1. How banks reinvent themselves through Enterprise Systems
April 17th, 2013
Prof. Dr. Alexander Mädche & Dr. Benjamin Müller
Chair of Information Systems IV, Business School and Institute for Enterprise
Systems (InES), University of Mannheim

2. Agenda
2
Agenda
1 The Banking Industry
2 Enterprise Systems - Conceptualization & State-of-the-Art
3 The Banking Enterprise Systems Center of Competence
4 Contacts
2

3. Changing
Customers
Changing
Economic
Conditions
Changing
Regulatory
Conditions
New
Technologies
Challenges in the Banking Industry
3
Banking
Industry

4. Two Approaches: Flexibility vs. Standardization
4
Standardization
Efficiency
Flexibility
Effectiveness
“Doing the right things … … doing the things right.”

5. What does standardization mean in retail banking?
Have the ability to (produce) offer your products and services as
efficient as possible!
Streamline and
standardize
processes
based on best
practices…
…and increase
automization and
use of standard
software.
“Any customer can
have a car painted
any colour that he
wants so long as it
is black!”
(Henry Ford)
5

6. What does flexibility mean for retail banking?
Have the ability to differentiate from your competitors!
Offer adequate
customer service… …and the
right
products
at the
right
time…
…in
the right
channels.
Need to do it at
all costs?

7. 7
Standardization
Flexibility Platform concept and
standardization behind
the scenesAND
Flexibility and
differentiation at the
interface to the customer
Flexibility vs. standardization?Towards Mass Customization and Platform Orientation
Through

8. Agenda
8
Agenda
1 The Banking Industry
2 Enterprise Systems - Conceptualization & State-of-the-Art
3 The Banking Enterprise Systems Center of Competence
4 Contacts
8

9. Service-oriented
Systems
Module
1
Module
2
Module
3
Module
4
SOA Middleware
Mdule x
Module
1
Module
2
Module
3
Module
4
Integrated
Systems
ERP
Module
1
Module
2
Module
3
Module
4
Functional
Systems
Module1
Module2
Module3
Module3
Calculation
Systems
Historic Perspective on Enterprise-wide Application Systems
9
19801960 1970 1990 2000 20101950 Time
Single
Purpose
Module
Inconsistency,
Heterogeneity,
Silo-based
Decisions,TCO
Limited
functional
scope
Complexity,
Inflexibility,
Competitive
Advantage?
Governance,
Development &
Maintenance
Costs, Lacking
Capabilities

10. What are Enterprise Systems?
10
▶ Large‐scale integration of data and processes
▶ All of a company’s functional areas and beyond its borderlines
▶ Build on packaged software (e.g., ERP, CRM, Business Intelligence,
or Portals)
Technological
Subsystem
Social
Subsystem
Enterprise
System

11. Good news on ES implementations?
11
SAP project woes impact Ingram Micro's profits – twice
… Net income stood at $56.3 million, a drop from $70.3 million in the same quarter the
previous year, Ingram Micro said at the time. The shortfall was primarily attributable to
difficulties transitioning to a new enterprise system …
PCWorld (2011)
PeopleSoft pegged for Fort Worth police pay problems
… Police in Fort Worth, Texas says that a recently implemented payroll system is leaving
them shortchanged or even without any pay at all … The system wasn't set up to handle
the odd hours and shifts police officers work …
InfoWorld (2010)
HP's "Perfect Storm" of ERP Problems
… epic tale of HP's centralization of its disparate North American ERP systems onto one
SAP system proves that one can never be too pessimistic … project eventually cost $160
mn. in order backlogs and lost revenue - more than five times the project's estimated cost
…
CIO Magazine (2009)

12. Beyond Dualism, towards Duality
12
▶ Socio-technical systems as a holistic perspective
▶ Influenced heavily by organizational structures
▶ Strong interplay with work practices of individual employees
▶ Shaping and being shaped by individuals' behavior
▶ Most ES projects fail because they fail to transform the organization
Enterprise
System
Social
Technological

13. The centrality of the “use” link
13
IT
Assets
IT Department
IT
Impacts
Organizational
Performance
Corporation Market
IT
Expenditure
IT Management &
Conversion Activities
Appropriate /
Inappropriate Use
Competitive
Position
Soh and Markus (1995), Markus (2004)
WORKING  Sound implementation, no major bugs, support in place,
running and no significant downtime, …
WORKABLE  High usability, all necessary features, complete in terms of
requirements, training provided, …
WORKED  Matched to tasks to enable apply it, used appropriately
and effectively, actual system usage, …

14. From Expenditure to Assets:
The Important Role of Usability
Definition Usability (ISO 9241-11): The extent to which a product can be used
by specified users to achieve specified goals with effectiveness, efficiency and
satisfaction in a specified context of use.
You can not tell whether a software
is usable without considering:
 the user
 the goals
 the context of the task
14
Appropriate for user, task and context!

