The cost challenge in core banking solutions

low-cost-is-the-new-high-valueWorking in the core banking solution area for more than 15 years from building channels and core solutions from scratch up to implementing packaged software (SAP) I am constantly encountering the struggle of both banks and IT providers to have the best solutions in a reasonable price.

In the past it was perceived as the main cost factor was the old technology (mainly COBOL on MF) with its limitations that the promise of new technologies like Object Oriented, JAVA, , SOA , etc. seemed to be the cure. If you think about that it definitely helped solving some problems which affected the long term cost, however even after some major technology upgrades we can still see that both developing and maintaining the solutions are expensive.

The packaged software is another trend that took great momentum in the past 10 years which also promises cost effective solution (if done right) however from too many reasons (from bad quality solutions, wrong pricing model, lack of implementation knowledge, and ,and, and… ) the cost are still high.

Nowadays we have a new savoir “THE CLOUD” which I’m I am hearing the same “music” on how it will solve the cost problem and will make everything easier pretty much like OO , SOA and other approaches was supposed to do.

Honestly speaking I am not sure if OO , SOA and now Cloud are wrong actually I totally understand the concept behind each and the potential however my question is:

Do we really know what a reasonable/realistic cost is?

Meaning what should a bank expects to pay for developing a core solution (loans, deposits, channels)?

I sometime have discussions with different people (from banks, SI’s and my own company) which have very different expectations some seems unrealistic to me, and mainly in consistent and vague in their cost assumption basis or benchmark they came up with it.

Here some facts I have from my experience:

1. Core banking processes are complex from many different aspects (technology, functionality, integration , scale)

2. The banking business is highly changing not so much in the essence (loan is a loan for many years) but from the way it is done, from the technology it uses, and the business model it supports
3. Banks are huge and complicated organizations from many different aspects (staff, org structure, politics, amount of IT solutions doing the same things, etc)

4. SI’s and Vendors in the banking business are huge and complicated with many contradicting objectives to cost reduction ….

These are the facts (among others) that influence the cost no matter which approach you take (build yourself, packaged, cloud) and we should be realistic on our expectations.

So to summarize my point I would propose to ensure we are clear & aligned on the problem and its cause before we jump to different concepts that revolutions to solve something we are not sure what it is…..

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The main mistakes Banks do when evaluating software package

In this post I would like to share my insights on some common mistakes banks are doing when evaluating their options for replacing some or all of their core solutions with new ones based on software package (more about software packaged for banking can be found in my previous posts).

We already discussed some barriers in going for software package however we can Trustmedefinitely see a global trend as more and more banks are evaluating buying their new core solutions Vs. building them (developing) on their own. The thing is that it seems evaluating and picking the right package is not easy in banking and making a mistake could lead to a very long and painful experience for the bank. This is why on one hand banks are spending high efforts in evaluation process; however seems to repeat some common mistakes which lead to wrong decision or bad feeling .

In the past 7 years I am working with banks around the world representing one of the leading software vendors for banking and here some of the insights I have on the main mistakes banks does.

If you look to how most (if not all) banks around the world are approaching such move like replacing one or all of their core banking solution you see that they are all following a common process they call RFI/RFP which usually goes in the following way:

  • Collect requirements from the relevant departments within the bank (functional, non-functional, technical, commercial, and so on) which represents the desired way of work based on the current one
  • Put all on paper divided to sections and send to all vendors you feel are relevant
  • Analyze the responses by using some sort of weighting/prioritizing methods to score them (in most cases the scoring method is not that scientific but biased by the different stakeholders like IT or specific business driver )
  • Then shortlist the vendors came with best score and invite them to do some demos the banks provides (insisting on fulfilling them as written)
  • Some (not all) ask for some kind of POC and here the variations on what is included on a POC is very wide.
  • Evaluate the implementation approach and SI (usually not too deep)
  • And of course in parallel to all that run commercial exercises to understand the costs.
  • Decide

There might be more or fewer steps which in different order and names however these are main relevant steps I usually encounter and here are the main flaws in the process in my point of view:

  1. Lack of alignment within the bank – in most banks I see that the process above is involving wide spectrum of departments and roles however in a non-aligned manner. Each role puts his pain points, desires and requirements not necessarily aligned/aware to each other and sometimes contradicts one another. then you put it all in one document which seems to be a unified story/picture but in fact it is just a selection of requirements that are representing different views on different levels that does not paint one concrete picture.
  2. Enforce vs. Adopt – usually the process starts from the “as is” situation including the future picture. Banks are missing knowledge on how the relevant vendors approach the market regardless of their existing way of work which could be crucial to the evaluation process. This brings to a process where the banks are enforcing their existing thinking paradigms on the vendor which could lead to huge gap which is not necessarily true. on top the bank does not have the proper skills and knowledge to understand the answers he is getting from the vendor.
  3. Feature function Vs. holistic view – along the same lines of the above, in most cases the banks would try to evaluate the software vendor on a feature functional basis, which sometime just from different terminology or specific vendor design it seems he does not fit. On top they are missing the big picture and holistic view of the software package which could bring added value in the long term which is very hard to see when dealing with feature functional analysis.
  4. Missing future operational model – in too many cases I see that during the analysis the aspect of “how will I operate the new solution” which covers day to day operation by the bank team, future innovation and maintenance is either missing or done as a minor topic compared to the feature functions at hand. This is a huge mistake as replacing core solution is something very expensive and risky you want to know it would last and be comfortable beyond the near future. There are many packages out there that knows how to fulfill a specific need very well however are impossible to adapt and support the unknown of the future and very hard to operate.
  5. Lack of Time – on one hand each bank will tell you how important the process is and that they have to take the right decision , however when you look at the time they provide for it, and more important how they split the time you find that the vendors do not have enough time to really take the bank through all the important aspects of its software. most of the time is spent on internal processes within the bank , the vendors are given unrealistic time frame to put together demos and presentations which leads to a non optimal process.
  6. Lack or lacking POC process – POC could be called in different manners but the essence of it is evaluating the desired software in a deep manner prior to making a decision to buy it. In my experience many banks either skips this process or do it wrong which means they buy something they don’t really know how it would look and operate. Doing a POC is a crucial step (even though most sales people won’t like this statement) and banks must insist on doing it as it could tell them a lot about all aspect of the solution.
  7. Poor implementation partner – another aspect which is totally crucial is the implementation partner. You can have the best software package in the world but if you make mistake in picking the implementation partner the end result and the process of getting there could be a nightmare. The evaluation of the implementation partner is done in most cases in a very superficial manner, usually banks will either ask the vendor to be responsible for the implementation (“as he knows his software better than anyone”) or they go for the big names as they have their brand, the workforce power, it would be hard to blame me that I picked them, and I have a good company to sue…. However in most cases these are the wrong choices and a much deeper analysis and evaluation has to be made by the SI partner.
  8. Fight Vs. Partner attitude – this is the most puzzling aspect to me which is the emotional side of the process, I often see that during the process the different stakeholders at the bank are getting quite aggressive in their behavior which comes from clear reasons like : fear from the change, political aspects and commercial however in too many cases the whole lingo and atmosphere is changing from partners to rivals. When you consider taking a software package to your core, which will be there running your most important processes and escort your day to day for a long period of time, you want to have good and pleasant relationship with the vendor. Also the stress, anger and aggressiveness is in most cases blinding and jeopardizing a good evaluation process for all the wrong reasons.

I guess there are more reasons however these are the main insights I captured in my global experience which I feel is happening mainly from lack of awareness and “force of habit” , changing it could save so much risk, cost and time in evaluating software packages.

In my next post I will try to share my point of view on how it should be done taking into account the above points.

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The Real Value for Customer Behind the Cloud Story

In my previous post (which was long time ago) I questioned the “promise” in the cloud mainly from the “what’s new” standpoint. However as I’m continuing to hear and deal with this topic on the daily basis I was wondering why we see such a huge trend /hype around the topic not only from the vendors but actually from the customers (the enterprises).
It seems that today most of the big companies has included the cloud in their strategy even though many of them not sure where exactly and what kind of cloud solutions they can leverage. Why is that?

searching for the wrong

My “mistake” was searching for the answer on the technical and functional side of things, why? Because I am a technical and functional expert and also because this is what the marketing people in the market are telling us, they share how fast you can setup your enterprise functionality, how easy it is to introduce new functionality inside the enterprise and of course how innovative and appealing you can be with your customers all will be done by adopting the new thing called cloud.

