Maximize the value from your Transformation Program

Trusting your Core platform suppliers (Admin System, Claims System, AMS, Loan Origination System, Banking Core) to plan your transformation program results in lower value.

Organizations that decide to undergo a full transformation program have different reasons for doing so.  In most cases, the business drivers for undertaking a once in a generation expense, are increasing sales or improving service.  While tech debt is frequently an underlying benefit, it's rarely the primary driver of the business case.  After the decision to embark on the transformation, the most common step the IT team naturally takes is to reach out to their largest IT vendor to assist in the planning.  For the majority of financial services, this is the core platform supplier.  

Core platforms support the middle and back office business processes and are the most complex and expensive systems in the IT portfolio.  Unfortunately, this decision prevents the realization of value through value deferment.  The team trusted to plan the transformation has a vested interest in how they get paid, not how your organization realizes value.  

Over the years, I’ve seen the same pattern play out.  We’re asked to assist with the pre-slotted, pre-budgeted Engagement Layer projects, all of which are scheduled at the end of a 3-5 year, $10M-$100M, transformation program plan.  The Core vendor has sold the organization on a program plan that has 1-2 big bang implementations of the new core platform that are initially scheduled for 18-24 months in duration.  In the last 1-2 quarters of the program plan, there are a series of smaller projects that connect the core to the other IT investments, like CRM, the phone system, website, and/or marketing platforms. 

Then we ask the following 3 questions of the executive team:

1. Why are they doing the transformation effort?

2. Which project on the program plan MOST impacts the KPI’s driving the program?

3. Would they prefer to realize the majority of those benefits years earlier?

Rarely, the primary driver of the transformation effort is true technology uplift or to drive a fundamental change in the back office business process.  In that case, the transformation plan created by the core provider is correct.  However, the vast majority of the time, the rational is to improve sales, reduce service costs, or improve channel marketing efforts.  But the projects set to deliver the majority of that value are scheduled at the end of the program plan, effectively deferring the value until the end, rather than allowing value realization as the program progresses.  For smaller projects, this may not be as impactful.  For a transformation program, 2 or 3 years of KPI movement have a very large business impact. 

Example: $15M 3 year transformation program designed to increase sales by 7% a year.  Pulling the CRM & Marketing projects to the beginning may yield 2.5 years of 5% sales increases.  

To effectively flip the transformation program plan to enable parallel delivery of the new core and the value driving projects, the overall IT architecture needs to be reviewed to ensure the integrations decouple the front office systems from the core.  Once that is in place, the projects can proceed in parallel.  It also provides a derisking of the cut over effort for the core projects later in the program plan.  

While this tactic may increase the cost of the program, it also provides a disproportional benefit that Accelerates value realization from transformational programs.  

For a review of your Transformation Program, contact us at Sales@PlatinumRiverInnovations.com.