What is the problem of all Russian companies without exception? Business has its own understanding of what is happening, its own requirements and objectives, but it is very difficult to translate them into the language of specific IT actions, and these requirements do not always reach IT in an understandable form.
The second traditional problem is legacy IT. In past years, there has been a lot of chaotic procurement and implementation, creating a lot of complexity in the IT landscape. Any IT manager who joins a company spends a lot of time understanding the current situation. On the other hand, business invests money in IT and wants to see where it goes, on what projects and initiatives, and how it advances the company towards strategic goals.
In Russia, the direction of corporate architecture has not yet been developed. Companies are in great demand for the development of architectures for specific solutions, but no one is seriously involved in linking the components of the architecture within the organization. In the best case, spreadsheets are used for this purpose, where information is stored in an unformalized form, and when a manager leaves the company, the knowledge goes with him.
The most important consequence of this approach is suboptimal spending of funds on IT, sometimes even outright waste. That is why companies abroad are increasingly demonstrating a strategic approach to IT management, and the vector is increasingly leaning towards streamlining and standardizing corporate IT landscapes.
Words into actions
The problem is obvious: it is necessary to connect business with IT, build a bridge between them, ensuring transparency. The strategy needs to be translated into requirements and actions that need to be communicated to people. Each department must understand the essence of the work and the general direction of IT development.The HPE Enterprise Maps system is designed to solve this problem. What is important is that this is the company’s own development, and not a purchased solution, which has recently become a rarity. This is good: HPE, as a system supplier, itself came to understand what was needed and needed in the market, and took the initiative to develop such a product. Built in-house, Enterprise Maps seamlessly interoperates with and is enriched with data from other HPE systems to create a cohesive, powerful solution.
To avoid reinventing the wheel, Enterprise Maps uses the TOGAF methodology, which is understandable to architects and shows how to approach enterprise architecture management. ArchiMate 2.0 notation is used as a language for describing the interaction of architectural elements with each other.
The main objectives of the developed system are to reduce the risks and confusion associated with IT and ensure compliance with the IT strategy. It is extremely important to be able to translate “beautiful” words into concrete actions. In addition, meaningful management of the “zoo” of existing systems is becoming a non-trivial task: there are a lot of suppliers on the market with their own policies for licensing, updating products and removing old solutions from circulation.
In almost any company you can find software for which support is paid, although it is not really needed or - moreover, the system has already been removed from support. It also happens the other way around: a company plans to build a new system without realizing that the platform it is using is very outdated.
For IT and business
Who might be interested in this? If a company has such a position as an enterprise architect, then he will become the main stakeholder.Typically, drawing programs are used to describe architecture, for example, Microsoft Visio. It is important to note that Enterprise Maps is not about drawing, but about creating models that are connected to the real world, and compliance with various policies will be monitored during their development. It is impossible to create an object divorced from reality.
Architects are an audience that understands the benefits of the system and is able to appreciate its capabilities. However, unfortunately, they most often do not manage the budgets, and decisions will be made higher up.
The next important user group is CFOs and CIOs. They have different tasks. For example, the CFO may not have a strong understanding of what is happening in IT, but it is important for him to see where investments are going and how much of a priority this area is from a strategic point of view. He will receive information about this not in the form of a report edited by employees, but with the help of a real cut of information. Transparency of the activities of the IT department and additional justification of their decisions to top management are important for the CIO.
Of course, big business that has reached a certain maturity is interested in decisions of this class - people who have realized that they need to put things in order. What’s very important is that Enterprise Maps, unlike more difficult solutions that require a fundamental approach, offers a path to “quick wins”: quickly implement a separate scenario to prove itself, and then gradually increase the power of the solution.
For example, the system includes the script “Five steps to move an application to the cloud.” Having such ready-made scenarios is very important for implementing quick projects that show the business the benefits of the solution.
Not just reporting
There are three typical destinations covered by Enterprise Maps. The first is to combine existing data (architecture models, business strategies) in a single repository, where all elements are associated with the corporate architecture, designate people responsible for information sections, and set up synchronization with various data sources.Secondly, seeing the current situation, you can build a plan for transition to the target state by identifying the missing elements using Gap analysis. This is the key difference between the solution and configuration management databases (UCMDB), which reflect only the current situation and only at the infrastructure level. The third important area is the standardization of the approach to IT assets, systems and functions.