15. From Expenditure to Assets:
Platform-based Flexible Extensions
15
Provide a standardized core platform and allow for flexible extensions serving
the different users to achieve their specific goals.
Platforms are defined as an “…
extensible codebase of a software-
based system that provides core
functionality shared by the modules
that interoperate with it and the
interfaces through which they
interoperate.”
(Tiwana et al., 2010)
Ecosystem
Module …
Interfaces
Module
Platform

16. Organizational
Individual
Adaptation
Appropriation
Assets to Impacts: Adoption, Adaptation, and Appropriation
16
Adoption
…
…
“Causes and
motivation”
“Realizing
benefits”
“The dust has
settled”
“Preparing for Go-Live”
“Choosing a
course of
action”
“Go-Live”
“Individuals
trying to use
the system”
“Trial and error”
“Reflect, learn,
and improve”
…
“Flurry of excitement”
“Gaining
momentum”
Conversion Use

17. EnterpriseSystem
On the Fit between Organization and Technology
17
Latent structures
Organizational culture
Control
Roles
Surface Structures
Interfaces
Usability
Deep Structures
Functionality
Data
Physical Structures
Organization
Technology
FIT
Strong and Volkoff (2010)

18. Forms of Enterprise System Fit
18
Strong and Volkoff (2010)
Functionality misfits
1
Data misfits
2
Usability misfits
3
Role misfits
4
Organizational culture
misfits
6
Control misfits
5
e.g., task structure different between system and business process
e.g., attributes scattered across multiple sources
e.g., system requires extra steps that introduce difficulty in entering information
e.g., ES roles inconsistent with skills available, create imbalances in workload
e.g., controls embedded in ES provide too much control stifling productivity
e.g., ES requires ways of operating that contradict organizational norms
FIT

19. Fit matters to ensure short-term Benefits and Adoption …
▶ Functional fit as an important prerequisite for actual adoption
▶ Socio-technical perspective requires careful consideration of change
▶ Tight interplay between technology and business improvements
▶ Allow benefits to emerge once adaptation and appropriation have stabilized
▶ Generally not one, but a series of major, interrelate improvement projects
19
Functional
Fit
Overcoming
Organizational
Inertia
Seddon et al. (2010)

20. … and contribute to the emergence of ES Benefits over the
long term
▶ Long-term organizational benefit are impacted by integration, process
optimization and improved access to information
▶ However, long-term benefits can only be realized through continues project
successes of each project
20
Organizational
Benefits from
ES Program
Benefits from
Project “n”
Integration
Process
Optimization
Improved
Information
Access
Seddon et al. (2010)

21. Agenda
21
Agenda
1 The Banking Industry
2 Enterprise Systems - Conceptualization & State-of-the-Art
3 The Banking Enterprise Systems Center of Competence
4 Summary
21

22. Market & Environment
OrganizationTechnology
ES-based Implications for Banking Transformation
22
Customers
Core Banking
Platform
Flexible
Apps

23. Banking Enterprise Systems CoC: Overview
23
Network
 Establish an academic
and professional
network to intensify the
cooperation and
knowledge exchange,
support career
development and
strengthen emotional
ties.
Education
 Offer a universally-
recognized education
program incl. certification
opportunities for
students.
Research & Innovation
 Carry out research
focusing on the lifecycle of
banking enterprise
systems and drive future
retail banking
innovations enabled by
BES.
BES-CoC
Prof. Dr.
Alexander
Mädche
Dr.
Benjamin
Müller
Sven
Hollmichel
Jens
Lauterbach
Core team at University of Mannheim
We develop and network people, interfacing between business vision and state-
of-the-art technology solutions driving future banking innovations enabled by
Enterprise Systems.

24. Banking Enterpise Systems Center of Competence
Web Page & Community
24
▶ Get up-to-date and state-
of-the-art information on
banking enterprise
systems
▶ Network with peers in
practice & research and
become partner of the
network

25. Agenda
25
Agenda
1 The Banking Industry
2 Enterprise Systems - Conceptualization & State-of-the-Art
3 The Banking Enterprise Systems Center of Competence
4 Summary
25

26. Summary
26
• Enterprise Systems are socio-technical systems.
The interplay between
organization, individuals, and technology needs
to be managed on a continuous basis.
1
• The flexibility through standardization paradigm is
important for Banking Enterprise Systems.2
• The Banking Enterprise Systems Center of
Competence provides state-of-the-art information
and establishes a network3

27. Prof. Dr. Alexander Mädche
University of Mannheim | Business School
Institute for Enterprise Systems (InES)
L 15, 1-6 | 4th floor | 68131 Mannheim | Germany
Phone +49 621 181-3606 | Fax +49 621 181-3627
maedche@es.uni-mannheim.de
http://eris.bwl.uni-mannheim.de
http://ines.uni-mannheim.de
Contacts
27
Dr. Benjamin Müller
University of Mannheim | Business School
Institute for Enterprise Systems (InES)
L 15, 1-6 | 4th floor | 68131 Mannheim | Germany
Phone +49 621 181-3607 | Fax +49 621 181-3627
mueller@es.uni-mannheim.de
http://eris.bwl.uni-mannheim.de
http://ines.uni-mannheim.de

28. References
 ISO/IEC. 9241-11 Ergonomic Requirements for Office Work with Visual Display Terminals (VDT)s-
Part II Guidance on Usability," ISO/IEC 9241-11,1998 (E).
 Markus, M.L. 2004. "Technochange Management: Using It to Drive Organizational Change,"
Journal of Information Technology (19:1), pp. 4-20.
 Seddon, B. P. B., & Calvert, C. (2010). A Multi-Project Model of Key Factors Affecting
Organizational Benefits from Enterprise Systems. Management Information Systems Quarterly,
34(2), pp. 305–328.
 Strong, B. D. M., & Volkoff, O. (2010). Understanding Organization-Enterprise System Fit: A Path to
Theorizing the Information Technology Artifact. Management Information Systems Quarterly, 34(4),
pp. 731–756.
 Soh, C., & Markus, M. L. (1995). How IT Creates Business Value: A Process Theory Synthesis.
ICIS 1995 Proceedings.
 Tiwana, A., Konsynski, B., & Bush, A. A. (2010). Research Commentary - Platform Evolution:
Coevolution of Platform Architecture, Governance, and Environmental Dynamics. Information
Systems Research, 21(4), pp. 675–687.
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