FLEXCUBE Implementation Case Study

April 15 – 16, 2008

Agenda
Benefits of FLEXCUBE introduction
Overview of Bank
Higher ROI, lower TCO
Reasons Allianz changed their core system
Program Organization Structure
Problems Allianz faced previously
Milestones and Phases
Preliminary Business Requirements
Summary
Scope of Implementation

Project Details

Transition Approach

Implementation

Business Model, Business Strategy

Infrastructure Management

Post Production Support

Banking community

Implementation Take-Away
 Overview of Bank
 Allianz bank is the tenth largest bank in Bulgaria, by
assets, and sixth by number of locations. It has a large
coverage nationwide and has attracted some of the
largest corporate clients (Allianz Holding – the largest
financial institution in Bulgaria) as well as over 150000
retail clients.

 Size of bank
• Asset Size – over 900 Mil Euro
• Number of branches – 126 locations, 95 branches
defined in FlexCube
• Number of customers - 170 000 (of which 20 000
corporate & 150000 retail)
• Number of accounts 200 000
Overview of Bank
 Products offered by the bank
• The full range of products for retail, corporate, treasury, private investors, etc.
• A set of different channels for offering bank’s services & products in “real
time” – Cards, VISA, MASTER, internet banking – retail & corporate, SMS/e-
mail notifications, Mobile phone banking, Scoring, etc.
 Reasons for the implementation
• Migration from existing platform due to old legacy system being unable to
support the banks rapid expansion (doubled, in asset size, in one year)
• Existing platform did not support integration with new channels – internet
banking, on-line card authorization, mobile phone payments, etc.
• Need for a more robust platform and availability of resources for its
support and further development.
• Need for quicker time for market – fierce competition in a rapidly
expanding financial services market.
• The bank’s desire to change the bank’s business and operational model
from de-centralized to centralized.
 Historical Note
The old bank system was OSBI, local Bulgarian system developed in the early
90s by a Bulgarian vendor. Allianz was the last bank to retire it.
 Reasons Allianz changed their core system

The bank desired to modernize their business model and processes to provide
efficient, less time and resource consuming, products and services.

The bank needed a standardized IT platform and infrastructure in

line with Allianz Germany IT policies, procedures and requirements
Old legacy system, unable to integrate in real time with satellite
systems, Cards, Internet banking, SMS, Mobile phone
Non-scalable solution, unable to handle the increase in usage
 Lack of functionality desired, e.g. automatic provisioning, auto loans
liquidation, etc
 Very slow time to market – new products from 3 to 6 months
minimum vs. 3 to 8 weeks currently.
 No available resources for system upgrades (the only bank on that
system)
Problems Allianz faced previously
           

Numerous problems, such as:

 Inability to integrate with new electronic channels, scoring systems,

etc.
 Inability to introduce new competitive products to market, such as
flexible mortgage, consumer loans, and various deposits
Inability to process in “Real time” card and internet banking
transactions
Inability to produce in short time sophisticated reporting and
analysis both for internal and external usage
 Preliminary Business Requirements

           
Allianz bank started in early 2006.
Looking for:
Easy integration/interfaces
Depth and breadth of functionality
Quick time to market
Internationally recognized vendor/solution with local
presence in BG

Historical Note
Started Oct. 2006 by introducing Online authorization
module (developed by Sirma/i-flex, using FlexCube as a
master authorization system)
 Scope of Implementation
Lines of business
 Retail
• Current Accounts
• Savings Accounts
• Term Deposits
• Retail Loans
• Structured Deposits
• Cheques
• National & International payments, SEPA compliance
 Corporate
• Trade Finance – LC, LG, Bills, Collections
• Corporate Loans
• Treasury – FX, MM
Project Details
 Core Solution Stack implemented

 Our Role
• SI involved – Sirma Business Consulting
• Partners involved (from i-flex side) – Sirma Business
Consulting
 Relationship between i-flex, SI, partners and bank – back to
back or independent contract
• bilateral contracts between Allianz bank and I-Flex, Sirma
and I-Flex, and the bank with Sirma
 Roles and Responsibilities of different parties
• Sirma – system integrator and implementer
• I-Flex – technical support and consultancy
Transition Approach