However as I searched and searched I found that the true value is not really there, of course there are examples where cloud offerings can be up and running faster for organizations, however this is in very specific and in many cases simplistic cases and the real reason for it being faster is not necessarily the fact it’s on the cloud, but because it is ready made, standardize and the customer (the enterprise) is willing to adopt it as is. You can get similar result doing on premise if indeed the vendor will provide already made solution in which the customer will be willing to adopt as is, so where is the value?

To make a long story short I finally found the true value customers (enterprises) see in the cloud story, that makes them so eager to include it in their IT strategy so aggressively, and it is the cost model and the way it is counted as investment. It seems that the cloud story solved three of the major problems CIO’s and CEO’s had for years:

  1. one is to approve huge amount of money up front on an IT project which included the hardware, software and services side, with very problematic capability to defend or explain the ROI (Return On Investment) to their board.
  2. second problem was the fact they were not sure if they would be there to enjoy the credit as in such projects you approve the investment now (and take the heat) but see the fruits in 2,3 and sometimes more than 5 years later. This time period is sometimes too long for a CIO or CEO.
  3. And the third problem was the way it is recorded in the books and as a result in the financial results the company publishes every quarter.



The cloud magically solves this how? Because you “just” lease the IT solution instead of actually owning it. This difference is called “CAPEX vs OPEX” which are both terms coming from the financial accounting area. In very simple terms (you can read more about it if you are interested) it means that CAPEX (Capital expenditures) is a spend on actual asset you own and it is counted with its full long term price in the books Vs OPEX (operating expenditure) which is a spend “just” on the operational cost of a certain function. Similar to buying a car Vs renting it, if you buy the car you pay its full price and you recognize this investment up front + the operational costs that comes with it, Vs renting you just pay operational cost as you use it (increased of course as the relative car price is included in it) which makes it much more appealing. With this approach one you don’t need to pre-approve the full amount so the cost seems more reasonable and easier to approve, second you potentially can gain the credit of doing the right thing much faster , and of course the way it is counted in the books is significantly better in the financial reports which removes the IT project from harming the nice numbers you want to show on a quarterly basis.

As an Architect, solution expert and someone that deals with actual content (technical/functional) I understood that once again what dictates the way we call things and also the way we implement them is directly impacted from the business practice and we definitely need to be aware of that if we want to remain relevant in front of our customers whether we like it or not.

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The Cloud is the future – REALLY ????

Working in the technology industry for more than 15 years I’m used to different trends coming and going which represents attempts of all sorts of entities with different interests to enter or penetrate a specific domain to make more money. What I find always “funny” is how fast you can generate a “community” of people becoming followers and believers in the new trend just because it is new, “someone said”, or just because “everyone does that and this is where the industry goes”. In principle one could argue what’s wrong with that? And I would say nothing if it is not disrupting your day to day job , and provides value.

Well I believe that the “cloud” is one of these examples where someone created a buzz word, and suddenly it became “the most important thing in the software industry” and I ask REALLY????

I waited with this blog for quite some time as I also wanted to make sure I see the full picture before I make any decisive statements, however going deeper over and over again I’m sorry I don’t see the big promise in the “cloud”. It might be that I am inside the cloud and don’t see due to the fog inside :-) , or is it the case of the Emperor’s new clothes that no one really see anything but plays along with the game as he is afraid to look like a fool???

From my discussion with many people around the world working in the business I feel this is the case. In private discussions I have with people from different companies (software vendors, big global banks, small/medium SI’s) , line of business and roles (sales, developers, consultants, and more) I always hear “yes you are right we also not sure what’s new in the cloud and whether this is really the future” however as soon as the discussion comes to official streams and in the headlights every one clapping their hands and say “yes”…..


What is this “Cloud”? well I always love to use the Wikipedia as a source to check different terms, usually it provides a very good definition and if not it shows you the fact that this topic is quite vague or so specific no one care about it enough to write…. In our case here is the definition which I find quite interesting:

Cloud computing is a colloquial expression used to describe a variety of different types of computing concepts that involve a large number of computers that are connected through a real-time communication network (typically the Internet).[1] Cloud computing is a jargon term without a commonly accepted non-ambiguous scientific or technical definition. In science, cloud computing is a synonym for distributed computing over a network and means the ability to run a program on many connected computers at the same time. The popularity of the term can be attributed to its use in marketing to sell hosted services in the sense of application service provisioning that run client server software on a remote location.