At the output of the system, the company receives slices of information for various users. Each of them will see the information in which they are interested. With the help of Enterprise Maps, you can answer a variety of questions: for example, you can find out how much it costs to maintain a particular application, whether investments correspond to the strategy, where the funds go, what can be done using the allocated budget.
Usually, after seeing the capabilities of Enterprise Maps, many people ask: is it a reporting system? Yes, there are great similarities. But the solution is not only responsible for presenting data in a beautiful graphical form, but also becomes the main working tool of the architect - a means of creating and maintaining enterprise architecture models.
It is important that within the system it is possible to lay down policies for the development of architecture (both the infrastructure part and applications), which will be monitored. Prohibited actions will not be performed, and further compliance with the rules will be re-checked. Thus, the architect does not just “draw pictures”, but approaches problem solving quite thoughtfully.
Data sources
In order for the system to be operational, it must be filled with data. This can be easily done using Excel spreadsheets and files, and this is enough for most customers - this is how information about corporate architecture is usually stored. More advanced customers have UCMDB systems, which also become a valuable source of data.Another important source is the project portfolio management system. This is where goals, programs, and projects come from. Based on this data, it is possible to show the place of ongoing projects in the overall strategy.
Finally, to populate systems you cannot do without modeling tools - for example, Sparx Enterprise Architect, one of the most popular systems due to its low cost. Moreover, in some cases the use of such specialized tools is preferable. If you are developing a new system that will become a major element of the architecture, it is better to take design tools designed for this and familiar to users, and then load the built models into Enterprise Maps, where they will be linked to current systems, infrastructure, plans and project activities.
Objective picture
An important part of the system are built-in reports - sections of information that become a valuable source of knowledge when making decisions about IT development. Among them there are several key ones.One of them is the Application Portfolio Business Opportunity report. Based on its data, we can say where the company should invest in accordance with its strategy, highlighting strategically important decisions, or vice versa - identify candidates for moving to the cloud. The next step is to identify business-critical applications that support key processes and therefore require special attention.
The Strategic Investments report allows you to see the gaps between actual investments and business priorities. For example, using financial information from a project portfolio management system, you can identify excessive investments in non-priority areas. This gives the financial transparency that businesses want to see. Reviewing the cost of applications also provides food for thought regarding their business value and real costs.
Platform Usage is a report that can also be very useful. It allows you to understand, for example, that a third of applications use an unsupported platform, and if you plan to implement a new system, then you should think about it.
One of the most important capabilities is the creation of a “dependency tree” that shows the relationship between specific infrastructure elements and business services. There are often situations when the operation of a business-significant system is supported by a single server, which reduces its fault tolerance, or vice versa - a non-critical application runs on unreasonably expensive equipment.
A means of bringing order
Among the companies most interested in corporate architecture are fairly mature financial organizations. The reasons are obvious: they constantly have to be “at the forefront of IT”, capturing new markets, which is reflected in the IT architecture. They are much more likely to need transparency, including in the process of achieving goals. Finally, the financial industry is extremely competitive, and major IT mistakes can be costly.Don't think that enterprise architecture management systems are solutions only for giants. If you can show a business that there are platforms that may not have been paid for for a long time, or business requirements that have not received enough attention, the result can be very impressive even for a small company.
However, there is still a reasonable limit on the size of the company. The minimum purchase is 10 licenses, that is, the organization must have at least 10 people who are interested in it. And several architects are already quite a large organization.
But the main thing is that the company must be ready, having purchased a lot of equipment and applications in past years, to bring order to its IT economy. There are not many of them yet.
If you go into the office of a medium or large organization, catch an employee in the corridor and ask him: “What do IT architects do in your company,” you are unlikely to hear the answer: “Like what? They model the structure and behavior of information systems; from various points of view, reflect their current and target state, formulate the fundamental principles of organizing a corporate information system for making key decisions...” The probability of such an event exists, but it is very small. If your interlocutor utters these or similar words, then an unlikely event has happened and you have caught an IT architect in the corridor. Most likely this won't happen. Your interlocutor will think for a while, but perhaps remember that there is a guy in IT who is called an architect. And also that he draws some kind of big, not very intelligible picture and pronounces mysterious words with a smart look. However, they are all IT specialists...
