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Real returns to be gained from investment in technology Back  
It is unfortunate but true that many companies only realise the benefits of technology when the expensive systems in which they’ve invested crash. With an economic slowdown, ever increasing competition and tighter margins, it is noe essential that investments be made wisely with a clear recognition of the returns to be achieved says Frank Noonan
It is also unfortunate but true that the technology industry is guilty of shooting itself in the foot by inventing a language so far removed from plain English that even those within the industry don’t really understand it any longer. The world has become very weary of e-business not because the basic ideas are not sound but because no-one seems capable of explaining what they are in a way which is meaningful to business. There are three main principles to investing wisely.
The first principle is to understand that anything that is buried in jargon usually contains an idea that is either so obvious or so false its fragility needs to be wrapped in verbal fluff to protect it. Never feel foolish to ask for terms to be explained clearly and with practical examples. Understanding what you are buying is the first step to realising a return from your investment.
The second principle is to determine what the real investment is likely to be. Capital investment in hardware and infrastructure should take account of future changes and therefore have enough flexibility to expand should this be required. Non-capital expenditure is harder to quantify and is open to interpretation but is very often the greater investment.
Do not be short-sighted in this regard. Companies who invested in SAP software may have thought it expensive at the time but it has come into its own by continuing to develop new products, fully integrated into the core ERP system, which allow the enterprise to extend functionality relatively cheaply. This strategy is known as mySAP.com.
The third principle is to recognise and quantify as far as possible what the return is expected to be and over what timeframe. Return on investment can take on various guises.
• an online trading system for a retail bank is intended to produce higher revenue
• an ERP system would be expected to produce returns in terms of working efficiencies and productivity
• technology that gives a competitive advantage can be measured in increased revenue and also in market share
• Some systems are introduced in order to reduce costs and improve cash flow. This is especially true of emerging marketplace technologies that enable the much-hyped concept of collaborative commerce (see below).
There are cases where technology simply must be introduced in order to keep up with competitors. Online trading through a web site is again a good example. In the retail banking sector, if one bank introduces an online system, it is almost unthinkable that its competitors will not follow suit.
Having understood what the deliverables are, what they will cost and what the return is, the basics are in place for a successful project.

The Shift in Emphasis in Applying Technology
Time was when technology was primarily intended for internal purposes, that is to automate business processes and produce greater working efficiencies and hence productivity. This is still true today but technology is increasingly being focused externally. This is driven by two factors -
• The realisation that further efficiency gains can be made by companies collaborating with each other and extending their business processes across multiple enterprises.
• The need to cater for much higher customer demands. Customers require information and services to be delivered faster, cheaper and better than ever before.
How this applies to financial services is outlined below. The important point is to realise that internet technologies in particular provide a means by which the supply chain can be extended into the buy-side and the sell-side.
It is not a new idea for competing entities to work together in areas of common interest. What is new is the means by which this can be achieved. The Internet has removed geographical barriers and made the world a much smaller place. The consumer is no longer bound by the fact that there is only one bookstore in town as there are many more available a mouse-click away. In the same way, commercial enterprises can trade with buyers and sellers all over the world providing they have implemented the technology to do so. This is the true advantage of e-business and no amount of hype and buzz will make it any clearer.

A marketplace is an electronic version of the stock exchange. A vertical marketplace is roughly equivalent to, for instance, the LIFFE exchange in the UK. It brings buyers and sellers together in one virtual location and makes the process of trading easier as well as enabling market forces to balance supply and demand and regulate price. The automotive industry in Europe has developed such a marketplace which allows them to form a large purchasing group and to carry out online transactions with their suppliers.
Suppliers who also integrate their systems into the marketplace will benefit from being able to deliver quicker (competitive advantage) and to automate the sales order, inventory management, production, invoicing and payment processes between them and their buyers (the automotive companies).
Many financial institutions have an ERP system of one type or another, the most common being SAP. But few have considered extending the functionality of the system outside of their enterprise to link in to the supply chains of other companies (even competitors), reduce costs, increase turnaround times and improve profitability. This is the meaning of collaborative commerce and it is something which the sector has yet to catch on to.
Customer relationship management is an area ripe for exploitation in financial services. If it is applicable to any industry, then this is surely it. CRM aims to improve customer acquisition, retention, loyalty and profitability by harnessing customer contact information and sharing this across the enterprise. The fundamental aim is to provide enhanced customer service and thereby generate higher revenues over longer periods of time. Again this can be enabled with existing ERP systems such as SAP so investment may not be as high as might be imagined.
A recent survey of call centres in Europe highlighted the fact that despite 87 percent saying that customer retention has a high priority, 44 percent do not prioritise incoming calls. In other words, the most valuable customers join the same queue as loss-making customers - this lack of personalised service is both unnecessary and is increasingly disliked by customers.

Business Intelligence
Sometimes seen as an oxymoron, this technology aims to achieve the holy grail of the management cockpit, where key performance indicators and balanced scorecard techniques can be seen and used at a glance to control the strategic, and indeed tactical, movements of the organisation. By drawing on many sources of information and amalgamating them into a single source, this provides the perfect complement to CRM as a means of understanding what the market wants and what to do to provide it.
By digging beneath the layers of spin and buzz, it is possible to apply technology to your strategic advantage. While nobody doubts that the required investment can be high to achieve true benefits, not investing could be your downfall.

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