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• Incorporate highly diverse and imprecise data in business decision-making
• Integrate advanced modeling with business operations
• Enable operational and planning decisions
Real-time, Informed Decision Making
IBM report surveyed 225 business leaders worldwideSource: Business Analytics and Optimization for the Intelligent Enterprise, April 2009. http://www-935.ibm.com/services/us/gbs/bus/html/gbs-business-analytics-optimization.html
IBM Global Business Services – Financial Services Sector Forum
The rapid change in macro economic parameters influ encing margins and competitiveness are making their impacts on each ba nk and forcing them to analyze their common business environments which are needed for p rudent Balance Sheet and & Income Book management� Interest Rate Movements
� Currency Exchange Rate Volatility
� Account Rollovers/ Defaults due to poor credit quality
� Early Closures of accounts
Business issues as faced by Treasury/ Balance Sheet Management Groups�Lower spreads making the credit premium computation a difficult job�Low supply of cheap source of funds viz. CASA –increasing the average cost of funds�Lack of good quality credit for fund deployment with targeted risk adjusted returns- forcing banks to invest heavily on low return G-Secs over the prescribed levels �Increasing size of credit default portfolio- NPAs for both secured and unsecured loans portfolio�Lack of secondary market for securitized assets-making the securitization a difficult business
IBM Global Business Services – Financial Services Sector Forum
Optimised analytics is increasingly key to business s uccess in the “new” marketplace driving organic growth and customer intimacy
By 2010, the codified information base of the world is expected to double every 11 hours
Executives are required to make more and faster decisions. Today, 70% of executives believe that poor decision making has degraded their companies’performance
Business Analytics
4in5business leaders see information
as a source of competitive advantage
1in2don’t have access to the information
across their organisation needed to do their jobs
1in3business leaders frequently make critical
decisions without the information they needSource: Business Analytics and Optimization for the Intelligent Enterprise, April 2009. www.ibm.com/gbs/intelligent-enterprise
The management of data and the creation of Business Intelligence is increasingly key to business success
IBM Global Business Services – Financial Services Sector Forum
OptimizeWhat is our opportunity to
improve?
ActionWhat should we do to
improve?� Capture the right key performance metrics
that drive optimum value� Measure our performance consistently� Understand and leverage trends� Align to strategic needs� Find opportunities for improvement
� Establish phased targets� Generate and predict alternative actions� Create test and learn approach (control groups)� Choose optimal action(s)� Manage and govern to expectations
� Define new treatments for optimizing the customer experience
� Leverage risk models to differentiate product offerings
� Create new dashboards/monitoring mechanisms
Convergence
Risk Mgt. Finance Mgt.
Operations
Marketing
InsightWhere are we today?
This means better managing a global convergence to ac hieve three core core objectives:
IBM Global Business Services – Financial Services Sector Forum
Business operations m
aturity
Information and analytics maturity
How the business applies information to achieve its goals
• Policies • Business
Processes• Organization
How the business manages information and learns from it
Spreadsheets and extracts
Data warehouses, governance and production reporting
Process automation and workflow
Master data management, dashboards and scorecards
Command and control
Task integration (e.g., ERP)
Business process integration (e.g., CRM) and collaboration
Predictions, contextual business rules and patterns
Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations available in late 2009 at www.ibm.com/gbs/intelligent-enterprise.
Ad hoc
Foundational
Competitive
Differentiating
Breakaway!Prescriptive, real-time,
pattern-based strategies with situational context
Breakaway!Prescriptive, real-time,
pattern-based strategies with situational context
Businesses today have an entirely new way to compete , butmost businesses have yet to take analytics the full distance.
IBM Global Business Services – Financial Services Sector Forum
Use Structured Data & Unstructured Data
Captured
Detected
Inferred
Made consumable and accessible to everyone, optimized for their specific purpose, at the point of impact, to deliver better decisions and actions through:
• Optimized sales activities• More effective service
agents
• Higher productivity of finance FTEs via IT enablement
• Maximize ROI – tactical and strategic cash improvement opportunities
• Better customer channel management
• Increased global operations alignment
• Reduced repository footprints and data model objects• Reduced number of data integration programs and tools• Rationalized the disparate reporting tools and maintenance• Reduced analysts data gathering time• Eliminate multiple data silos• Enhanced trust level of data and broadened access• Increased data accuracy• Increased capability through cross-functional correlations
Three types of analytics programs provide value-driven benefits
IBM Global Business Services – Financial Services Sector Forum
Business Objectives for 2010-2011
Revenue protection and growth
Competitive differentiation such as innovation and deeper insight
Cost takeout and efficiency
Improved risk management and regulatory compliance
Operating enablement such as continuous improvement 10%
12%
33%
41%
71%
Top-line focused
Internally focused
Source: Breaking Away with Business Analytics and Optimization: Enterprise operations meets new intelligence available in late 2009 at www.ibm.com/gbs/intelligent-enterprise.
