By F. Gordon Hubbell, Vitex, Inc.

As a director, your bank may spend significant sums of money on new IT systems or components, an often overlooked aspect of your implementation which can degrade and sometimes negate gains in the efficiencies sought from their implementation. Process engineering is the effort that goes into studying exactly how the tasks and transactions are processed, how bank employees accomplish the tasks, and how well the processes fill the business needs of the bank.

In a process engineering project, the tasks that make up the majority of the usage of a system are identified before the system is even selected. This phase is called the current environment study and yields a precise workflow analysis of what is being done presently and what needs are not being fulfilled by the current system and the work done by the staff using it. The result is a cogent picture of inefficiencies and a clear list of the business needs sought in a new system or system changes.

Directors should want its management team to have a current environment study in-hand. The bank’s operations officials can evaluate more thoroughly a proposed new system or system change. This evaluation is then not based just on the “bells and whistles” presented by the vendor, but also by a quantification of the precise new functionality sought. This maximizes the return of spending by focusing analysis on what ultimately becomes a best fit for the situation.

The work does not end here, however. Even the best systems will not ultimately work well if their functions and features are not integrated into a new set of workflows that take advantage of improvements. Director leadership ought not let the bank executives be led astray by vendors touting “best practices” which have been designed by them, in a generic setting. The problem is that each banking institution will have a different set of products, different transactions surrounding them, and differing needs for centralization or decentralization of functions and of management control over system usage.

Thus a target environment phase of the project is used to integrate the new system into the bank’s administration. Here, inefficient old processes are changed to accept the new system’s features. Any formerly efficient processes are retained to the greatest extent possible, and totally new functionality gained from the system is integrated to the extent desired.

Directors can assist in helping management understand that process engineering takes time and is very seldom included in the vendor’s contract for installation of new systems because it adds cost. Also, the vendor frequently doesn’t have the skilled staff necessary to accomplish it. Most vendor implementation staffs are technically oriented, not business process oriented. Thus, it is up to your bank management to exercise discipline in the way new systems are selected and implemented, ultimately achieving greater gains in efficiency and new functionality by taking the time to fully understand the underlying business needs, select systems accordingly, and integrate them into the bank’s administration analytically. The extra time and relatively modest extra cost of process engineering assures success in system selection and implementation and a health ROI.

  <back to December 2006 Directors Digest>