The way they describe it articulates my point in this blog which is “cloud computing is a jargon term without a commonly accepted non-ambiguous scientific or technical definition” meaning, people in our industry talks about the cloud like they all know what they are referring too however most of the people are not really sure what it means….

In most of the cases when people refer to the cloud in the IT industry they mainly talk about two main things:

  1. Hosting – this is the capability to provide hardware resources to companies that prefer to lease their servers instead of buying and maintaining the actual hardware. The hosting started from the web hosting for web apps and grow to providing a server capabilities for any purpose, especially with the evolution of the virtualization technologies thanks to VMware that enables servers to be virtualized over a unified hardware and AMAZON that found a nice cost effective model to provide servers for any kind of usage.
  2. ASP/SaaS – Application Service Provider also called “on demand software” and SaaS meaning software as a service which basically means providing specific software application in a hosted manner without the need to install it on the customer servers and use it in subscription model of some sort. in this case you should ensure the software has multi tenant capability if you want to be attractive.

Both of the above (Hosting and ASP/SaaS) are very old concepts running for years, so what is so new?? What is the innovation everybody is talking about? When I look at most of the claim to be “cloud based solutions” out there I do not see anything that provides any revolution or even evolution from just the old way of providing hosting services (maybe chipper with AMAZON but that’s it) or ASP/SaaS based applications like kind of solutions.

Some people confuse the “cloud” with the different concept called the “Grid” which was introduces also many years ago to represent a way to run software over different computers in an on demand manner, meaning a specific software could exploit the memory and CPU power of different computers in which you can plug and play dynamically without being installed on these machines. The Grid promise was that you can make use of computing power available like use the people PC’s when they don’t use it that could enable running high power processes in a low cost model making use of existing capacity. This is definitely not “cloud” and one should not confuse (or let others confuse him) about it.

So if “Cloud” is just a nice name for hosting/ASP/SaaS, Is it really the future? Is it really so “game changing” for us as individuals or as companies? Of course it would save some money in the short term on hosting but what is there more? Where is the vision?

In my personal view “the cloud” trend is actually very disrupting to serious work needs to be done in the IT business (across industries).The fact that such minor topic with no real value gets so much attention from customers, leading software vendors, analysts and the fact that it is sold as the solution to everything even though it does not, takes the focus and energy/resources from working on the real challenges that require attention.

It also introduce so many problems and challenges you need to deal with (security, privacy ,technical issues, and more) due to the fact you must become “cloud” because this is what the industry is saying…

When people ask me “don’t you believe in the cloud?” I usually say there is nothing to believe in, it is just a nice term for hosting and cloud based apps are just nice term for SaaS/ASP both exists and valid for the kind of usages they always enabled which are non-core fairly simplistic applications for individual and businesses.

Do I see the need to transform on premise solutions to “cloud” ? my answer here also would be a big NO, as I believe that IT capabilities in today’s world which will be greater in tomorrow’s world is a competitive advantage in any industry therefore should be close as much as possible. Do I believe developing, managing and maintaining software should be easier, faster and chipper? big YES but you don’t need cloud for that.

I would love to hear your point of view and maybe you could show me aspects I missed.

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8 steps to support banks in moving to packaged software – Part 2

In my previous post I started to point some actions SI’s should/could take in order to help banks move faster to packaged solutions Vs home made, this part will close the list with 4 more important points:

# 5 : Sell certainty vs. potential – in my experience taking part in many different sales cycles in the global banking world, I witness that the argument “you can potentially do anything you want” and “there is no one way or things you can do it depends on what you want” do not give the customer confidence, the sales people saying that usually means that the software could be very flexible and the SI can implement it in the way you want it, however the message customers get is quite the opposite. For them the fact you can’t show them what can be done and how it should be done during the early stages of engagement perceived as some kind of attempt to avoid something. The tough thing here is the inherent contradiction in the way the customer talks to you, on one hand if you limit him, he might challenge you and say “but it does not fit my needs”, or “but I do it differently”, on the other hand if you say “all options possible it’s up to you” he might say “but I expect you as the expert to bring your best practices and save me time and risk”. Most of the sale people I met (from different companies) will be very reluctant to say “this is how you do things” as they want to make a sale however you must be able to sell the customer certainty, reduce the amount of “options” so he can take clear decision and gain the confidence that you will know how to do it for/with him. The way to do this is by having a point of view as an expert SI on how things should be done with the ability to both show it and defend it. You should always keep the option of “we can change it” however if you do this after you gave a good alternative there are good chances the customer will take your approach, if not he will be willing to pay for the extra time/risk. If I don’t do that I lose the whole a point in selling a packaged solution.

