Reference no: EM133597221 , Length: Words Count:800

INFORMATION TECHNOLOGY MANAGEMENT

CASE STUDY

Case study: Plutus

Christian is the IT manager of Plutus, a fairly new bank with a business model based on the customer and the customers' experience of the bank branch. The bank's business strategy, therefore, prioritises face-to-face, branch-based dealings, customer convenience, and transparency to create value.

Christian has been the bank's IT manager for the past three years. The IT department has played a significant role in implementing and maintaining the IT infrastructure and software required for effective banking operations. In the bank's first year, the IT department succeeded in developing a secure and accessible online banking system, allowing customers to monitor their accounts, perform transactions, and interact with the banking staff to ask for technical or financial advice. This was successful and aligned closely with the business strategy of ensuring convenience and transparency.

However, the growth of the company has resulted in less time for well-thought-out innovation and careful implementation of technology that will enhance customer value and optimise the cost of operations. Christian recently read about the benefits of contactless debit and credit cards, and wanted to roll out this initiative at Plutus. He failed to evaluate the demand for this product and did not run any trials for the initiative or collect any evidence to inform this decision. Subsequently, there was limited demand for the new bank cards, as customers were happy with their existing cards, only swapping over when cards expired or were misplaced. This resulted in unnecessary printing - and now storing - of contactless cards.

Another initiative that was not well researched was the request of the executive committee (ExCo), namely that Christian buy and oversee the implementation of a biometrics system, in order to improve the process of registering and securing the information of Plutus' customers. Unfortunately, this system has been delayed, and its lengthy implementation has been costly. Additionally, misalignment between the bank's other departments and the marketing team means that customers were assured that Plutus had the technology to verify their identify and eliminate fraud prior to the integration of the biometrics system with the bank's software. This has resulted in banking delays and customer frustration.

This is particularly ironic as the biometrics system was implemented, partially, in an attempt to expediate the current time-consuming process of opening an account with Plutus. Customers joining the bank are required to complete a written form containing all of their personal information, and this information is then confirmed and entered into the internal banking database by the bank teller. This process is necessary, as it allows the bank to ensure that all the information, provided by identification documentation, is correct. It also allows the bank to focus on its business strategy, prioritising the branch experience over online forms.

Not only is the process time-consuming, the current organisational process requires that, following each registration, the IT technicians log every customer's details in an additional database. Plutus uses software that is connected to an internal database to record and store the personal details of all customers. Additionally, core banking software is used to document and manage all transactions made by the customers, but this software is managed by the IT department. Both banking software systems are costly, and maintaining and managing both systems requires a large percentage of the bank's operational budget.

The two processes have traditionally been kept separate due to the limited communication channels within the organisation and have been insourced because the ExCo are concerned outsourcing may impact the bank's compliance and privacy policies. The duplication of this process is time-consuming, especially for the IT department, meaning that staff members have to focus on processing data rather than core business tasks.

In the IT department, if the staff do not complete these non-essential business tasks alongside successfully maintaining the IT infrastructure and providing technical support, they are expected to work overtime. Christian is concerned, as this has created dissatisfaction and low morale. This negative culture is further exacerbated by the failure to recognise and utilise the expertise of the IT team.

When creating the IT budget for the year, Christian used the baseline budgeting method, focusing on investing in the same resources that the IT department had always prioritised, because this approach had previously worked. He had failed to take into account that the IT team had grown from just himself and one other staff member to a team of 20, and he had not fully accounted for this growth in the budget. Therefore, training and mentoring sessions were not included in the budget, and no platforms have been provided where the IT team can develop their skills and suggest or pilot initiatives that can improve operational efficiency.

Within the IT department, there has been a lack of consensus around the budgetary approach that should be taken to optimise costs and banking services. Many team members have suggested that the budgetary process is outdated and no longer caters to the operational needs of the bank. In drawing up the IT budget, Christian failed to look at the value stream and consider how IT resources can be utilised and streamlined to add value to the life cycle of the banking services Plutus is providing.

Mismanaged and misaligned budgetary decisions and time-intensive, non-essential organisational operations have resulted in the failure of the IT department to deliver the value expected by the ExCo. Similarly, customer expectations are not being met, and these setbacks have resulted in low morale in the IT department.

During a meeting with Plutus Execo and the heads of departments, different sourcing options are discussed to develop an efficient database to capture and manage customer information. The CEO has explored the FORT framework and suggests using this method to assess which of the sourcing options would best fit the bank's budgeting and operational needs. While no sourcing decision was made in this meeting, the necessary requirements of an external sourcing model were collated. The sourcing model would need to reduce organisational expenditure, manage specific, time-consuming, and cost-heavy operations, and provide Plutus with access to current technology and technical services.

Questions

Question 1. What are the five main sources of waste in Plutus bank? (Max. 200 words)

Question 2. Describe how a Lean approach could assist Plutus with cost optimisation and mention the five Lean principles they would need to follow. (Max. 200 words)

Question 3. Imagine you are the IT manager for Plutus, and the CEO has asked you to determine which sourcing approach should be used by following the FORT framework. Examine each FORT framework relationship category to determine the sourcing strategy Plutus should implement. Consider the relationship between Plutus and its providers, and the type of sourcing approach that could manage the requirements of the Plutus customer data base. Ensure that you explain the reasoning behind your response. (Max. 400 words)