“The Core” implies immutability and permanence, certainly not something to be trifled with – “Not on my watch!” is the typical and understandable reaction to such a statement.
In most cases “The Core” is not the heart of the problem. The true challenge lies in the myriad of workarounds and add-ons that have evolved over the years. The original system was built either in the time of bell-bottoms or while Cat Stevens was topping the music charts. Now it needs to serve up a banking product on a mobile device with as much power as the system that originally ran the entire branch network. Things have changed!
The enemy is not the core, but rather the complexity that has built up around the core: replacing the core is not the goal, the goal is tackling the complexity challenge. So with this in mind, here are some recommendations on how to create momentum for addressing the complexity challenge:
1. Focus on complexity, not “Core”
• Understand what is involved in the current complexity and where the business is restricted because of complexity.
• Map the complexity costs back to the financial impact of complexity
• Generate a perspective on the financial benefits associated with reduced complexity
2. Understand the relationship between reduced complexity and business agility
• Consider the upside of increased agility, what is it worth to be able to adopt new business models more quickly?
• Understand the value of clear and quick information, and reflect this in the case.
3. Create a low risk plan to measurably reduce complexity
• Instead of a single “Core replacement”, plan for a series of steps to take complexity out of the equation.
• Have a method for measuring the complexity reduction, and create a culture that rewards reduced complexity.
Most banks that I speak with agree that they have a “Core challenge” but ask how to get started – my best advice is not to alarm anyone and then to carefully and systematically tackle the problem of complexity.