Implementation approach
• Big Bang approach with extensive stress testing and three
full mock conversions.
• The bank was already running on one system and splitting
into branches was difficult, splitting of national settlement,
central bank reporting, reconciliation and consolidation would
have been very difficult and resource hungry.
• The same would have prolonged the time for implementation
and contradict the bank’s desire for full conversion and re-
organization within 12 months.
 Implementation
• High level time lines for different phases
• PWT – 5 weeks – done by Sirma
• GAP analysis – 6 weeks – done by Sirma
• System initial set-up and parameterization – 14 weeks – done by Sirma
• HW sizing and procurement (in parallel) – 13 weeks – done by Sirma and
IBM
• IT infrastructure and comm. lines upgrade and set-up (in parallel) – 22 weeks
– done by Allianz bank
• System’s parameter and products testing – 12 weeks – done by Sirma and
Allianz bank
• Additional set-up and parameterization – 2 weeks – done by Sirma & i-flex
• Systems Integration testing (incl. parameters and products) – 6 weeks – done
by Sirma, i-flex and Allianz bank
• Train the trainers (in parallel) – 4 weeks – done by Sirma
• Mock migrations and stress testing – 6 weeks – done by Sirma, i-flex and
Allianz bank
• End user training (in parallel) – 7 weeks – done by Allianz bank
• Post Go-live support – 8 weeks – done by Sirma & i-flex
Implementation

• For each phase

• Deliverables of the phase – Documents and sign offs for each of the
above phases
• Resources (from i-flex as well as bank) involved – numbers, types
(technical, functional, PM, testers, SME etc)
• i-flex technical – 10 man months
• Sirma technical – 60 man months
• Sirma functional – 80 man months
• Sirma PM – 12 man months
• Allianz bank PM – 12 man months
• Allianz bank full time project team – 36 man months
• Allianz bank part time project team – 90 man months
• Oversight management strategies used
• Project sponsors (bank’s CEO and COO) introduced
• Project Steering Committee meeting fortnightly
• PRINCE II methodology followed
• Any bank specific step
• Compliance with Allianz AG, Germany standards
• Allianz AG, Germany QA and supervision
 Implementation
Data Migration

 High level steps involved – strategy, data mapping, utility

preparation, extraction from legacy to flat file, file to FLEXCUBE,
mock runs, testing, etc.
• Data migration strategy developed by Sirma & i-flex, approved by Allianz
bank
• Data mapping conducted by Sirma and approved by Allianz bank
• Data upload to FlexCube utilities developed by i-flex and Sirma
• Extraction from legacy system executed by legacy system vendor,
requirements prepared by Sirma
• Data uploads to FlexCube conducted by i-flex and Sirma, verified and
approved by Allianz bank
 History data – migrated or not?
• No migration of history data
 Challenges faced – data enrichment, data cleansing etc
• Extensive and constant data cleansing, verification and reconciliation
conducted together with Sirma and Allianz bank
• Large proportion of additional client, loan, collateral data was missing in
the core system and had to be gathered for upload to FlexCube
Business Model, Business strategy

• Program Organization was set up in the bank with 30

sub-projects defined with project teams and
responsible parties.
• Before implementation bank was totally
decentralized- each branch was like a subsidiary
bank- admin functions, IT, all separate.
• Defined a new business model and branch model,
restructuring and centralizing important functions.
Restructuring of all functions were going in parallel
for 10-11 months.
 Infrastructure Management
High level production hardware layout
 Type of machines used
• IBM P70 series AIX OS, Oracle 10G for database – 6CPU (12
cores) for production,
• IBM blade center for application, Windows Server 2003 OS, Flex
Host – 2 blades 2CPU 4GB RAM each, Flex Branch – 3 blades
2CPU, 4GB RAM each
 Location of different machines
• All HW located in Allianz bank Production data center
 Network details
• An MPLS layer 3 network for all 126 locations connected to main
data center with bandwidth ranging from 256Kbps to 1Mbps
depending on number of users in each location
• MS Active Directory present and MS Exchange throughout the
whole bank
 Infrastructure Management
Responsibilities for infrastructure

 Hardware
• Sizing – Sirma and IBM
• Procurement – Allianz bank and Stone Computers (an IBM
authorized reseller)
• Setup – IBM and Sirma
• Maintenance - IBM
• Support – IBM and Allianz bank
 Third party software is maintained and supported by the respective
software vendor in accordance with the Allianz bank internal rules
and procedures
 i-flex software (all in compliance with Allianz bank internal IT policy,
rules and procedures)
• Setup – Sirma
• Maintenance - Sirma
• Support - Sirma
 Post Production Support
 Type of Support
• Local
 Tools used
• Help desk system is being used for issue tracking and
resolution
 Standard support methodology used
 Support infrastructure
• Temporary access to the Production Environment is granted
only for applying patches and new functionalities
• Permanent access to Test & Dev. Environments incl. at site
and remote
• Access to data – only access to Test & Dev environment data
• Data patches – Sirma & i-flex were responsible; with
temporary access being granted on a “need to have” basis
 Post Production Support

Methodology used for moving a fix to production –

apply to pre-production, test and move

• A fix or new functionality is first applied in Dev.

