The elements which make up a core banking project budget?

In this video, @Chris Long the ANZ head of sales @SAPFioneer when interviewed by @Triona Quinlan bursts myths about the overall cost of core banking project budget programs. Chris makes excellent points on striving for MVP and small sized increments, and he also highlights several peripheral program components that affect the overall price tag.

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TRINA: Chris, Next question is for you. So, many Financial Services Organizations are frightened by the headline price tag attached to a major transformation. At Liberty, we’ve been working hard to burst that myth and explain that the product itself, forms only part of the cost. What are the key elements that make up a core banking project budget, beyond the product itself?

CHRIS: Sure… and I think one of the worst things about the headline, the scariest thing about it is probably the uncertainty. Because, people start on a core banking system replacement. You heard, John say that CommBank started with a budget of 600-something million. They went a little over that, and so, I think… the good news is that technology and things are making more, it more possible to get to … I guess and we would certainly push our customers to get to a minimum viable product as quickly as they can. So that, then rather than a whole lot of uncertainty, trying to build a bridge across a huge canyon, you’re trying to do something smaller. I think Macquarie have done a very good job of this, where they delivered minimum viable product, the core functionality, and then … since then, they’ve been enhancing it and they now do a release into production every two weeks, which is a great thing. So, what that says, is all the other bits that go with your core banking so the consulting to figure out what you need to do, the user training, the data integration, the data migration the conversion, all those pieces, you naturally, make them smaller. You reduce the risk of blow out. You’re a lot more focused to the smaller use case. What does the customer need for this piece? And once you know that… then you’re going to make less mistakes. Over all you’re going to do about the same amount. Probably you’re going to do less work, deliver more results because you won’t have the bigger mistakes that have been made. And we saw … CS90 in the end CS 90 had to change the name, because I remember that it turned out be 1990 and it hadn’t delivered. So, that was changed around. So there’s lots of projects on that board that John had earlier, that they were … and we’re lucky that now the technology makes it easier to deliver minimum viable product, a lot easier than it used to be, but let’s not try to change the world because there’s a good chance that when you plan out for two years what you’re going to do, what you started with was what you thought you would / should have done two years ago and by then everything’s changed anyway. So, I would say …that key for that is …the headline is scary. Yes, there’s all those other components, but if you’re doing data migration the smaller you do it. And even look at look again at the Macquarie example, they didn’t migrate their loans portfolio to the new system. They worked out that a 30-year mortgage lasted about seven years. So, in their fourth year, first of all, they had a higher book value of mortgages on the new system than the old system and then a little bit later in the year they had a higher quantity of mortgages on the new system (than) the old system. And the complexity of moving a 30-year mortgage from one system to another and getting it right to the cent was avoided. Because you can do things now that you don’t need to do the hard, don’t just do the hard work, do some of the things a little bit easier… I think that was what I would suggest.

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