 # 6: Aim for a volume of “small” deals Vs. few huge deals – Another insight I have from viewing the way SI’s/software vendor’s sales teams think in banking, is to “always focus on the huge transformation budget” which is very understandable ($$$), meaning if there is a 100 Million USD deal you want to take it and prefer to invest your time there rather than putting your efforts on 10 deals of 10M or 100 of 1M, however looking at these huge opportunities it is often very long (years), chaotic and in most cases do not succeed (the web is full with blogs and articles about why huge programs fail) and you don’t really win the 100M but invest a lot of time and money chasing it. However assuming you followed my advice and established clear expertise, assets and approaches based on focused business domains and software package the ability to win smaller deals will be increased significantly. It would be much easier to convince a CIO/CEO to make gradual decisions with less risk and less cost vs. the huge decisions everybody afraid off. The confidant message of “don’t commit for 100M, let’s start with 10M we are certain you will pick us for the next after we prove our success) can be a true differentiation. I see the talks in this industry, people are starting to be aware of the fact the huge transformations are not the right way, the first SI that will provide an alternative might get the lead.

 # 7: Adopt lean culture vs. lean methodology – “lean” is a very common word these days or more accurate buzz word to almost any organization today that wants to say/prove/show he is making the transition to become more efficient. However in many cases we witness organizations that call themselves compliant with lean methodology (whatever that means….) however operate like an elephant in a china shop. It is extremely obvious in most of the global SI companies operating in the banking business (the smaller ones are leaner but just because they play in niche). The thing is that it is not about lean methodology but about adopting a lean culture that would bring the company to think faster, simpler and as a result deliver faster results to its customers. At the end this should bring this SI to an advantage in their perception in the market. Now I am not Naïve and I am well aware of the fact this is business and as mentioned above many of the SI companies are in the “head count” business making their revenue from selling time of their “resources” however I believe this has to change assuming the goal is to do thing different, changing the game taking over the market. From pragmatic point of view the lean culture would mean working in leaner relations with the customer right from the sales cycle (or even sooner) to the implementation and handover. Encourage and guide your staff to shorten the interaction time with customers, coming with answers before the questions are asked, convincing the customer to see and evaluate without the need to follow long RFI/RFP’s for every single things he needs could make the difference. If you truly adopt a packaged software attitude it enables you to be leaner by definition.

# 8: Focus on fast delivery Vs “Robust Methodology – The SI game of the past was about implementation methodology, this is why almost every global SI came up with his own project implementation methodology which served the following purposes:

    1. Provide collaterals that could justify why the customer should choose this specific SI over the competition, enabling the customer to “feel” the collaterals and really see something.
    2. Provide proof point for experience, the methodology used to send the message “we are not just providing resources, we have proven methodology”.
    3. Used as an enablement for resources coming and going , something you can train them to make them your own.

Now don’t get me wrong, methodology is important and required however in today’s world of fast results and quick wins the waterfall methodologies which as more steps you have the more “serious” it is, does not bring the value anymore. Customers witnessing the long lasting projects, they see the methodology is no longer guarantee to anything, it is actually a problem. in the world of packaged solution you could of course stick to the methodology approach (most of the SI does) however to make the game changing step one should look at other alternatives to bring to customers something else, faster something that you can see results right from day one, and instead of spending 50% of the time on planning and defining use it to evaluate, experience and refine existing capabilities the standard software can provide.

I can probably find more points for thought in the same direction however the message is clear, to accelerate the adoption of packaged software in the banking business the SI’s must do more in order to help banks make this transition faster with less concerns. The SI’s playing in the banking industry needs to choose whether they want to continue in their current model which is the consulting business, selling resources to staff projects or they want to adopt a true “Packaged Solution” attitude, culture and capabilities seizing the opportunity this industry is going through and lead the way.

