Banking & I.T : Finding the Common GroundNew Role Of I.T & C.I.O in Banks

By Samer Abu ZayedDeputy CEO/Head Of Group I.T and Enterprise Program

Banking Technology Summit – Jan 2012Amman - Jordan

New Role of I.T in Business Organizations – Business Motivations

In the era where the customer has tremendous influence over business strategy, organizations need to be customer-obsessed to retain customers and dominate markets.

governments must become citizen-obsessed to remain in power;

customer expectations are rising dramatically. Customers today are increasingly online; demand contextual, personalized service from every interaction; and have embraced the power of their complaints

to establish market leadership, customers will develop brand loyalty through technology-enabled outstanding customer experiences as well as direct product or service perceived value and quality of supporting services.

2

We Have Entered The Age Of

Empowered Customers

3

Characteristics Of The “Empowered Customers” AgeCustomers have more power than ever. With online reviews and mobile web access, yourcustomers know more about your products, your service, your competitors, and pricing thanyou do. Remember “Where the buyer has full information about demand, actual marketprices, and even supplier costs, this usually yields the buyer greater bargaining leverages.

Your competitors now have instant access to your tactics and strategies. Your own customers are sharing their experiences online, search engines expose interest in keywords, and everything your competition wants to know about you is on your website and those of your best influencers. In short, customers practically serve granular insight about you to your competitors’ feet. This amps up competition, since competitors can match or react to any move you make instantly. Your can’t build barriers to protect your market share:

• Barriers to entry are minimal, there is always new comers , Startups challenge existing leaders.• Competition becomes fiercer : Perfect real-time information exists about competitors’

pricing and practices.

4

How to Compete in this Empowered Customer AgeIt’s no longer sufficient to be simply “customer-centric” or “customer-focused.” The only successful strategy in the age of the customer is to become customer-obsessed — to focus your strategic decisions first and foremost on customer knowledge and retention. Here’s what we mean:

“A customer-obsessed company focuses its strategy, its energy, and its budget on processes that enhance knowledge of and engagement with customers and prioritizes these over maintaining traditional competitive barriers”.

5

What business model “Customer Obsessed” Organizations is based on?1. Invest in real-time insight to build products and services customers will embrace.

For example, they use social technologies to listen to their customers and to gain real-time insight — transforming slow market research into fast customer intelligence. They then respond quickly, building products and services based on needs their customers can’t yet articulate.

2. Spend more on customer experience and service to build and maintain relationships.

Interactions between customer-obsessed firms and their customers aren’t arm’s-length, taking place through script-driven call centers. Instead, these companies invest in customer-obsessed services, delivering rich and responsive customer experience consistently across channels.

3. Fund sales channels that deliver intelligence about customers and don’t just push products.

In the age of the customer, firms succeed based on the customer’s experience of value — notproduction and delivery. These firms obsess about repeat business more than new business.They create, maintain, and leverage customer connections, prioritizing the end user customersover their channels.

6

What business model “Customer Obsessed” Organizations is based on?

4. Shift marketing funds from one-way ads into useful content and interactive marketing: One-way information delivery no longer works. Successful firms in the age of the customer don’t just embrace social applications — they focus on them as a foundation for connection, measuring their impact. These firms are generous with content in their interactions with customers — like not only providing mobile banking but also delighting customers with mobile devices that supply information instantly.

7

The Age of the customer requires CIO & I.T Function in Business Organizations to change

As explained in the previous slides in the era of the empowered customer and the customer obsessed business organizations realized that the customer has tremendous influence over business strategy, In fact business organization can to establish market leadership and customers will develop brand loyalty through two values :

technology-enabled customer experiences as well as direct product or service perceived value and quality of

supportingservices.

The CIO and IT have a vital role to play as part of the business — not as a service provider to the business, but as an integral part of the value delivery process to the customer. This shift requires CIOs to forget “alignment” a focus on connecting the dots between IT and “the business” as if IT were just another technology vendor and concentrate instead on shared business leadership. CIO’s must think about the emerging role of IT as part of the customer- value ecosystem as a move toward “empowered business technology

8

CIOs Must Increase Focus On The Customer Experience, Revenue Growth, And Innovation

There are major challenges to build this new I.T image?

· . . . technology is often absent from strategy planning . . . Unfortunately, IT is all too oftenabsent when leaders discuss business strategy options. Statistics show that only 29% of firms report

developing any kind of technology strategy in conjunction with the business strategy. As a result, IT is significantly disconnected from the rest of the business, and CIOs must bridge the gap.

· . . . and CIOs must help IT professionals to stop seeing themselves as separate. We hear this in almost every conversation with any IT professional — the constant reference to “IT and the business” as if they exist as two distinct entities. We also see the expression ‘I.T projects”

In fact there’s no such thing as technology projects; they are all business projects with technology components.

