ecobank then proceeded with implementing Optimized Core

Architecture – in relation to cards: Tieto’s Card Suite, FlexCube, and Postilion were used

• With this implementation Ecobank had attained Optimized Core

• EcoBank is now beginning to enjoy the fruits of Business Modularity

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II. Tieto’s Contribution to

Optimized Core • On-line interfaces to FlexCube and Postillion

• Off-line interfaces to Flexcube, MasterCard, and Visa, and from Postillion

• Affiliate net settlement and clearing

• Merchant Management including Merchant Settlement and Merchant Service Charge calculation

• Fraud Detection and Prevention – Exceptional Fraud Management

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II. Tieto’s Contribution to

Optimized Core • Account Management for Pre Paid and Credit Cards

• including interest and other account fee calculations

• Account statementing

• Basic collection functionality

• Issuing Authorization including: VSDC, M/Chip, and CPA

• Card Life Cycle Management for Debit and Credit Cards

• Cards transaction (also on-line) and card commission calculations

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III. IT engagement model • It is important that Project goals are tightly aligned with

strategic goals

• Executive Reviews and Steering Meetings allow us to ensure that the goals are correctly aligned

• Organizations needs to ensure Business Change

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III. Tieto Contribution to Capacity

Building • Ecobank defined its business and marketing product

requirements

• Tieto provided business and technical consultations

• Initially, Tieto provided Application Service Management - Tieto Employees lived on-site

• 7 Ecobank employees were ready for everyday operations with Card Suite, an accounting expert has been trained for Ecobank Operations

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Fruits of Unification • 29 affiliates are using Card Suite

• Migrated from HP Unix to IBM AIX platform – also performed stress tests – less expensive to manage a common platform

• Migrated 29 affiliates data

• Common business and IT practices mean greater capacity and improved customer servicing

• Fraud Detection and Prevention – Exceptional Fraud Management

• Chip rollout – improved risk management • In some African countries mandatory

• Reduced Fraud Losses

• PCI DSS Certification has been attained • PCI DSS Certification was greatly aided because common and

business IT practices were introduced – improved Risk management

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Fruits of Unification – Instant Debit

Card Issuing

• Started in one Affiliate

• Took 2 weeks for a new customer to get a debit card – Africa is big

• Business requirement was to reduce card delivery time • Cards are made without cardholder’s name and with PIN mailer

• The affiliate has its own embosser – to write the cardholder name

• Web Service used to take information from FlexCube and update it into Card Suite

• Cardholder can now get a personalized card in about 10 minutes

• Improved Customer servicing that allows for increase in customer base

• This now can be rolled out to other affiliates because there is a common enterprise architecture

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Lesson Learned • Executive Support is Key

• For Large Projects Intensive Cooperation is Required

• Large Customers strive to implement Business Modularity Architecture and Unification Operating Model

• It is in everybody’s interest to define appropriate functions to appropriate systems

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© 2

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Corp

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Kims Šifers Principal Business Consultant

Cards, Tieto Financial Services

[email protected]

'A Practical Application of Enterprise Architecture – the Ecobank Example by Kims Sifers, LV

Technology

business process

unification

data standards

operating

shared customers

business units

enterprise

business execution