This Case study is fictitious and is not based on an actual Bank
UDB sets out its Strategic Programme.
UDB is a global bank headquartered in United Kingdom but with a large percentage of its operations in the rest of the world. It has over 45,000 staff globally, including investment banking operations in the UK, South Africa, the USA and Hong Kong, and retail banking operations in the rest of Europe. It also has a private client business unit focused on high net-worth individuals, also focused on United Kingdom but with clients worldwide. It is financially secure and but its operating costs are under scrutiny in order to ensure they remain so and this reflects their future strategic direction.
The banking sector has been subject to significant change since the financial crisis of 2008 and has seen considerable restructuring and refocusing. UDB was not seriously impacted by the crisis but given its spread of operations it has faced regulatory change for all it businesses especially Investment Banking which traditionally had been the most profitable division.
The bank is structured traditionally by banking sectors with a strict hierarchy of reporting and managing relationships linked to these sectors, namely, Retail banking, Investment Banking, Private Client Banking with Core Common Services at the centre such as Procurement, Finance, HR and IT. Each sector including Common services has been responsible for delivering its own projects.
UDB has maintained its Investment Banking and Private Client Operations but has decided to refocus its efforts in the retail banking sector.
The core strategies of the organization however reflect the differing customer profiles and whilst its core business, retail banking, remains cost focussed it systems and structures have to reflect the diverse range of clients and services such as the Investment Banking/Private Client sectors including the regulatory challenges.
This is all part of a major strategic change programme. This includes diversification, increasing market share and reducing operating costs.
1. Retail Banking Expansion.
It has generally expanded its retail bank operations through acquisitions as part of this strategy through rationalisation and consolidation.
It has as part of the retail banking strategy recently acquired a large retail branch network from an existing large retail bank in the UK, WWB, which was required to divest because of regulatory requirements. The aim is to further extend and deepen its retail presence and build on its worldwide brand. UDB still needs to ensure it maintains its regulatory compliance and the acquisition is subject to Banking Authority Oversight.
The integration of this acquisition is a key programme/project and builds on its success in its other
operations and the integration of other banking operations. The key factors it considered in pursuing this acquisition were its resources, capabilities and core competences. However this major change programme needs to be successfully managed. The programme will include a series of projects allied to strategic objectives. The proposal is to merge the acquired banks operations with existing retail banking operations in the UK and Europe. This includes not only physical branch closures but also people and structure changes. This programme needs therefore to be structured and managed to meet Stakeholders expectations and minimise disruption to business as usual. The integration process being a phased project itself.
The existing banking operations have themselves been subject to significant changes over the past few years as part of the strategic objectives. This has included branch closures, investment in on line banking and resultant IT enhancements.
2. Shared Service Centre – Off-Shoring?
As part of its Cost focus and In support of all its current global operations UDB developed a shared service centre (SSC) for finance and HR in the United Kingdom operating as a stand-alone function bringing together staff from the individual business units and acts as a centre of excellence for these services. The project to establish the SSC over-ran in terms of time and cost and the implementation was poorly controlled, especially in terms of scope and requirements, and change management was poorly managed. It is now however regarded as a successful business operation in support of the.
Core Businesses as costs have been reduced and quality of support improved. It is also recognized that important key Lessons learnt from the implementation of this change need to be incorporated into any future projects and programmes. The central services from the newly acquired bank will have to be merged into the existing SCC whilst not disrupting the Core services provided to retail customers.
However in order to further reduce the cost of its back office-support functions the Chief Financial Officer (CFO) is also considering relocating the shared service centre to the Far East, but is determined to avoid a high profile project over-run and ensure quality of service. The CFO is also concerned that whilst the business case for moving work from United Kingdom to the Far East is good, the loss of jobs will be harmful to the bank’s reputation in its home country especially with the acquisition of the retail operations. It is important to ensure therefore that all stakeholders are involved and there is an adequate communication plan.
3. IT Outsourcing.
At the same time the bank’s IT organisation is very large (approximately 3,500 staff) and it is involved in an extensive portfolio of projects and will have to manage the integration of the IT systems from the retail bank, WBB. However performance is poor in terms of delivering projects on time and to budget. There have always been challenges with managing what is often seen as noncore business. One very large project which is being delivered in partnership with an external IT consultancy, GGC, poses a particularly serious risk to future revenue and profit because the roll out and development process has been poorly managed with limited user interface. These issues will be further complicated by the integration of the new retail business. Relationships with the business users of systems would be much worse but for some very strong personal relationships between key IT managers and their business customers. This project will enable the systems inherited from recent acquisitions and mergers to be regulatory compliant and effective in delivering customer service.
They also need to accommodate the changes resulting from the acquisition.
The new Chief Information Officer (CIO), who is responsible for all IT in the bank, has started to introduce Agile methods (Scrum) in order to improve system development project performance but the first attempt to use Scrum failed to gain the necessary commitment from the system users. It also did not fit with the regulatory nature of much of its core business. There continues to issues with the delivery of IT improvements throughout the business. The new Chief Operating Officer (COO) has also suggested that outsourcing is the best route to improving project delivery as well as driving down the cost of IT service delivery despite the existing relationship with GGC. The contract for the new IT system having been let on a fixed price without the scope being fully developed.