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8 steps to support banks in moving to packaged software – Part 1

In my previous posts (10 reasons why… ,… Adoption Barrier.., Make or Buy…)   I shared my insights on the barriers preventing or prolonging the decision of moving to packaged software within the banking industry, as I mentioned, there is no one reason therefore there is no magic word you say and change the situation, however I do believe there are several steps could be taken to accelerate the adoption of packaged software for core banking business.

In my opinion the key players that could make a difference are actually what we call the System Integrator type companies (assuming the software vendor is not doing the system integration on his own of course) as they are the ones that can make the experience of deciding/implementing a software package to be a good one or something to avoid in the future.


So In this post I would like to offer some practical points for action, an SI company could take to help accelerate such decision and win a great business as a result of that:

#1 : Make a Strategic Decision – I think the first step is to decide whether you (SI) are interested in leading your banking customers through the change of moving from a “homemade” software development to “packaged software” philosophy. this is not trivial step, as many SI’s are in the business of “consulting” in terms of “tell me what you need and I will provide the resources and charge for it” way of work. This is not a bad thing if made as a strategy however in my view in order to truly support banks in this significant mind shift the SI has to be committed to such approach and make a change in the way he looks at his role. The SI cannot just provide T&M resources and expect it would be enough, the banks require someone that gives them the confidence in making such move. Most of the SI’s I encountered in my career did not make such strategic decision, most of them work on “all options are on the table” kind of approach , dealing with each opportunity on a case by case basis trying to support all kind of projects. If the customer wants a homemade solution? We will say yes, if he wants some kind of a packaged solution? We will try to say yes as well. this situation is one of the key reasons why banks are moving slowly as they don’t have a true partner that can guarantee their success. So once the SI really believes that the software package approach is the future for banking, wants to lead that approach and willing to change the way he handles this business we can continue to the next steps.

#2 : Focus on one software vendor – as I mention in the first step it’s all about commitment and confidence in the approach so it has to have also commitment and confidence in the software package offered. An SI that truly wants to convince his customers that:

  1. They should move to the software package approach as a strategy
  2. Choose him as the strategic implementation partner to escort him in this transition

He must pick one software vendor he believes has the best package and stick to it. when a bank encounter the same SI offering different packages sporadically / opportunistic it has hard time in believing that this partner can take him through the challenging journey even if this is a big global SI. By picking one software vendor, putting investments on it and building the skills of its implementation forces around it the SI sends a clear message “we believe in this package vendor and you can trust that we will deliver successfully”. This action is very complicated as you need to have both certainty that the package has the proper capabilities and of course that this vendor is trustworthy so you can build your company future on it, however in such complicated industry you must (in my opinion) deal with this challenge if you want to be dominant player.

#3 : Focus on concrete business domains – The banking business is huge and built from many different business domains, each can have a lot of complexity from both technical and functional aspects, the lending business is much different than the clearing house payments or investment banking, trying to be an expert on all of them is very challenging. a wise approach could be picking several domains (1,2 3 depends on the size of the SI and ability to invest) and deepen the company assets and expertise around them in order to come to the customer with real deep expertise giving him the confidence that you know what he needs and how to take him there. It is not an easy decision as in most cases SI’s react to business opportunities as they come and reluctant to be proactive as a nature, they usually see such act as some sort of gamble which they prefer to avoid, however this is exactly the strategic decision I spoke about in step #1 that would make the ability to move forward and change.

#4 : Invest in content vs. resources – This one is actually very critical and important specifically in the packaged software area, however strangely enough (at least to me) I still did not encounter an SI that actually do this (and I work with all the best SI companies in the world). In order to convince a bank to make a move to packaged software with you as his strategic partner for implementation it, is not enough to come with the vendor on one hand providing “feature function” pitch and on the other hand you with “professional resources”, why ? because everybody does that and every bank knows that the human resources (the consultants) of one company could be very good however they are not really owned by that company, meaning they can leave any day leaving the SI without his “expertise” and it is not something you can rely on in a long term basis. This is why it is important for the SI to develop real content assets relevant to such implementation based on the software package (and I am not talking about “methodologies” which any SI claims to have), real content that could prove to the customer that this SI has real assets related to the software package he choose and to what he is trying to implement. The content is important also internally for the SI if he wants to reduce his TCI (Total Cost of Implementation) to drive more revenue over time and have the ability to up skill new resources faster and chipper.  As you can see in order to do this you must follow step #1, 2, 3 as you won’t make such investments if you didn’t make the strategic decision and you definitely cannot invest in different vendors/business domains so you have to be more precise.

in my next post I will provide more points to explain my point of view regarding the role SI should plan in helping banks transition to software package approach.

