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Standard Software: The Packaged Approach

In the previous entry on this blog, I discussed the challenges that banks face in trying to get business strategies and IT investments synchronized so that IT can support business execution in future.

 

In a survey done by The Banker and SAP, banks showed a clear willingness to implement packages/standard solutions in the back-office business domains of accounting, reporting, human resources (all with 80% positive response) and procurement (with 60%). Still, they have largely remained focused on in-house development. The sense has been that a home-grown IT environment is needed to gain advantage over competitors. Of course, this approach has also led to organizational and data-storage silos that have made it difficult to bring together information across different products, LoBs, and channels.

 

As banks gain experience and reap the benefits of standard software in back-office operations, they may adopt a new mindset that looks beyond the traditional focus on in-house software, and begin to extend the standard-software strategy to more banking-specific domains. This can be done effectively with packaged industry solutions that run on top of these solutions. The standard-software approach can help streamline many processes, while enabling the bank to devote more resources to new IT strategies and innovation-thus, supporting both efficiency and market competitiveness.

 

For example, SAP solutions can be tailored to meet customer-specific needs and industry-related work-flow. In addition SAP packaged solutions enable companies to use templates to build on best practices and save time, resources and budget in implementing and operating their systems. At the same time, the “loss in individuality” of a standard solution is more than offset by the increase in flexibility compared to old home-grown systems, and the ongoing innovation driven by the collaborative exchange of expertise from a variety of industry participants.

 

The automotive industry provides a classic example of how to leverage standard software. This industry has gone through several organizational changes driven by lean production, just-in-time strategies and so forth. Today, automotive companies largely use the same software and share many of the same suppliers for their production, as well. Nevertheless, vehicles are different across brands, types, and series. The industry has been able to focus IT on unique selling points, such as service to the customer, rather than the execution of one or another process in an intermediate part of the overall value chain.

 

We will be continuing this discussion soon. In the meantime, you can hear more about implementing standard software packages in the podcast linked here.

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