The Process for Selecting Vendors to Address Business Problems in The Banking /Investment Sector

88 Pages·1992·6.3 MB·English

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OCTOBER 1992
THE PROCESS FOR SELECTING
VENDORS TO ADDRESS
PROBLEMS
BUSINESS
IN
THE B VESTMENT
ANKING/IN
SECTOR
AUTHOR
TITLE S^Cf&S^
DATE BORROWER'S NAME
LOANED
— —
J
IBS CAT. No. 23-108 PRINTED IN U. S. A.
INPUT
The Atrium at Glenpointe, 400 Frank W. Burr Blvd., Teaneck, NJ 07666 [phone]
VENDORS THE BANKING/INVESTMENT SECTOR INPUT
IN
Published by
INPUT
The Atrium at Glenpointe
400 Frank W. Burr Boulevard
Teaneck, New Jersey 07666
U.S.A.
The Process for Selecting Vendors to Address
Business Problems in the Banking/Investment
Sector
Printed in the United States of America.
INPUT exercises its best efforts in preparation of the
information provided in this report and believes the
information contained herein to be accurate. However,
INPUT shall have no liability for any loss or expense that
may result from incompleteness or inaccuracy of the
information provided.
YNDCI • 100 • 19S2
1811
VENDORS IN THE BANKING/INVESTMENTSECTOR INPUT
Table of Contents
I Introduction I-l
A. Background I-l
B. Scope 1-2
C. Methodology 1-3
D. Systems Implementation and Systems Integration 1-6
le Overview 1-6
2. Systems Integration Services 1-8
-
3. Vendor-Provided Systems Integration Services 1-8
4. SI Examples from the Banking/Investment Sector I-10
E. Organization ofThis Report I-10
II Executive Summary II-
A. Background II-
B. User Department Involvement II-
C. Short Lists II-2
D. Vendor Selection Criteria II-5
E. The Relation ofPlanning and Systems Implementation II-7
F. Implementation Players II-
G. Digital's Positioning II-9
H. Recommendations 11-11
III The Systems Implementation Process in the Banking/ III-l
Investment Sector
A. Introduction m-i
B. Relation of Planning to Implementation in Banking and in-i
Investment Firms
C. Systems Project Implementation in Banking and ra-3
Investment Firms
D. Areas Within Banking and Investment Firms Responsible m-7
for System Project Initiation
E. Examples of Project Initiation m-8
111811
VENDORS IN THE BANKING/INVESTMENT SECTOR INPUT
Table of Contents (Continued)
IV Process for Identifying Potential Suppliers for Banking/ IV-
Investment Sector Implementation
A. Overview IV-1
B. Importance of Short Lists IV-
C. Short Lists IV-3
1. Reasons for Inclusion IV-3
2. Being Included on a Short List IV-4
D. Evaluation Criteria Used for Selection IV-6
1. Importance of Using Formal Criteria IV-6
2. Relative Importance of Selection Criteria rv-7
3. Criteria Trends IV-
4. "Knock-Out" Factors IV-10
5. Changes in the Contract Process FV10
6. IS Influence on the Decision-Making Process IV-11
7. Decision Making IV-12
Digital's Position as a Systems Implementation Vendor V-l
V
A. Use of Digital for Systems Implementation 1
B< Digital's Overall Image V-2
C« Digital's Capabilities V- 2
V
D. Importance of Systems Implementation Capabilities to 4
Banking and Investment Firms
V
E. Usage/Acceptability of Major Vendors 6
F Digital's Capabilities Compared to Other Vendors V- 6
e
VI The Linkage Between Strategic Consulting and Systems VI-
Implementation
A. The General Relationship Between Strategic Consulting and VI-
Project Implementation in the Banking and Investment Sector
B. The Strategic Planning/Consulting Process VI-5
C. Follow-on System Implementation Resulting from Strategic VI-7
Consulting
D. Competitive Positioning VT-9
vn
Recommendations VII-
A„ Recommendations for Individual Implementation Opportunities
B. Recommendations for Improving Digital's Longer Term Position
Appendixes A. General Trends in the Banking and Investment Industry A-l
B. Planning and Information Technology in Financial Service B-l
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Firms Interview Guide
u YNDCI
6583
VENDORS IN THE BANKING/INVESTMENTSECTOR INPUT
Exhibits
I -1 Firms Interviewed 1-3
=2 Individual Respondent Profiles 1-5
-3 Implementation Components 1-7
=4 Banking and Investment Sector—Systems Integration 1-9
Market, 1992-1997
-5 Commercial Systems Integration Market by Component, 1-9
1991-1996
II -1 Major Responsibility for System Project Initiation in II-2
the Banking/Investment Sector
-2 Importance of Short Lists for Selecting Implementation II-
Vendors in the Banking/Investment Sector
-3 Reasons for Inclusion on Short Lists of Banking and II-4
Investment Firms
-4 Actions and Activities Which Can Improve Being II-
Considered for a Short List in Banking and Investment Firms
-5 Average Rating for Vendor Selection Criteria Reported by II-6
Respondents
-6 Relation ofPlanning and Systems Integration II-7
-7 Banking/Investment Implementation Players II-
-8 Digital's Capabilities and Their Overall Importance 11-10
ITT -1 Relation ofPlanning and Systems Integration III 2
-2 Functional Components of Systems Implementation in the HI-3
Banking/Investment Sector
-3 Groups Involved in Implementation in the Banking/ IQ-4
Investment Sector