Environment and tested by us
• The fix or functionality is then applied in Test Environment
by us and tested by the bank
• After bank’s approval a temporary access to production
environment is granted to us for applying the
fix/functionality
 Banking community

 Show cases and visits

• Since “Go-live” there has been two site

visits by Banc de Brazil, from Brazil and
Bank Republic from Azerbaijan

• Allianz bank and its management are

quite happy with hosting such visits
 Implementation Take-Away
 What did we do right?
• Close tracking
• Preventing scope creep
• Regular visibility to all stake holders
• Daily discussion of issues
• A wider consultancy on operational issues and processes and ways to
optimize them
• A wider support and consultancy for issues outside the project scope but
relevant for the overall implementation – IT infrastructure, network set-up, IT
processes and procedures

 What could we have done differently?

• Did not insist on the creation of full time dedicated bank implementation team
from the start of the project. The subsequent hand-over of responsibility from
us to the bank was longer than desired.
• Following from the above, it also took longer for the bank personnel to get
accustomed to the new processes and applications
• A weak or non-existent marketing and awareness building of Allianz’s
success, throughout the wider banking community locally and within the
region
 Benefits of FLEXCUBE introduction

 SEPA compliance
 Domestic and International Payments enabled staff
reductions and faster and more reliable services to
customers
 An on-line and timely reporting enabled all levels of management
for easy analysis and fast response to market trends and
customer’s needs
 A range of new products have been introduced and new
customer growth rate increased, from 15% to 35%, on a yearly
basis
 A range of new services introduced such as on-line card
authorization, internet banking, and reporting
 Customer scoring system interfaced to FlexCube reduced the
average time for decision making from 2.5 days to 6 Hours
 Higher Return On Investment, Lower Total Cost of
Ownership

 The bank’s IT department head count was reduced by 42%

 The bank’s back office operations department was completely
centralized and head count reduced by over 50%
 The bank’s front office personnel was relieved from back office
duties and entirely focused on sales and customer services
 Customer’s information gathered, stored and analyzed has
increased by over 70% for retail customers and over 50% for
corporate ones
 Program Organization Structure
Board of Directors
Steering Committee
COO Project Director Sirma PM Director Retail Director Corporate Director IT

Investment Control
CEO, ED

Program Sponsor
Project Management Office Program Director

Chief System Integrator

ERP Project
Sirma Business Consulting

Project Streams/Project Teams

Business Strategy IT and Operations Risk Management Other Functions / Governance
 Roles and Responsibilities

Role Responsibilities

• Approving and changing the scope of the Program according to the master plan and budget.
• Reviewing the regular Program status reports and proposing solutions regarding tasks implementation
Steering required by the Director.
Committee • Tracking task implementation at the regular Steering Committee meeting where the Director presents the
Program progress and the necessary solutions. (incl. proposing solutions)
• Making final decision regarding the Program

• Preparing implementation plan (with the Project managers if necessary)

• Distributing tasks to the responsible persons
• Tracking task implementation during the meetings of the Program
Program • Coordinating different tasks with counterparties, consultants and other external resources
Director • Coordinating obligations and responsibilities with Project Managers
• Preparing the Program regular status reports for Steering Committee
• Presenting Program status and informing Steering Committee for necessary solutions
• Collecting budget status report from line management

• Preparing implementation plan (with Project team if necessary)

• Distributing tasks to the responsible persons
• Tracking Project task implementation
Project • Presenting Project status report at the regular Program meetings
Managers • Responsible for the approval of all Project products
• Presenting all requirements for project changes to the Program Office
• Reporting all issues which could not be resolved within the Project
• Informing Program Director about all delays of the initial plan deadlines
 Roles and Responsibilities

Role Responsibilities

• Proposing ideas and expert opinions

Project • Working on tasks defined by Project Manager
Members • Preparing the necessary documents and analysis connected with the Project products