IBM’s 2009 survey of 398 executives worldwide researc h shows top-line focus is back and it’s a global phen omenon
IBM Global Business Services – Financial Services Sector Forum
Current Top Ten Priorities
Next 24 Months Top Ten Priorities
Project Scope
• Pricing and offer strategies• Branding and reputation management• Product/services market selection• Lead generation and pipeline management• Promotion and offer management• Logistics and distribution management
Increase Focus
• Customer segmentation and profitability• Demand forecasting and management• Enterprise goal setting and alignment• Budgeting and resource allocation
Maintain Focus
• Reporting and performance measurement• Cost/expense management• Career path and succession management• Fraud and financial risk management• Leadership development• Channel performance
Re-assess Focus
Impact
Source: Breaking Away with Business Analytics and Optimization: Enterprise operations meets new intelligence available in late 2009 at www.ibm.com/gbs/intelligent-enterprise.
Primary improvement focus : Top-line Top-line and Productivity Productivity
Getting started means aligning existing and future pri orities
IBM Global Business Services – Financial Services Sector Forum
Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations available in late 2009 at www.ibm.com/gbs/intelligent-enterprise.
Current Top Ten Priorities
Next 21 months Top Ten Priorities
• Pricing and offer strategies• Branding and reputation management• Product/services market selection• Lead generation and pipeline management• Promotion and offer management• Logistics and distribution management
• Customer segmentation and profitability• Demand forecasting and management• Enterprise goal setting and alignment• Budgeting and resource allocation
• Reporting and performance measurement• Cost/expense management• Career path and succession management• Fraud and financial risk management• Leadership development• Channel performance
Increase Focus Maintain Focus Reassess Focus
Return to growth
Improve Productivity
400 C-level executives are leveraging analytics for for growth
IBM Global Business Services – Financial Services Sector Forum
� Based upon an independent, worldwide, cross-industry survey undertaken in August 2009 with 398 respondents
– Roughly 60% of respondents were C-level executives
– Roughly 80% of respondents were business executives representing
• General management
• Finance
• Supply chain
• Sales and Marketing
• Human resources
– Roughly 50/50 mix between product-based and services based industries
� Study segments respondents based upon business performance relative to industry peers
– Top performers were in the 1st quintile
– Lower performers were in the 4th and 5th quintiles
Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations at www.ibm.com/gbs/intelligent-enterprise.
Our study probes deeply into understanding “breakaway ”companies
IBM Global Business Services – Financial Services Sector Forum
ChallengingDisrupt the status quo to improve the business and create new opportunities
EmpoweredEnable and empower employees to analyse,
decide and act
AnticipatingPredict and prepare
for the future by evaluating trade-offs
proactively
21.9X5.6X
15X
Chart shows differences at the highest achievement levels
Key: Top performers (i.e., 1st quintile relative to industry peers)
Lower performers (i.e., 4th and 5th quintile relative to industry peers)
Relative difference of top performers to lower performers
32.5%
1.5%
22.7%
1.5%4.4%
25%
Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations at www.ibm.com/gbs/intelligent-enterprise.
Top Performer AdvantagesWinning Characteristics
3X High quality information
3.2X Strong decision support toolset
2.5X Keen focus on driving business change
Top performers are able to seek, evaluate and act on opportunities
IBM Global Business Services – Financial Services Sector Forum
Data Governance Levels
42%
14%
25%
32%
33%
54%
SophisticatedProcesses and management systems that are strong with some supporting automation in place
Competitive Defined processes and management systems that are understood and adopted by most people
Rudimentary A few basic processes and the beginnings of a management system
Top performers(i.e., 1st quintile relative
to industry peers)
Lower performers(i.e., 4th and 5th quintiles relative to industry peers)
3X
Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations at www.ibm.com/gbs/intelligent-enterprise.
Data governance helps top performers move faster and collaborate
IBM Global Business Services – Financial Services Sector Forum
Above average BAO platforms and toolsets
Analytical and predictive tools
Content management
Dashboards and visualization
Master data management
Data integration tools
2.7x
2.5x4.4x 2.0x2.4x
Business direction Trusted information
Business rules management
2.4x
Key: Top performers (i.e., 1st quintile relative to industry peers)
Lower performers (i.e., 4th and 5th quintile relative to industry peers)
Relative difference of top performers to lower performers
17% 17%23% 24%
27% 27%
55%
65%60%
56%
45%
74%
Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations at www.ibm.com/gbs/intelligent-enterprise.