We are expanding our line of courses on information systems architecture with a master class “Developing an IT landscape map.” In one full school day we will understand what a landscape map is and learn how to draw that very not a very clear picture. In some ways, the map of the IT landscape is a bit unlucky. Although the practice of drawing maps that visualize all of an organization's applications on one sheet is common, there are very few guidelines for this type of activity. The IT landscape map was included in the second version of the archimate corporate architecture modeling standard, but disappeared somewhere in the third version. And in the second version of archimate, the description of the IT landscape map is extremely concise. In fact, the example shown in the picture above is accompanied by a quite clear history of the development of ArchiSurance applications, caused by a series of mergers and business transformations. But this story is not given in the standard or on The Open Group website, but is passed on by word of mouth. There are a series of works that reveal approaches to creating a landscape map in more detail, such as, for example: “Landscape Maps for Enterprise Architectures” by L. van der Torre and others or “An Approach to Managing Application Landscape” by Sameer Paradkar, Jay Kulkarni, but they few people know. Perhaps the only source known to most enterprise architects that addresses the topic one picture this is the famous “Enterprise architecture as Strategy” by Jeanne W. Ross.
In the same time landscape map view This is an extremely meaningful tool that visualizes not so much objects, but rather the relationships between them. Applications in this view act as associated classes, combining, for example, functions and areas of activity. In a similar way, you can visualize associations between other types of objects. In principle, the rows and columns of the landscape map can be chosen arbitrarily. Essentially, a landscape map is a tool for creating the most interesting cross-sections of a web of entities and the relationships between them.
Making a good map is not easy. We'll start by no longer looking at applications as static objects, but by thinking of them as actors—subjects that perform one of the stages of activity in the data processing chain (or value stream). This approach will allow us line up applications in the required sequence. An equally interesting problem will be the relative position of the chains relative to each other. There are many more approaches that allow you to literally stuff a landscape map with one or another content. I hope we will have time to talk about the main ones.
A more formal description of the event and registration on the IT Expert website: https://www.itexpert.ru/rus/services/training/moscow/detail.php?ID=7172 announcement on Facebook.
BINBANK has completed a project to create, implement and integrate the most functional banking IT system. To implement this project, advanced technologies and the best product and integration experience of IBM, Oracle, Tata Consultancy Services, Diasoft and LANIT were used.
Improving the quality of products and services offered to customers, increasing the efficiency of business processes and competitiveness, optimizing infrastructure and costs - these are the objectives of the project implemented at BINBANK. It was their solution that formed the basis for the key parameters for choosing suppliers of systems and technologies.
“From the first days of its work, BINBANK has pursued an active policy aimed at maximum customer focus. The bank’s management realistically assesses the current economic situation, while understanding that opportunities for effective, sustainable development remain today,” notes Senior Vice President of BINBANK Alexey Kolabukhov.
“The new IT infrastructure will allow the bank to make full use of the new most advanced technologies in the near future and strengthen its competitive position by the time the country’s economy emerges from the crisis,” he adds.
To implement the project, from implementation to integration work, technologies based on the principles of service-oriented architecture (SOA) were chosen - it was their use that made it possible to improve the productivity and flexibility of the created IT infrastructure.
Now, in order to increase the efficiency of business processes, BINBANK specialists can develop new banking products and supplement existing ones with new options in the shortest possible time. In addition, the high flexibility of IT infrastructure configuration technologies will allow the bank to quickly respond to changes in market conditions, quickly enter the market with new offers, ensuring the optimal cost of new banking products.
The use of SOA technologies allows you to centralize IT resources and, thereby, increase operational reliability and significantly reduce costs in terms of costs for subsequent support of operations, IT personnel and management. In addition, the new system architecture allows us to minimize the risks of operational failures resulting from the intervention of the “human factor” and force majeure circumstances.
It is also worth noting that the system created at BINBANK is integrated with other information systems into a single IT landscape, which increases the speed of IT processes when combining systems of subsidiaries.
As a result of the unification of the client base and the entire product line, the bank will receive another competitive advantage - increased customer loyalty, who will receive the fastest and highest quality service at any time and in any bank office.