• Information Center for all questions regarding the Program

• Archiving and renewing Program master plan
• Managing processes for task solution, change requests, approval for Project products
• Archiving and renewing central registers and documentation regarding issues, change requests, approvals
Project
of Project products
Management • Preparing and renewing Project participation list
Office • Reviewing project status reports and preparing Program status report
• Organizing and taking minutes at Program and Steering Committee meeting
• Providing on time accurate information for forthcoming changes for all employees of the Bank, organizing
meetings and preparing newsletters

• Supporting Program Management with new ideas and proposals for issue solutions and problems
Investment • Controlling quality and professional preparation of all Program products
Control • Reviewing the results and products of the Program and proposing approvals
Milestones and Phases
Introduction of FlexCube

Milestones Deliverable Start End

Planning of deliverables connected with A plan for PWT *** 09.10.2006 10.11.2006
introduction of bank- information platform of TB A plan for key users’ training*
“Allianz Bulgaria”. Developing detail plans of the
project plans for tests, migration, training and
adoption.
(PWT) The bank’s team is introduced to the basic A protocol for completion approved 13.11.2006 12.01.2007
functionalities and the architecture of FlexCube by the leader of the team
Analysis of the existing bank products and defining A product catalog of the present 15.01.2007 02.03.2007
their place in the functionality of the bank- products in Allianz**
information platform (product fitment). A product catalog of the future
products in FlexCube*
Parameterization and Product set-up of FlexCube A protocol for completed 05.03.2007 30.04.2007
parameterization of the products
from the Product catalog
Preparing data base for System Integration and A protocol for completed installation 01.05.2007 01.06.2007
User Acceptance tests of the data base and FlexCube
application
User Acceptance test - plan, preparation and Making up test scripts*** 04.06.2007 03.08.2007
accomplishment A protocol for correctness of the test
scripts results
Milestones and Phases
Introduction of FlexCube

Milestones Deliverable Start End

Preparing the formats for data migration Making up tables for data 16.03.2007 01.06.2007
migration*

Data migration from the existing systems in A protocol for correctness/ 01.06.2007 03.08.2007
FlexCube. faithfulness of the migrated data

System Integration test plan, preparation and A plan for System Integration test* 03.08.2007 31.08.2007
accomplishment A protocol for correctly completed
System Integration test

Trial conversion and stress testing A protocol for trial conversion 16.07.2007 27.08.2007

Train the trainers A protocol for completed training 02.07.2007 31.07.2007

the important/key users

Go-live – big bang A protocol for successful putting 06.09.2007 10.09.2007

into operation for every single
branch

Support and optimization (tuning). 26.09.2007 30.11.2007

Milestones and Phases
Development of interfaces to the basic bank system

Milestones Deliverable Start End

Analysis of the requirements to the interfaces Interface Requirement 23.10.2006 28.02.2007

Specification Document**
Design, functional specification of the design and Interface Functional Specification 27.11.2006 28.02.2007
architecture Document*
Development and introduction A protocol for introducing the 11.12.2006 29.06.2007
interfaces
System Integration test plan, preparation and A system integration test plan* 02.07.2007 05.08.2007
implementation/ fulfillment A protocol for correctly completed
system integration test
Documentation Technical, System and Architecture 28.02.2007 05.08.2007
interface documentation*
 Milestones and Phases
Exploitation of Centralized report system

Milestones Deliverable Start End

Analysis of the requirements to the Centralized Application Requirement 02.12.2006 30.03.2007

report system Specification Document**
Design, functional specification of the design and Application Functional Specification 05.03.2007 30.03.2007
architecture Document*
Development and introduction A protocol for introducing the 05.03.2007 01.06.2007
application/system/product
System Integration test plan, preparation and System integration test plan* 02.07.2007 05.08.2007
fulfillment/ accomplishment A protocol for correctly completed
system integration test
Documentation Technical, System and Architecture 28.02.2007 05.08.2007
interface documentation of the
application/system/product*
Support and tuning ---------------- 03.09.2007 30.10.2007

Notes :
* Sirma responsibility
** Allianz responsibility
*** Joint responsibility of for both sides under the agreement
 In Summary

This was the first project of its kind, considering its

scope and functionality covered. The implementation
was almost entirely led and done by SBC, an I-Flex
partner, and successfully completed within twelve
months.
 Contacts
Velko Todorov
E-mail: velko@sirma.bg
Tsvetomir Doskov
E-mail: doskov@sirma.bg
Web: www.sirmabc.com