4. New Headquarters.
A further organizational project challenge is that the organization has agreed to move to a refurbished HQ building in London which was commissioned earlier as part of the organizational strategy. The refurbished HQ building will consolidate the current 5 locations to provide a more cost effective and much more pleasant work environment than the current set of buildings. It will also bring together operations from the acquired branch network. There have been internal problems with the management of this project and the contractor is over budget and currently late. It is important that steps are taken to bring this project back on track and work with the contractor to ensure project objectives are met. The Contract was let on a fixed price with a risk and reward formula with an incentive fee. There have been numerous discussions over the causes of delay and cost increases some of which are down to changes in scope and requirements and some down to poor contractor performance allied to internal weaknesses in Project Management. Overall this move is seen as sending out a clear Organizational message to stakeholders on the strategy and status of the organization given the recent upheavals in the Banking Sector. The timing of the move is seen as critical although scope and cost are relevant.
The organization is therefore in the middle of a transformational change programme linked to the 4 key projects. The integration of the retail bank, the off-shoring of the SCC, the outsourcing of the ITT service and the construction of the new headquarters building. This programme of strategic change will involve further key procurements which will have to be managed and then implemented especially in respect of the off-shoring and out-sourcing proposals. These will need to be implemented as part of the programme. This has to be managed in conjunction with the existing IT system issues, on-going integration and the Headquarters challenges.
The timescales for these changes mean that this Programme needs to be completed within 12 months in order to minimise disruption to business as usual.
All these changes need to be managed and the board has decided that it is essential to adopt a structured Programme and Project Management approach. The Bank recognizes the need to improve business and programme, project and portfolio management (P3M) performance significantly. In addition to the projects discussed above it has a number of key projects to complete in order to comply with new banking regulations as well as changes to the business to improve customer service and productivity. These have been even more urgent by the recent acquisition. A recent review of projects across the company by a consulting firm using the P3M3® model concluded that the firm’s P3M capability was generally at Level 2. It is felt that to be successful in delivery they will need to move to Level 3.
You have been asked by the Chief Executive who chairs the programme board to take on the role of Chief Programmes Officer as a secondment for the length of the programme and research the Programme and Project Challenges identified in the scenario and provide a report at this stage giving detailed advice on the following:
1. What are the key issues to be considered in the business case for the outsourcing and off shoring proposals taking in account the range of projects and how would you recommend these are assessed and managed through the delivery of the programme?
2. What are the Key Scope deliverables and Requirements for the Programme and identify these in detail for the IT outsourcing project?
3. What are the key steps to estimating the Programme and Project resources and schedule?
Show how would you approach the development of a detailed plan and provide key milestones.
4. Identify the key risks for the Programme and provide a detailed risk management strategy.
5. How would you recommend the organization organizes for the change taking into account its existing structures and challenges? How would this reflect your view of key stakeholders?
6. What are the key methods of Programme Control you would recommend and justify your decision?
7. What would be your recommended model for contracting for the outsourcing and off shoring projects given the experience with the Headquarters building and the new IT system showing how you would approach supplier selection?
8. You have also been asked to provide a separate report on how you would recommend that the bank organizes and manages the strategic change based on recommended Best Practice Frameworks especially in light of the P3M3 assessment. You have been asked to critically analyse 2 alternative approaches and provide a justified recommendation on your preferred approach and identify how this will meet the requirements of P3M3.
It is important that you research how other organizations have approached the
project/programme management of strategic change in support of your advice on ALL the points
2.2. Questions You have been asked by the Chief Executive who chairs the Programme Board to provide an initial report to UDB considering the following key issues.
For part 1 you are required to write a 3,500 word consultancy report, in this case a programme plan, from which they could deliver this strategic business transformation. The report must:
Identify and critically evaluate the key issues to be considered in the Outsourcing and Off-shoring Business Cases;
Identify and critically evaluate the Programme Scope and Deliverables giving a detailed analysis of the Outsourcing Project;
Identify and Critically evaluate the estimating and scheduling issues for the Programme providing a set of key milestones;
Provide a justified Risk Management strategy identifying key risk and issues and mitigation steps;
Provide a review of Programme Management organization taking account of key stakeholders and the various projects;
Identify and critically evaluate the Programme Control approach and justify your choices;
Critically evaluate the options for contracting the outsourcing and the off shoring projects in the light of the experience with the Headquarters Building;
For part 2, to support delivery of the projects and the programme you are required to write a 750 word consultancy report. The report must:
1. Compare the advantages and disadvantages of two Project/programme Management Frameworks of your choice.
2. Critically justify your choice of frameworks and why?
2.3. Assessment Submission Structure The report should be structured to follow the marking guidance as indicated below: Introduction Business Case Programme Scope and Deliverables Estimating and Scheduling Risk and Issue Management Programme Management Organisation Programme Control
Contracting Conclusion For part 2 you should include: Introduction Framework Comparison Critical Justification Conclusion and Reflection (including lessons learned) References (Harvard Style) Appendices