Today, the BINBANK project is the largest implementation of integration solutions and products from all suppliers in the Russian financial sector. The transactional basis for creating a new solution was the BαNCS retail banking business automation system from Tata Consultancy Services.
The BαNCS system is deployed on the basis of a disaster-resistant infrastructure, which includes two geographically distributed clusters and provides a recovery time for key applications of no more than 1 hour, even in the event of a complete failure in one of the data centers. The project was implemented by IBM, which has extensive experience in creating highly reliable, productive and fault-tolerant systems. IBM specialists developed a design and deployment plan for the infrastructure, installed, configured and tested two clusters, and developed a set of operational documents.
The disaster-resistant infrastructure is built on the basis of high-end IBM System p590 servers, DS8300 storage systems and TS3500 tape libraries.
To solve the problems of doing business in Russian conditions and constructing reporting in accordance with the requirements of the Bank of Russia, BINBANK turned to Diasoft for help, which proposed an innovative product implemented in accordance with the key concept of the project - SOA technologies.
Diasoft FA# Bank, General Ledger (SOA) is a new generation product, the only solution of its class developed in Russia, the performance of which fully meets the most serious requirements and business volumes of a large multi-branch structure. Based on this Diasoft solution, the bank built reporting windows for generating reporting forms in accordance with IFRS and RAS.
Integration of the Diasoft FA# information system with the BαNCS system was made possible thanks to adapters specially developed by Diasoft - they allow you to download transactions from the main ABS and perform reconciliation at the end of the day in multi-threaded mode.
The basis for the deployment of SOA architecture at BINBANK was provided by an integration platform created on the basis of Oracle Fusion Middleware products. As a result, BINBANK has built an information space within which about 400 thousand events daily pass through the integration platform between 170 information sources with 9 different types of information systems. In addition, the costs of creating new technological business processes and connecting them to the bank’s overall IT infrastructure are minimized.
The project takes advantage of all the advantages of the corporate data bus and Oracle technology products, in particular: ease of setup and administration, unsurpassed performance, scalability, manageability and low resource requirements. The project was implemented on the basis of a solution that is recognized as No. 1 in the world for SOA management and was included in the Oracle Fusion Middleware family as part of the WebLogic line based on the results of the successful integration of Oracle and BEA Systems. Choosing the Oracle integration platform allows BINBANK to reduce costs and ensure maximum economic efficiency.
The LANIT company was given a key task - using the experience accumulated in the bank in solving integration problems, to build an SOA architecture, ensure the integration of implemented and existing systems into a single information space of the bank and automate key information flows between banking systems to ensure trouble-free operation of the necessary banking processes.
LANIT specialists have built a highly reliable comprehensive integration solution in SOA architecture based on Oracle Corporation products in the Oracle Fusion Middleware line. This solution is characterized by high fault tolerance, performance and security, and has an architecture that allows the flexible transfer of existing branches to the new banking system. This allows you to reduce the cost of automating new business processes and minimize the cost of connecting new systems to a single SOA infrastructure.
Over the past few years, the Zvezda machine-building enterprise has been consistently building a comprehensive information system. Zvezda produces high-speed diesel engines for shipbuilding and railway transport, as well as emergency standby power plants for various industrial and defense facilities. The company has a full production cycle - from development to service. There are about 40 thousand parts and assemblies in production, and the number of technological stages reaches 80-100. “The main task of an enterprise information system is to operate with all this data in their interrelation,” says Pavel Plavnik, General Director of Zvezda OJSC, who spoke at the “Eyes Wide Shut” section of CIO Congress White Nights 2009. The most interesting and important moments of this speech , as well as the interview that followed, we bring to your attention.
Managing "Eyes Wide Shut"
Today, one of the key tasks of an enterprise is to create a comprehensive information system. What benefits will we get? Is it possible to evaluate the economic impact of IT? We do not analyze in detail the economic efficiency of each of the blocks of the enterprise information system, since the benefits, from my point of view, are obvious.
Let me give you a small example. Previously, no special devices were required to control the processing of a part on a machine, because metal processing speeds were not very high. Control was carried out simply visually, and even protective screens as a mandatory element appeared only towards the end of the last century. But today's machines process metal with a special ceramic tool at very high speeds. Naturally, the processing process is already taking place in a closed chamber and at such processing speeds and coolant pressures that it is almost impossible to visually control it. It is necessary to use sensors and display information on a special display.
