1. BANKING INFORMATION SYSTEMS
LECTURE 8

2. Package Based Solutions
Make or Buy
Selection
Implementation
Operation
•  The four main phases are:

3. Phase 2: Selection
•  The package selection method is used to select a software package that best matches the business needs
of the client.
•  The method consists of six phases and can be used to select one or a combination of software packages.
•  A properly executed package selection can save a lot of time during implementation of the package.

4. Selection Methodology

5. Selection Methodology
1.   Start Up
The purpose of the start-up effort is to ensure that sufficient resources are available to the project, so that :
- a clear plan with deadlines is in place,
- and the members of the project team are aware of their responsibilities.

6. Selection Methodology
2. Focus and Direct
•  Scopes the package selection project, answering the questions as:
- why the business will start the project,
- what goals the business will again, - what approach will be used by the project to gain the goals,
- and what the limits of operation of the project are.
•  While the start-up phase focus on preparing the
organizational conditions for conducting the project,
The focus in this phase is  business-oriented.

7. Selection Methodology
3. Define the Short List
•  In this phase the project team tries to deliver a shortlist
of three to five packages which most closely match the
current and future requirements specified by the
organization.
•  After a long list of packages has been drawn up a Request
for Information (RFI) is sent to these vendors.
•  Based on the answers to the RFI, a shortlist is drawn up which will serve as the basis for the remainder of the selection process.

8. Selection Methodology
4. Evaluate
•  This phase provides the package evaluation process.
•  During this package selection phase, the project team will conduct a thorough review and analysis of several potential short-listed software tools which meet the client’s business requirements and enable the desired business processes.
•  This phase ends with one preferred potential software tool which meets the client’s business requirements.

9. Selection Methodology
5. Validate
•  In the validate phase, the package solution will be
tested in full practice.
•  The provider will have to install the system in a client’s
test environment. The reason for doing this is to eliminate
the final uncertainties.
•  This validation phase is optional.
- In most situations, all the information gathered in combination with a short proof of concept in the evaluation phase will be sufficient to reach a decision.

10. Selection Methodology
6. Confirm and Finalize the Preferred Solution
•  The objective of this phase is to get the final sign-off of the package selection project.
•  With this sign-off the client agrees to the solution as advised by the project team.

11. Integrated Or Best of Breed
•  The selection of a core banking system is a strategic decision with long-term implications.
•  It is essential to select a system that not only supports the current situation, but allows the organization to respond to future market demands.
•  An important aspect is the choice of an integrated system (one system) or a ‘best of breed’ (multiple systems) infrastructure.

12. Integrated Or Best of Breed
•  Smaller institutions will often have a preference for integrated systems.
-  A well-chosen system provides all the necessary functionality, causes not too much trouble with interfacing and innovation, and is supported by the vendor.
•  Large and sophisticated banks, however, will opt for a ‘best of breed’ infrastructure.
-  No single system totally covers their requirements, so they have to choose specific software components for specific functionalities.

13. Selection Criteria
•  System selection does not mean choosing a system with the most extensive functionality.
•  It is a dynamic process in which different selection
criteria must be matched with existing and future business
processes and system architectures.
•  There should be a match between the business processes, the system and the organization.

14. Selection Criteria
•  The system selection process must be driven primarily from a business perspective, rather than being treated as a choice between change and improvement of the current state.
•  Any emotional bias towards an existing solution will
introduce hidden variables that influence the decision.

15. Selection Criteria Vendor Support and Services
Implementation and Migration
Functional Aspects
Technical Aspects Business Value Security

16. Selection Criteria: Vendor
•  The viability of a vendor is a crucial element in the search for a replacement system.
• Analyze a vendor’s viability, not just in terms of financial
stability, but also by:
Scrutinizing technical competence
Vendor’s development capability
Quality of support
Marketing and sales reach
Alliances and partnerships
Management performance.

17. Selection Criteria: Support and Services
• Part of selecting the right vendor is having a good understanding of the support and services a vendor provides during the implementation project and once the solution is in production.
-  What is the release and upgrade strategy?
-  How are new requirements incorporated in the solution?
-  What types of consultants are available during the implementation project?

18. Selection Criteria: Implementation and Migration
•  One of the most compelling areas of a bank’s analysis lies in the implementation practice of the vendor.
•  Failure to perform due diligence regarding vendor project management capabilities has the potential to drive implementation costs exponentially and dispirit bank staff.
•  It is vital to talk with a vendor’s customers to gain ‘real world’ experiences.

19. Selection Criteria: Implementation and Migration
•  Vendors will have their targeted list of references for use in the sales cycle.
•  It is important to talk with banks that have similar
profiles - how they use the system and matching scale – to
gain a more balanced perspective.
•  However, be aware that the banks on these lists often receive preferential treatment from the vendor.

20. Selection Criteria: Functional Aspects
•  Functionality is the most important criterion in the system selection process.
•  When evaluating a system’s functionality in relation to the needs of the bank’s business, it is imperative to consider:
- current needs and functionality,
- future needs,
- as well as the vendor’s policy towards upgrades, changes, and additions.

21. Selection Criteria: Technical Aspects
•  The organization’s existing technical infrastructure and
capabilities limit the choices.
•  Adding new components to an existing technical
architecture can substantially influence operational and
maintenance costs.

22. Selection Criteria: Business Value
•  Return on investment (ROI) is an important criterion, but does not solely define the true value of IT investments.
•  A more practical measure is the business value of IT that
takes ROI into consideration as well as other important
factors, such as strategic alignment, architecture, risk, and business process impact.

23. Selection Criteria: Security
•  The assessment of a solution in terms of its fit with the
bank’s internal security standards helps to prevent a lot of
discussion during the implementation project.
•  By involving the departments responsible for the security aspects, any gaps can be properly identified.
•  These gaps can either be filled by the vendor in its next release, or resolved by specific activities during the implementation project.