ROUND TABLE PARTICIPANTS:
François Vidal, head of Les Echos Finance department Jean Milatos, computer manager, ABN AMRO Frank Iller, UBS France Jean-Manuel Mercier, director of information systems, Fortis Banque Philippe Darneau, partner, Accenture Alexandre Karras, global information system manager, asset management, BNP Paribas Hervé Auchere, partner, financial services, Accenture Elias Abou Mansour, director of information services, Euler Hermes Group Thierry Menneson, partner, IT Transformation, Accenture Philippe Gibert, director of information services, Aviva Pascal Vigier, head of international computer systems, Crédit Agricole
François Vidal: A major concern of financial institutions is to reduce IT costs. How can firms create IT synergy between different business entities in the organisation?
Philippe Gibert: There are various approaches. We have already made a move in that direction. We had IT spread through about 15 buildings. Bringing IT into the same building has reduced my running costs by €400,000.
There are a number of win-win initiatives: the latest or new technologies that bring immediate cost savings. We achieved savings of 18% last year through that, and by outsourcing our desk-top publishing and night operations.
Frank Iller: There are discussions on offshoring or inshoring from the Asian perspective. Around a year ago, we created a single unit within the group, which took care of the infrastructure, processing centres, networks and e-mail management. This has led to tremendous cost benefits. Governance structures took some time to settle but, at the moment, this is working very well from a technical point of view.
Jean-Manuel Mercier: At Fortis, we need further consideration on outsourcing. As regards software development, I think we will be doing less of it because it is becoming more and more complicated. At this point, we need to identify where our skills lie, in which subsidiary or country. We need to find out how we can work together.
On the French side, reducing costs is not important. We have to respond to user demands, which are considerable. In particular, there are a huge number of regulatory restrictions: Basel II, IAS, even Sarbanes-Oxley. The question is, how do we deal with all this? We have to try to rationalise and to find areas of convergence with other companies in the group. It is not a question of immediate cost reductions but rather how to develop while involving the lowest costs.
François Vidal: As regards outsourcing, I would like to put the question to Mr Milatos (ABN AMRO) and to Mr Karras (BNP Paribas): you seem to have adopted two fairly different models, full outsourcing and outsourcing while retaining control, or at least partial control; could you explain to us what happens at a particular moment when this decision was taken, and why use this particular architecture?
Jean Milatos: The issue for ABN AMRO was one of reducing costs within the investment bank. The management saw outsourcing as the easiest solution, and the quickest to implement. Seven countries took part with the investment bank in setting up a full outsourcing facility with EDS, including both infrastructures and evaluation studies. ABN AMRO has kept control of only a very small number of extremely sensitive applications. Alongside this outsourcing policy there was also a policy for industrialising and rationalising IT services. This was the deal with EDS. I would say that it works, from an economic point of view. The cost reductions have been truly spectacular.
Alexandre Karras: The BNP Paribas merger was completed almost five years ago, so there has been sufficient time since then to gain benefit from these experiences. We very quickly identified that the newly formed BNP Paribas group IT needed to be a fairly strong contributor to the synergies in the group. The job of the central IT department was to set the choices and implementation of the technical infrastructures. It was also the leader in IT control and operation.
We created three global production platforms that have brought together all the application resources of BNP and Paribas. We then formed a joint venture with IBM for operational control of IT and also to create a technological innovation centre. For the time being, we have entrusted to this joint venture the operational management of these three global platforms, which I stress provides control and production for all departments of the BNP Paribas group. We have gained significantly. The return on investment has been staggering.
Second, as regards the business units, they obtained an IT facility designed for them and provided them with dual-skilled people in their teams who understand both IT and business needs.
François Vidal: It is clear that we are going through a change in the industry. What is your vision of the IT business 10 years from now?
Jean-Manuel Mercier: I think that in time to come, package solutions will be the norm. In the banking market, already we are less and less involved with software development. It is important for software engineers to know the business and have knowledge of the information system. That’s what I say clearly to my teams.
What is interesting now is that if you want to make your career in the banking or insurance sector, you don’t necessarily have to know Java etc, you need to know the banking business.
If I need a Java developer tomorrow, I go out and find one. I have to pay, but I go and find one. If I need someone who knows the Fortis Banque France documentary credit information system, I am not going to find one. So this is something I have to develop and protect.
I think that the real added value in future for directors of information services will be to know the business, with a good veneer of technical knowledge, so that they can make the link between the technologies, innovation and the reality of the business.