The same is true on the scale of the entire enterprise - today it is simply impossible to manage “with eyes wide shut”. There are many ways to transmit information, but their effectiveness varies. So much so that there is a critical amount of information and the required speed of its processing, at which it is impossible to do without IT technologies. In today's conditions, we can ensure enterprise manageability only if we have IT tools.
About production planning
Back in Soviet times, while working as the head of the main dispatch bureau, I was involved in labor organization. After all, the situation at all factories was the same: this one did not fill the workpieces, this one did not issue some invoices on time, this one did not provide the technology. The continuous stress of poor work organization made me want to build a planning system. After all, the task is extremely clear - taking into account the existing standards for each detail, a plan that is approximately repeated from month to month, etc. And I built this system, spending quite a lot of time. The calculation was actually carried out manually - using a calculator (Excel did not yet exist).
The problem can be solved, but, unfortunately, it will no longer be possible to take into account today’s large amount of information in this way. However, now IT has reached a qualitatively different level. New products have appeared that take into account the first negative implementation experience. They allow you to solve production planning problems, and it is impossible not to use their capabilities - this is completely obvious to me. Otherwise, we will constantly manage retroactively - plugging holes. You cannot drive a car by looking only in the rearview mirrors. Management is always looking forward.
On quantitative assessment of the effect of implementation
In order to absolute the quantitative parameters that we would like to achieve from the implementation of a particular IT system, we need to have the right conditions for obtaining them. Unfortunately, without clear and detailed accounting in real time, it is impossible to achieve the required accuracy of these parameters. Without an ERP system, it was very difficult to unambiguously assess the economic efficiency of certain management decisions.
And the second point is optimization criteria, the reliability of which is also necessary. For example, what should the level of work in progress be? In Soviet times, there were industry instructions and scientific calculations, but with our demand dynamics they do not work. Then what to rely on?
About “grafting to IT”
In the 90s, the enterprise made an unsuccessful attempt to introduce an integrated ERP-class management system. The project failed for a number of reasons: a fairly large and complex software product and high dynamics of legislation. As a result, it was not possible to integrate the production management system and the accounting system, taking into account all the features of tax reporting and the dynamics of its changes. The accounting systems of economic services, accounting and production services were too different.
Yes, we invested in IT without getting the desired effect. But as a result, this project became a kind of stepping stone - the preparedness of employees to work with such systems increased. Even if the project does not reach the pilot operation stage, we nevertheless create a foundation on the basis of which we can grow further. Thanks also to this work, the preparedness of the environment, with some stabilization of the legislative framework and a new level of IT development, turned out to be sufficient to reach the level of practical benefits from IT in the following projects.
We have achieved a kind of “grafting into IT”. The experience of failure to implement the previous system was taken into account as much as possible. During the new implementation, we paid special attention to the tasks of connecting production and accounting. And even then there were great difficulties. But it’s not always possible to rise to a new level from scratch - that’s why unsuccessful projects are also useful.
IT base of an industrial enterprise
After the unsuccessful ERP implementation in the 90s, we took a different path, which was based on the idea that the industrial enterprise should use a product data management (PDM) system as its base. Today, the entire structure of our products is fully described both from the design and technological sides (standards for material consumption, labor costs, etc.) in the information system. This is the basis that allows you to work with the information structure of our products (see figure). We chose the Lotsman PDM system, which copes with our tasks of designing and preparing for the production of new equipment.
Enterprise IT landscape
The most expensive and at the same time the central element of an enterprise information system is the SyteLine ERP system (see figure). This is one of the heaviest IT systems in the enterprise. Its implementation was not easy and took about two years; the project, as they say, drank a lot of blood. But from the point of view of efficiency, today it is the most important tool that allows you to quickly collect all information and comprehensively plan the activities of an enterprise. The system allows you to monitor processes in all departments in real time and significantly simplifies the procedure for monitoring production, purchasing activities, planning the production time of each order separately and accounting for costs - including separately for each order.