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Trusted Advisor in Banking Software Industry – what does it mean?

The desire to be this “trusted advisor” is clear to any company that wants to be able to influence its potential customers to the direction of the company strength point have it be service or software which could lead to great business.
I recently came across a very well written post called Using the Power of Certainty to Drive Sales Success which I found very logical when it comes to the first part which explains what it means to be a trusted advisor and why it make sense, however the second part which is the “4 steps to get there” felt to me the exact common mistake many sales people/managers are having when it comes to their perception (which drive their actions) on how to become one.

The term “order taking sales people” was mentioned and I liked it very much, it comes to describe the common “behavior” of sales people thinking the customer already knows why they need the product and they just need to take the order or sometime called “close the commercial details”, however in almost any industry a sales person must do much more if he wants to succeed.

In the banking software business such “order taking behavior” in which sales people just present the customer with the company profile,the software/service portfolio and some high level customer references and ask “what do you need/want we will price it for” doesn’t cut it, actually in this industry to make a sale you need to work hard and show your customers how they could and should use your software/service in order for them to buy in.

it’s also quite clear that in order to be able to get to the sales engagement you first need to make sure the customers knows you and approach you soon enough so you could pitch your capabilities. In this industry the perception of a company is crucial and decision process is long, however if you are not there at the beginning it is very hard to influence the customer decision at the end.

So being a trusted advisor is definitely something a sales person needs to be if he wants his banking customers to buy whatever he is selling and to approach him soon enough in the thinking process so he could still influence and make a sale.

Now the above is not new actually this is common knowledge (including in the article I mentioned above) and most of the companies has indeed set this as an objective, However the way of becoming a trusted advisor this is what makes the difference.

TrustmeIs it really about networking? Knowing the right people in the right places? Well it is definitely important and could help for sure however this is not the way to become a trusted advisor or trusted in general, So is it about knowing the art of talking/presenting? Many people/companies are focusing on the “masters of words” to gain this sales capabilities or making the “perfect slides”, Will that make you the trusted advisor? Of course not, trust is something deeper than knowing to say the right words, or using the right slide decks. So what is it then? Maybe it is having the right demos so we can show customers exactly what they want to see, we will shape it nicely and have our sales team do it in each meeting, ahh will even equip our sales people with an iPad and have all our demos run on it…. Well this also would not bring you to become a trusted advisor.

All of the above and much more (actually there are many more examples but I did not want to make this post so long as I think the point is clear) are the common way of thinking I encountered at many different companies (big and small) in their efforts to become this trusted advisor for their customers, investing so much on such “skills & capabilities” even though its clearly won’t get them there.

The answer on how to become this trusted advisor is actually very simple (at least to say) and it is probably true to every industry, any kind of product or service you want to sell, and it is: “to master the product & service and first and foremost be an expert”, of course you need to have all the skills required to be able to present an idea and have a nice conversation with a customer (especially in a global world where you need to know the different culture nuances) however you have to know your product & service deep enough if you truly want to become a trusted advisor Vs an “order taking sales person”. The “Trusted” will come from the fact the customer will find someone that speaks out of real knowledge and experience with real passion to its product/industry, the “Advisor” will come from the self-confidence the sales person will gain out of his personal knowledge and experience to advise customer not just to buy but how to best use it and why.

If your company is in the services business you need your sales people to know it on a detailed level, it is not enough to know what kind of services you offer and the high level approach and costs , you need your sales person to come from such service delivery background, one that could talk to the customer’s staff in their language.

If your company is in the software business you need your sales people know how to work with the software they are selling. Do they need to be the #1 experts ? No but they have to know enough hands on “tricks” to be able to bring the message across to the customer team.

We sometimes think that sales people (account executives, account managers) they just need to speak with higher management but actually the trusted advisor approach means you talk to the execution level as good as you speak to management. At the end if the people on the ground send a green light the management will be more confident to make a decision , however if the team on the ground are sending red flags mmmm no way the management will go for it.

What is your take on that? How much detailed knowledge do you think a sales person should have on its product/service he is selling to become a trusted advisor ?

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