the answer to crisis

IT depts need to be more business-focussed,



Today's dynamic business environment is driving banks to align their IT investments with business strategy and revisit outsourcing policies and the ability to multi-source IT services will be an important skill for businesses.




Kasikorn Bank’s headquarters.
Information technology can help business to overcome the global economic crisis in two ways, by helping to create innovation and to control costs, according to Kasikorn Bank's CEO Banthoon Lamsum in his recent presentation to the Thailand ICT Management Forum, organised by the Thailand Management Association, entitled "Crisis is Opportunity."

"Investment in technology has to be aligned with business strategies. Maximising IT alone is not formula for success, rather it is how IT is adopted into the processes and management."

The CEO continued that IT is not just a technical issue. IT people have to understand business and marketing. For KBank, its internal IT staff always speak in the same language as business and every project is about what the customers want and what has to be done to meet those customer requirements in the face of competition. Its strategy is for a balanced investment between business requirements and demands from IT.

Kasikorn Bank's executive vice-president of the systems division, Teeranun Srihong added that the key skill for today's corporate IT managers is managing multi-sourcing to leverage the various vendors' expertise that are available in the market.

At the beginning of 2003, the company decided to take on a global partner for IT and focus on its core competency of banking. This led to the IBM outsourcing deal which is set to last 10 years and covers both infrastructure and operations and resulted in hundreds of Kbank staff being transferred over to IBM, explained Kbank's vice-president for IT operations, systems division, Worathep Aramkul.

But today, the situation has already changed. IT is no longer just about back-end tools, but is now the core engine to deliver business services directly to the customer through new channels such as Internet banking. This has led to the bank having to revisit its IT outsourcing policy.

The plan is for more in-sourcing for areas that have a close interface with business and this means that the bank has to weigh up the costs of developing manpower and upskilling staff not just in IT, but also financial analysis compared against outsourcing vendors who can take the project on.


Currently, Kbank has around 200 to 250 internal IT staff with responsibility for security, helpdesk and strategic planning in IT. Moreover, the bank is using a variety of outsourcing vendors covering the areas of application development and management, enterprise infrastructure and network. AT present, the bank uses both international and local vendors in different areas selected by their expertise, such as Atos Origin, Progress Software, G-Able, DataOne, Datacraft and Wipro.

"Over the past few years, we have learned that if we outsource in some areas, we may have lost the opportunity to learn some expertise and knowledge which may be essential for our business, such as Internet banking. It also creates some risk to rely on one vendor only," Worathep said.

"In addition, when we sign outsourcing contracts, it is important to set the key performance indicators for each other. IT outsourcing vendors have to be able to translate expectations from customers, expressed in business terms, together with those from the IT department such as business sense and cost savings."

Worathep also explained how Kbank bridges the gap between business and IT with a new IT organisational structure which has a new role of "Relation Manager." This is a dedicated IT person who communicates with business divisions to explore and evaluate how IT can meet business requirements as well as expectations.

IT managers in many organisations have to transform themselves to be able to focus not just on how to get the job done, but to become a service manager focusing on business results. They have to understand that IT plays a major role in enabling business and is not just a backend support tool anymore. In this highly competitive environment, IT has to consider the people skills, flexibility and comparative advantage of each approach.

Asked if vendors offer new business models such as joint partnerships and co-investment to provide new services through revenue-sharing, Worathep said that there are still many issues to consider, such as the type of service, reliability of the service and anything else that may risk the bank's reputation or customer information.

One of the most challenging aspects when selecting an outsourcing partner is to find people with the qualifications and skills to deliver the standards demanded by customers. Technical capability is only one part, mindset and attitude are also important, explained the general manager of IBM Solutions Delivery which provides service to Kasikorn Bank, Suras Lertpoompunya.

IBM Global Solutions Delivery has to plan and build its employees' expertise in order to meet the requirements of the customer and keep in communication with the customer to fine tune the relationship. Every year, both sides have to evaluate the service milestones whether they meet the expectations set or not. "Thailand has a good talent pool, but there is still a shortage of software architects, project managers and business consultants," Suras noted.