All of the above information is collected quite easily, automatically. Thanks to this, today we can clearly plan the labor resources that we need for the production program for six months in advance. Without an ERP system, it was basically impossible to accurately calculate labor resources for each site and workplace in advance. Although I am not very pleased with the interface of this product - in my opinion, it needs to be refined and modified to suit the needs of managers, making it as visual as possible.
We also use the interesting OrgMaster system, which allows you to automate the management of business processes in an enterprise. The structure of the enterprise's processes was completely rebuilt during a reengineering project several years ago, and the software package made it possible to consolidate these processes through a step-by-step description of the activities of each department down to the workplace level, as well as continuously monitor all changes occurring in the processes. To solve the problems of monitoring performance discipline at the enterprise, increasing the speed and quality of internal and external communications, we have implemented the NauDoc electronic document management system. It has been working at our enterprise for about five years, it is continuously developing and allows us to almost instantly process both incoming information and the movement of documents within the enterprise, including control of performance discipline. It significantly speeds up the preparation of correspondence, organizational and administrative documents, contracts, and in an enterprise, in any document (including during the preparation of a contract), an electronic signature is equal to a physical one.
This picture will be supplemented with new elements in the future. In particular, in the near future we will be implementing a system for managing relationships with customers, as well as a system for automating maintenance and repairs.
Advantages and disadvantages of complex automation
The main prerequisite for the formation of a comprehensive information system is the ability to generate and update significant information resources. The effectiveness of such a system lies precisely in its complexity. It is used by production workers, sales managers, and economists. All these functions are important, and placing increased emphasis on any one is wrong. I personally work not so much directly in the system as with ready-made reporting forms. But I have a strict requirement - that there is no manual work in these reports. Naturally, such a complex information system has pros and cons.
| pros | Minuses |
| Release of the “army” of accountants, planners, and accountants | Inevitable “adjustment” of the control system to existing software products |
| Reducing the role of the “human factor” in the reliability of management information. "Transparency" of the enterprise | The need to carefully select a software product |
| Receiving accurate information “just in time” | The need for the most severe administrative efforts for implementation |
| Possibility of modular expansion in the manner and within the time frame determined by the enterprise administration | "Transparency" of the enterprise for regulatory authorities |
IT and rigidity of thinking
Active use of IT inevitably requires adjusting the management system to the capabilities of software products. Over 70 years, certain stereotypes and standards of work have developed at the enterprise, and, as in many machine-building enterprises, there is some rigidity and inertia of the old thinking. And this is one of the serious problems that have to be overcome when adapting to the capabilities of the information system. But as a result, we only benefit from this. We are significantly simplifying many things, for example, the wage system. Before introducing the system, we had approximately 20 different mechanisms for calculating payments for different groups of employees. By introducing a standard software product that does not have the functionality of such complex payroll calculations, we abandoned the old payroll system and unified these processes.
About anti-crisis measures
In 2009, the budgeting automation project was completed, which, although financed before the crisis, became a good anti-crisis measure. Now, of course, the requirements for efficiency and level of analytical information are increasing. Our budgeting system based on the Plan Designer software package allows us to analyze cash flows, track various debts over time and other factors, multivariate analysis of development prospects, and much more.
On the interaction of the CIO with management
The implementation of a software product is not the initiative of the CIO. In particular, at our enterprise the main initiative came from managers in various areas - for example, the chief accountant or chief mechanic. And for such complex systems as ERP, the main initiative belonged to key managers - me and the financial director. Therefore, a very important aspect of IT development in an enterprise is effective communications between the CIO and management of various categories. It would be very useful to promptly inform managers about the capabilities of modern software products and convert people to their faith. This is the main advice I would like to give to CIOs - to have more contact with the employees who directly use IT systems.
Moreover, this is very important not only during the start of the project and product selection, but also at the stage of its operation. Since having unique IT systems does not guarantee effective use, not everyone is happy to use these products. This is one of the serious problems. And the authority of the CIO must be used as much as possible to integrate information technology into the real work of the enterprise.
Businesses evaluate the IT landscape by how easily it allows them to solve development problems
Oleg Baranov, managing partner of Neoflex, answered CNews’ questions.
CNews: How have the tasks of informatization of banks changed over the past year due to changes in the economic situation?
