Fast Track Selections - A 'How To' Guide A financial services institution may have a variety of reasons for introducing a new systems solution within their existing infrastructure. For many institutions the selection of this solution can take many months and at great cost. With a prolonged selection phase there is a risk that circumstances of the business environment, such as personnel changes or new business priorities, are likely to change leading to further revisions to the plan and ultimately a delayed decision. What, therefore, are the reasons for following a selection process in the first place? There are a number of important reasons and below I have included the ones which are cited most often: - It is required that a due diligence process is demonstrated - Audit trail of decisions is provided which can be referred to in future discussions - Ensure that there is a close fit to business requirements - Ensure that the best deal is struck in terms of financials as well as service levels How, then, can we ensure that the above points are fulfilled while minimising the time spent on the selection activities? An approach I have used with a number of financial institutions is to employ a fast track selection process. This approach retains the rigor of the traditional approach but allows the selection process to be conducted in significantly shorter timescales. The key principles which ensure that a fast track selection can be adopted are summarised below. These highlight the main differences between the fast track approach and traditional approach. Principle Details Run activities concurrently Aim to carry out as much of the activities as possible in parallel. For example, researching of the vendor market place can be carried out at the same time that business requirements are being agreed. Use existing research to shortlist (do not send out RFIs) Do not send out Requests for Information (RFIs). This is essentially an initial scan of the market place and takes time to put together and then evaluate. Instead, conduct in-house research of the market place (based on previously published market surveys, Web based research, systems handbooks such as the one published by Martin Whybrow and knowledge available within consultancies). Use predefined templates Templates will help to speed up the creation of required documents such as: RFPs, non-disclosure agreements, evaluation systems, workshop design, vendor guidelines for workshops, recommendation report. The idea here is to prevent re-inventing the wheel every time a selection process is run. Instead existing collateral can be used. Be aggressive with the short list Attempt to keep the short list short. That means a maximum of 4 but preferably 2 or 3. Dedicated business team A dedicated business team needs to be in place over the fast track selection process. The activities are intensive and occur back to back. This means that the business team members, who typically will have line management responsibilities, must be in a position to attend the required meetings and workshops. Strong project control A detailed schedule of activities is required outlining to the business team their required involvement for how long and on which days. This plan needs managing on a daily basis to ensure that all tasks can be completed exactly to schedule. Failure to complete any of the tasks on schedule can create significant delays. Below is an example of a fast track selection process. Note how many of the activities are carried out in parallel. A list of DOs and DON'Ts is included below to assist you in similar fast track selections. These are based on experience of running many fast track selections within the Investment Management, Investment Banking and Retail Financial Services areas. DO - Understand the business drivers - Identify stakeholders and get buy in by providing regular updates - Have a dedicated business team who will be available throughout the selection process - Limit short list to a maximum of four suppliers (preferably two or three) - Undertake as much as possible in parallel - Run scripted and repeatable vendor workshops to provide a measure to compare solutions - Work with the vendors to ensure that they get the vendor workshops right on the day - Involve IT architecture and infrastructure in formal evaluations - Ensure that there is ample time put aside for contract negotiations (minimum of one month but likely to be as long as three months). Implementation planning with the suppliers can normally be progressed during this time DON'T - Send out a Request for Information (do own comprehensive research to get a short list) - Create business requirements from scratch - get a draft and run intensive workshops with the business team to revise and get a final version - Base evaluation on initial list price - Add in additional suppliers at a later stage (make sure the research is accurate at the start) - Think the suppliers have made their final offer price (they will go down further) So, having completed your fast track selection what are the benefits that you have gained? Typically these are as follows: Shortened timescales. The selection process from requirements creation to final recommendation can be completed within two months (although contract negotiation can normally take a further month or more). Reduced cost. Due to the availability of templates and existing business requirements this can significantly reduce the man days effort required reducing elapsed time as well as cost. Creates momentum. A project which can be delivered successfully in a shorter timescale has momentum, credibility and will encourage commitment and buy in from the business team. Business Banking - Treat your bank as just another supplier of raw materials All business people appreciate the importance of good, reliable and competitively priced suppliers whatever product or service they provide. This is unsurprising given that the quality of the product or service they in turn provide, and the price at which they can offer it, is often directly related to the performance of their suppliers. Given this relationship a manufacturer, for example, will look to purchase their raw materials at the lowest price for a given quality, shopping around between suppliers before agreeing a contract After all, if the raw materials are overpriced, or of poor quality, who suffers? Who gets the complaint? Who loses custom? Whose bottom line is impacted? (Whose bonus is cut?). It's no wonder therefore that business people look to get the best deal they can out of their suppliers. But do they apply the same principles to their banking arrangements? It would appear not. Over the years there has been much research to establish how satisfied businesses are with their current bankers. The results have been consistently disappointing for the banking industry, particularly for the Big 4 banks (LTSB, HSBC, RBS and Barclays) that handle around 85% of the business banking market. Around a third of businesses report that they are dissatisfied and are considering changing bank. Yet despite this the numbers of businesses that ACTUALLY SWITCH are few and far between, with less than 5% of businesses moving each year. Many reasons are advanced for this contradiction; Changing bank reflects badly on the business itself - historically this is linked to the fact that one of the main drivers for businesses to move bank is that they have been declined facilities by their existing bank. However, if more businesses switched this perceived 'stigma' would soon disappear and businesses that moved bank could even become 'respected' as being financially astute and in control of all aspects of their operation. All banks are the same - in years gone by there may have been some justification for this as the products and services offered by banks, particularly the Big 4, were much of a muchness. However, with the entry of new players in the business banking market the breadth of services offered and the level of competition is increasing which can only be to the benefit of businesses prepared to move their banking to get the best deal. New entrants also strive to move the basis of comparison away from 'reputuation' and towards price and service quality. Changing banks takes up valuable time and effort - again this may have once been the case because the bank losing a customer had no incentive to act quickly and, in some cases, sought to delay the transfer long enough to persuade the customer to stay put. But now the Business Banking Code sets a standard of 5 days for the transfer of information regarding standing orders and direct debits and 5 weeks for the completion of the transfer itself. So the climate is changing, the fundamentals of business banking have moved on; different rules now apply and new criteria for choosing a business banking supplier have emerged. But the question remains will businesses learn to treat their banks as just another supplier?