Top performers are armed with state-of-the-art tools
IBM Global Business Services – Financial Services Sector Forum
2.5XTop performers nearly triple their odds of success through their keen focus driving change
• Culture and people change
• Data governance
• Business process change
• Organizational alignment
2XFocusing on driving change is more than twice as important to success as having a well run project
• Program governance
• Project objectives
• Multi-phased roadmap
• Sponsorship
• Capability assessments
• Funding process management
GoodSound justifications
BetterWell run project
BestDriving change
Beating the odds for success
Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations at www.ibm.com/gbs/intelligent-enterprise.
Focus on making the value-driven operational changes that matter
IBM Global Business Services – Financial Services Sector Forum
Forecasted Benefits• Total Est. Growth Benefits Over 5 Years: £1 – 1.5b
• Total Est. Cost Savings Over 5 Years: £115 – 175m
• More tightly integrated sales an marketing efforts across bank lines of business and customer care business operations.
• 1.5% increase in customer retention
• Average increase of products per household to 4.8
Forecasted Benefits• Total Est. Growth Benefits Over 5 Years: £1 – 1.5b
• Total Est. Cost Savings Over 5 Years: £115 – 175m
• More tightly integrated sales an marketing efforts across bank lines of business and customer care business operations.
• 1.5% increase in customer retention
• Average increase of products per household to 4.8
Client Challenges•The bank spends between £105m and £180m annually on business intelligence (BI)
•The business does not always recognize the importance of BI as a corporate asset nor its role in achieving desired financialoutcomes
•There is an interest in saving cost, but the real appetite is for improved business performance and profitable growth
•There are between 1200 and 2000 dedicated FTEs within the business engaged in BI related analytics.
• The business lacks confidence in IT’s ability to meet their changing BI needs in a cost effective and timely manner, leading to communication issues and fragmentation of BI investment
• The BI environment has become overly complex, in part redundant, costly, benefits limiting and unsustainable in the long term
IBM Global Business Services – Financial Services Sector Forum
There is significant opportunity to improve the current business intelligence landscape within the bank focused on driving more meaning outcomes and revenue to the bottom line. Critical observations of the past 6 weeks include the following:
• The current funding model drives tactical projects that do not advance an ‘enterprise’ view
• The current environment is an order of magnitude too large (too many tables, too many jobs) making the environment overly complex, difficult to support, and difficult to use
• Inefficient and expensive archiving practices (e.g. full copies instead of changes only)
• There are too many similar tools related to ETL, analytics and reporting
• Business continuity procedures and processes are not sufficient to meet current expected business SLAs
• There is a lack of overall data governance and metadata management resulting in perceived data quality issues; Lack of an overall owner
• Poor or missing business metadata directly contributes to data quality issues
• The business has a general lack of confidence in technology related information management. Business perceives that changes are many times cost prohibitive, will take too long and/or the result is unreliable
• Resources are not being effectively used on strategic business activities, for example:
Total Est. Growth Benefits Over 5 Years: £1 – 1.5b
Even applying a very conservative level of estimation, the potential benefits to the company are inarguably significant. Although the immediate inclination is to focus on a cost reduction play, the real benefits are in the
business’ ability to drive more meaning growth leveraged through a “smarter” organization
Estimated PotentialGrowth Benefits and Cost Savings by Year
IBM Global Business Services – Financial Services Sector Forum
Retail Bank Card New Markets
• Risk Scoring improvement created an additional $120 million (EBIT) over 5 years through more informed decision making
• Creation of a global relationship-based risk evaluation raised average per customer card net profits by more than five times, with annual profits >$140 million.
• Leveraged total relationship and external data to reduce processing backlog to less than three days (from weeks), reduced application fraud by 80%, reduced analyst staffing by 40%
• New account authentication based on geographic, risk, demographic and source factors virtually eliminating fraud, first-payment default declined 84%. Total process time reduced 90%, with staffing levels reduced by >60%.