Oleg Baranov: The crisis will most likely lead to a redistribution of the market, and those who intend to increase their market share are actively developing their IT infrastructure. We are seeing a surge in activity from state banks. Many of them have intensified IT projects related to building infrastructure for issuing and servicing mass credit products. This is understandable: after all, now most private banks and foreign players have reduced lending volumes, and state-owned banks, which do not experience difficulties with financing, are trying to capture this niche.
According to our estimates, the crisis had little impact on foreign banks. As before, they are investing in infrastructure development, considering it as an important component of competitive advantages in the Russian market. They did not intensify, but did not weaken the intensity of their IT projects. Although, in comparison with state banks, they are rather taking a wait-and-see approach.
As for commercial banks, my sense is that about 30% of the commercial banks in the top 100 have significantly cut their IT budgets. Another part of them maintained the previous budgets for development projects, but at the same time focused on completing projects already started.
CNews: What requirements do financial organizations have today for the construction and development of IT landscapes?
Oleg Baranov: The main task of business is development. Businesses tend to evaluate the IT landscape by how easily it allows them to solve development problems. A “good” IT landscape quickly and at minimal cost adapts to changing business and market requirements, allows you to quickly introduce new products to the market, easily change their parameters, quickly connect new points of sale, improve the quality of customer service, and save costs. All this is provided by the organization’s IT landscape, built in the service-oriented architecture (SOA) paradigm.
In the analytical block of the IT landscape, the key motive is to change not business processes, but approaches, algorithms and methods of information analysis. After all, they are also not constant; accordingly, the bank needs to have such analytical IT systems that will allow them to quickly collect and process the information necessary for decision-making. And with large volumes of business, solutions implemented in data warehouse technology do this well.
CNews: Does the process of mergers and acquisitions put forward any special requirements for the IT landscape?
This process is directly related to the bank’s IT landscape. If a decision is made that the acquired bank will operate within the banking group as an independent unit, the bank faces the task of generating consolidated management reporting, and this is a matter of creating or developing an analytical unit in the IT landscape. If the issue of merging the operating activities of two banks is decided, then serious tasks arise in combining IT systems and/or their integration.
For our company, as a provider of professional services for financial organizations, the processes of mergers and acquisitions result in projects for the integration of bank information systems, the creation of portal solutions or the construction of reporting systems in data warehouse technology.
CNews: Some time ago, there was interest in the banking market in replacing domestic automated banking systems with solutions from foreign vendors. Was he justified in your opinion?
Oleg Baranov: There are known Russian banks that decided to replace domestic ABS with foreign ones, but, as it became clear over time, there are very few successful projects for such a replacement. At the same time, many foreign banks that came to Russia were able to implement core banking systems that support Western accounting standards. There are examples of successful projects in this niche; moreover, our company has several of them.
The secret of success here is quite simple. There are two approaches. The first is an attempt to implement in a foreign ABS all the features of Russian accounting, reporting and legislation. Such projects, unfortunately, in most cases fail. The second way is to minimize the modification of a foreign ABS by solving localization issues in third-party software, usually Russian-made. This approach is more successful, and many people recognize this.
Each banking system has a “core” that can do some things and cannot do others. In order to fully implement Russian specifics in a foreign core banking system, its core needs to be redesigned. Trying to "teach" the kernel to work differently is usually tantamount to rewriting the system. In the second approach, we use the foreign ABS as it was designed. In this case, the proportion of necessary changes during its implementation will be relatively small. With this approach, almost any foreign ABS (from a technical point of view) can be used in a bank operating in Russia.
CNews: What key competencies, in your opinion, should IT specialists of financial organizations and IT partners of banks have, taking into account the current economic situation?
Oleg Baranov: I don’t see that due to the crisis any technical competencies have become more or less in demand. It is very important that an IT professional knows the business. At least in our company, this is a fairly fundamental requirement for employees. There are many good programmers on the market, but it turns out that if a programmer does not know business, he is at least less effective in his work than one who knows business. All projects are imbued with business sense, and a specialist who does not fully understand that It is he who automates and makes the wrong decision. It seems to me that this has always been the case – both before the crisis and during the crisis. So industry specialization and industry expertise are a prerequisite.
CNews: What products and services of your company are most in demand now?