…….CEO’s already understand the connection between technology and revenue. Integrating

business and technology is increasingly critical to improving organizational performance.In study after study, CEOs identify technology integration within the business as a keydifferentiator in both reducing costs and increasing revenue

9

10

When the marketing function in one ‘non I.T’ organization was asked to list all of the reasons that why it sees IT department 'not too competent' or 'not at all competent'"

IT and marketing speak different languages 58%

IT doesn't understand the organization business 56%

IT doesn't understand how we adopt technology 48%

IT focuses on the metrics that don't matter to us 32%

Other 14%

But how do other lines evaluate I.T function in the organization , lets ask the Marketing Function

It’s time to develop a new IT philosophy

It is time for the C.I.O to focus on the external “final” customer and not only the internal customer “business lines”

IT becomes a fundamental part of the business. In this approach, IT doesn’t sit apart from “the business” like some third-party technology vendor. This new way of thinking about IT places the CIO first and foremost as a business executive responsible for business performance, with a secondary responsibility for running and managing technologies and systems.

The CIO’s primary concern should become driving business and customer value. The CIO is primarily concerned with helping deliver value to the customer buying products or services from the business and with understanding how the perception of value is created in the mind of the ultimate consumer of the organization’s products and services.

11

It’s time to develop a new IT philosophy

The CIO must work hard to demonstrate and communicate the business value of IT. The shift in philosophy cannot take place in isolation : The CIO who attempts to make the change while the CEO still expects the CIO to focus on keeping the lights on and reducing the budget year after year have no chance to succeed. In order to get the CEO to understand how this change can help the organization, the CIO must coach the IT team on how to communicate effectively in business terms at all times

12

CIOs Must Evolve IT Through Three Steps To Reach Empowered BT

Build The Business Technology Foundation

1. Keep on the lights (Ensure current business continuity

2. Bring new business expertise into IT.

3. Put top talent in the role of IT consultants

4. Measure projects and IT using business metrics.

5. Develop a portfolio approach to technology investments

6. Build rigorous processes designed to deliver consistent results.

14

“Beyond Alignment: A Road Map For Business-Centric CIOs”

Step 1: The Journey To Customer Centric I.T Function

Starts With Building A Strong Business- Technology

Foundation

15

Re-Think / Re-Build I.T CommunicationTake I.T from “punch of techies” to “people in the business technology field ” by establishing effective communication1. Shift IT from having discrete relationship events to becoming part of the conversation.

Bring new business expertise into IT.

2. Make the end customer an IT responsibility

3. Hire a marketing expert to communicate professionally with the rest of the organization and promote I.T as business enabler.

16

“Beyond Alignment: A Road Map For Business-Centric CIOs”

Step 2: Rethink IT Communications To Develop Trust And

Credibility

17

Influence And Innovate As A Partner Player

1. Plan business strategy, not IT strategy.

2. Become the chief innovation officer by supporting innovation within the organization through communication medias (SharePoint and others) , also encourage innovation within I.T function as well.

3. Redefine IT’s role as a service.

18

“Beyond Alignment: A Road Map For Business-Centric CIOs”

Step 3: Influence And Innovate As A Partner Player

19

Five Main Essential Metrics for Managing I.T within Non I.T OrganizationsMetric #1: Alignment Of IT Investments To Business StrategyYou can’t deliver sustained business value if the IT strategy and the business strategy are not aligned and tightly linked.Metric #2: Cumulative Business Value Of IT InvestmentThe second metric explicitly measures and communicates the value of IT investments by lookingat the cumulative return of the entire portfolio Metric #3: IT Spend Ratio — New Versus MaintenanceThe third metric focuses on the total IT spend. Depending on the industry, IT budgets consumeanywhere from 2% to 15% of revenues and more than half of all capital spending. However, manyIT organizations find themselves locked each year into a cycle of spending increasing amountsof the budget on just keeping the lights on — leaving less and less to spend on new initiatives. Infact, the average IT organization spends 70% to 80% of its budget on maintaining the status quo versus only 20% to 30% on new initiatives. Best practices companies have taken this ratio to 60/40, and some are actually driving toward 50/50. Measuring and reporting this ratio can be a key indicator of both the efficiency of IT as well as IT value creation.

20

Five Main Essential Metrics for Managing I.T within Non I.T OrganizationsMetrics #4: Critical Business Service AvailabilityThe fourth metric focuses on the customers of IT and their satisfaction with the services IT provides.The most useful metric would be one giving insight into current and future customer satisfaction —it would be a leading, not lagging, indicator.

Metric #5: Operational HealthThe fifth metric focuses on operational health and stability, without which IT will be unable to establish credibility with its users and is more likely to be relegated to a role as a cost center rather than a value center. There are a number of components to consider concerning operational health.

21

Thank You Q&A

22