• 35% improvement in Customer marketing event identification/conversion rate resulted in $75million (EBIT) a year in benefits
• Fact-based efforts reduced marketing campaign cycle time from 16 weeks to 4 weeks while increasing the number of campaigns generated by >20 times
• Customer-centric integrated treatments created 1 point increase in company-wide loyalty score resulting in +1.7% increase in market share and +1.2% increase in gross margins
• More informed decision making in self directed channels and among frontline associates increased cross-selling proficiency boosting average number of products owned from 3.6 to 6.7
• Decreased merchant agitation, increased merchant promotional sales, increased charge volumes by >25% among targeted groups
Competitor BI Related Business Objectives for 2010- 2011Revenue protection and growth
Competitive differentiation such as innovation and deeper insight
Cost takeout and efficiency
Improved risk management and regulatory compliance
Operating enablement such as continuous improvement 10%
12%33%
41%71%
Top-line focused
Internally focused
Note: Respondents were asked “What are the main business objectives of your enterprise over the next two years? Select two.” Source: Breaking Away with Business Analytics and Optimisation: Enterprise operations meets new intelligence available in late 2009
Top line focused
Internally focused
In order to achieve needed growth and competitive differentiation, the bank must shift focus of BI to meet demands of the market and it’s competitors. This new shift represents an optimised, cost effective model focused on deeper market penetration and customer advocacy.
Staged ApproachIntegration and simplification stages are prioritised, based upon existing complexity, cost, and potential value to the business
Incremental Value Generating CapabilitiesCost savings will be based upon clear metrics underpinning productivity gains through reduced: complexity, error rates, cycle times & improved availability
Wave 1Baseline Wave 2 Wave 3 Wave 4 Wave 5
Estimated simplification model based on what we kno w today
IBM Global Business Services – Financial Services Sector Forum
Accountability� Lack of service-level accountability for information provided
� Lack of clear definition, in terms of rights and obligations, ofdata owners subjecting the company to unnecessary exposure, both operational and regulatory
� Total lack of insight into corporate-wide BI spend due to “federated” construct and resulting issues of traceability
� The majority of technology-related spend is devoted to tactical efficiency programs and process areas
� Exposure to FSA fines and reputational damage due to significant gaps in data protection and security policies
� Lack of flexibility in evolving reporting needs limit internal accountability and increase the cost of external compliance
Governance & Culture� Information generally not treated as a critical input for timely
day-to-day business decisions
� “Doing things right” seems to be less important than doing what has always been done or what is convenient for the situation at hand
� Past data strategy and BI initiatives have not been clearly linked to business goals/priorities
� Certain BI assets remain largely unused while others are being used for purposes other than their original intent
� Decision making tends to be done based on personal experience and gut feel rather than rigor and proof
� No BI centre of competency across lines of business to integrate learning and resolve ongoing BI issues
Technology Enablement� No focus on building a common, extensible BI infrastructure
� Legacy policies and lack of standards has resulted in multiple uncoordinated and redundant solutions
� Former attempts to create a corporate BI strategy has created a false sense of impossibility and a lingering skepticism about its potential value, resulting in a plethora of disjointed business Unit BI initiatives with limited value
� Technical competencies within critical areas of BI are noticeably lacking within the organisation
Data and Information � No corporate-wide approach to single version of the truth
� Current focus on tactical BI performance issues combined with an historical lack of quality analytical data is limiting its ability to leverage information as a competitive advantage driving growth and differentiation
� There is no common framework to address data acquisition and integration needs across business units that is timely enough toinfluence daily business decisions (client interactions, sales, marketing, risk, pricing, etc)
� Trusted data standards are not universally applied resulting in questions around quality of the data and output
� Numerous BI practices, knowledge on information location and data relationships are in the heads of “a few” resulting in potentially high risk to business operations
� Data requirements and performance metrics are almost nonexistent creating an inability to measure results and value of BI related investments
IBM Global Business Services – Financial Services Sector Forum
Key Themes
Customer Focus & Insight
Actionable Insight & Outcomes
Innovation &Opportunity
Risk, Reporting & Compliance
• Effective understanding of the customer through single view, supported by an enterprise data model and metadata strategy
• Actionable information for Customer strategies to drive higher quality & more personalised and profitable experiences
• Access to Customer interactions, behaviours, trends and events across all channels and interactions
• Improve data quality and accuracy in reporting through the radical simplification and reduction of redundant sources and repositories
• Ensure timeliness of information to front line through removal of sequential batch processing and reduction in manual intervention
• Increase efficiency and predictability of outcomes through role-based access rules, security and optimisation of supporting tools
• Leverage customer and household relationships to maximise profitable growth
• Integrated view of market, industry and customer segment trends• Predictive analytics to guide and inform of potential opportunities,
e.g. atomic level data, managed sandpit environment• Introduction of a scalable BI environment and supporting processes
• Timely access to complete customer history and transactions across the business to better track behaviours and trends and manage risk
• Profiling and analysis of account/external data for early warnings• Greater agility in meeting new reporting and compliance obligations• Predictive analytics to guide and inform next actions, mitigation and