Oleg Baranov: Our company survived the crisis relatively well. We had no layoffs or salary reductions. The volume of orders practically did not decrease, although there was no significant increase in the fall-winter either. Over the past 2008, we grew by 84% compared to the previous 2007. Since the end of spring - beginning of summer, there has been a surge of interest in our services, and we are beginning to expand a little. This situation is due, in my opinion, to the demand for our services and products.
There are four main areas of activity that are worth mentioning. The first is solutions for obtaining bank reports using data warehouse technology. We have our own product Neoflex Reporting - a system for generating all types of banking reporting based on a universal data warehouse. There are projects to build reporting on the SAP BI platform.
The second direction is the integration of applications and the construction of IT landscapes of organizations in a service-oriented architecture. We not only implement the integration bus and ensure the bank’s transition to SOA, but also provide consulting services in this area, helping the bank create a methodology for the development of the SOA landscape. When moving to the SOA paradigm, the entire ideology of managing the IT landscape must change. The principles of managing development projects must change. In each such project, you need to understand what business services will be used, what systems will provide them, and how to ensure the unification of these business services from project to project.
The third direction is front office solutions based on industrial BPM platforms for automating business processes related to sales of financial products. Unlike competing systems, our front office solutions include an industrial BPM engine, where the business processes of a specific customer are described using the standard BPEL (Business Process Execution Language). This approach makes it possible to effectively modify and develop the solutions being created.
In addition to the above, we have a direction related to the localization of foreign automated banking systems. There are a number of projects for foreign banks to implement foreign core banking systems, where we help customers design the IT landscape, determine what functionality will be implemented in the foreign core banking system, which functionality will be implemented in localization components and in Russian core banking systems. While engaged in localization, we provide banks with a number of our own components: this is the already mentioned Neoflex Reporting banking reporting system, the Russian general ledger Neoflex GL, an accounting transformation module from a foreign core banking system, a reserve calculation module in accordance with Russian standards, an anti-fraud module in accordance with the requirements of the Central Bank 115 Federal Law. In essence, we offer a bank that has decided to implement a foreign core banking system both IT landscape design services and a set of components that will reduce the time and cost of implementing a foreign core banking system.
CNews: Which projects implemented in 2008 can you highlight as key? What work is currently underway?
Oleg Baranov: I'll start with a project for Sberbank. This is the “Credit Factory” project, where Neoflex was responsible for developing an integration solution that connects information systems involved in the processes of lending to individuals. This project started at the end of 2008 and was completed just recently. Now the solution operates in the Central Office of Sberbank and its North-West Bank and ensures the interconnected operation of 12 information systems of Sberbank and its partners. By the end of 2009, we will extend this solution to seven more territorial banks of Sberbank. This is a large-scale project; in 2010, as planned, the created solution will cover the entire structure of Sberbank, all 17 of its banks.
We also did an interesting project for HSBC bank. The customer decided to introduce an ABS in Russia, which is used by bank divisions in other countries. Neoflex was chosen as the main integrator. We were responsible for the design and implementation of an IT landscape in which a foreign core banking system acts as the main system. All primary information about business operations is entered into this system, and a number of domestically produced systems are used to meet the requirements of Russian regulators. Last fall, the solution started working in terms of functionality that ensures the operation of the corporate block, and in June 2009 we “launched” the retail block into operation.
Another significant project was implemented for a large foreign bank, whose name I cannot mention due to the terms of the agreement with the customer. In October last year, we began building a data warehouse for this bank to obtain mandatory reporting based on the Neoflex Reporting product. In fact, within 6 months we implemented the system and put it into commercial operation. The project was preceded by a consulting stage, when we helped the bank decide what IT landscape it needed to solve analytical problems. Now, with this bank, we continue to work on expanding the project on mandatory reporting, we are engaged in management reporting and transformation of data into a system that keeps records according to US GAAP standards.
The last project that I want to mention is currently being implemented in one of the largest state-owned banks. We create front office solutions for issuing loans for dozens of bank branches scattered throughout the country. In addition, we are introducing a single integration bus. The bank is large, both in terms of the number of clients and in terms of its regional structure. The complexity of the project also lies in the fact that the bank has a decentralized core banking system made in Russia. So the implementation of this project is an interesting and non-trivial task for us. I will be glad to tell you about its results in a few months.