-4 Banking/Investment Implmentation Players III-
-5 Major Responsibility for System Project Initiation in the IH-7
Banking/Investment Sector
TV -1 Importance of Short Lists for Selecting Implementation IY-2
Vendors in the Banking/Investment Sector
-2 Reasons for Inclusion on Short Lists of Banking and IV-4
Investment Firms
-3 Reasons Banking and Investment Firms Use Different IV-5
Vendors in Consulting and/or Implementation Phases
1
VENDORS IN THE BANKING/INVESTMENT SECTOR INPUT
Exhibits (Continued)
FV -4 Importance ofUsing Forma] Criteria for Selecting IV-6
Implementation Vendors in the Banking and Investment
Sector
-5 Average Rating for Vendor Selection Criteria Reported by IV-7
Respondents
-6 Example of Changes in Vendor Selection Criteria Reported IV-9
by Users
-7 Changes in Contract Process IV-1
-8 Factors Affecting Influence of Central IS versus End IV-12
Users in Implementation Vendor Selection
V
-1 Systems Implmentation Vendors in the Banking and V-2
Investment Sector
-2 Digital's Perceived Strength in the Banking and Investment V-3
Sector
-3 Relative Importance of Offerings to Banking and V-4
Investment Firms
-4 Digital's Capabilities and Their Overall Importance V-5
1
VI Percentage ofProject Implementations Preceded by VI-2
Strategic Planning/Consulting by Project Size
•2 Source of Strategic Planning/Consulting VI-2
=3 Relationship of Planning and Implementation VI-4
4
Strategic Planning/Consulting Preceding the Systems VI-5
Implementation Process in Financial Services Companies
•5 Percentage of Strategic Consulting Assignments Initiated VI-6
by Different Types ofUnits Within Banking and
Investment Firms
6
Percentage of Systems Implementation Follow-on From VI-7
Strategic Consulting
7
Reasons Financial Service Companies Use Different VI-9
Vendors in Consulting and/or Implementation Phases
vn
•1 Reasons for Inclusion on Short Lists of Banking and VII-2
Investment Firms
2
Average Rating for Vendor Selection Criteria Reported by VII-3
Respondents
iv YNDCI
VENDORS IN THE BANKING/INVESTMENT SECTOR INPUT
Introduction
This chapter serves as an introduction to the body of the report. This
chapter includes:
• Background on the study
• The scope of the study
A
• description of the methodology
• Differentiation of the terms "Systems Implementation" and "Systems
Integration" used in this study
A
Background
Digital needs to understand the decision process used by senior, non-IS
executives in the banking and investment sector when they address a
business problem with an information technology component. Digital
wants to ensure that it receives equal consideration in the decision process
involving major business opportunities.
There are two areas of business opportunity involved:
• Systems integration projects (defined in Section D) or other large imple-
mentation project.
• Strategic consulting assignments that may lead to systems integration
projects.
Digital's priority is understanding the decision process involving systems
integration projects.
Digital engaged INPUT to conduct face to face interviews in order to
better understand the decision processes of these executives.
YNDCI 1-1
VENDORS IN THE BANKING/INVESTMENT SECTOR INPUT
B
The interviews addressed issues that bear directly on Digital (or other
firms) being selected to provide IT solutions to business problems in the
banking and investment industry. These issues include
• Which vendors are initially called in when there are business problems
with an information technology component?
How
• important are prior relationships (versus, for example, general
reputation)? What kind ofrelationships are most important (e.g., man-
agement consulting versus business re-engineering versus systems
integration)?
How
• is the list of vendors established or added to?
How
• open is the process? Is the same short list called back repeatedly?
If so, how do new firms break in?
• What is the general importance of such factors as understanding a
general business area, in-depth knowledge of a particular application or
technical knowledge?
• Given the factors for which a vendor is considered, how well do selected
vendors (including DEC) meet these factors (and why)?
• To what extent are internal units (e.g., internal consulting or IS) in-
volved in the process? Why?
• How does a problem under consideration move from the "talking stage"
to the action stage? Which potential vendors are left behind and why?
• What selection criteria are used to select a winning vendor? How formal
is the process? IfDigital was involved, why did it win or lose?
How
• do the processes described above differ from those followed
several years ago? Are significant changes expected in the next few
years?
• To what extent are the outcomes in the questions raised above influ-
enced by such issues as the type of operating unit within a bank or
brokerage, the importance of a problem, the perceived significance of
the technical component, the unit's and/or firm's profitability, or the
project size?
1-2 YNDCI