A s si g n
ABS TRA TR A CT Anal ysis of DBS bank ’s inves tmen ts into Infor
Contents Page Introduction:
2
DBS’s Business Returns:
2
Analysing Returns Using IT Portfolio Theory 2 Infrastructure
2
Transactional
3
Inforational
3
Strategic
3
Business Returns !easureent and Credi"ility # Tangi"ility of Business Returns $ Conclusion
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References
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A&&endices
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1
Introduction DBS bank today is one of the most successful banks in the Southeast Asia region To attain this status the bank had to go through some serious transformations !rom focusing on ac"uiring other banks to the develo#ment of information technology and leading in innovation The disa##ointment of the failed ac"uisition of Danamon Bank in Indonesia lead the ne$ C%& of DBS 'r (iyush )u#ta to believe that in order for the bank to make serious inroads in the Asian market they $ould have to focus on **moving to information and mobile’’ + Kien S.S, Soh C, Weill P, Chong Y, 2015) based banking systems ,o$ they became successful has been analysed using the IT #ortfolio theory
DBS’s Business Returns Business returns are essentially the returns on investments for a #articular business DBS bank has certain business returns in mind and therefore invests in information technology to hel# achieve the returns The kno$ledge of technology for the managers- standardisation- gro$th of business +nationally and internationally.- local customer satisfaction- leading in innovation and higher $ork/o$ e0ciency can be considered as some of the main business returns for DBS bank &nce these business obectives are accom#lished- the 2nal and m ost im#ortant return of all- the #ro2t shall gro$ together $ith the share #rice The more a$are managers are of technology the better they $ill be able to im#lement it Standardisation allo$s businesses to control and streamline o#erations and gain economies of scale bringing do$n maintenance costs )ro$ing and s#reading the business $ill e3#ose it to more markets and $ill enable the bank to have a bigger customer base #roviding more income 4ocal customer satisfaction is highly im#ortant to DBS as they aim to become the *Asian Bank of Choice’ + Kien S.S, Soh C, Weill P, Chong Y, 2015) and therefore maintain as $ell as s#read their customer base by kee#ing their customers ha##y es#ecially in the Asian conte3t 4eading in innovation is highly im#ortant to DBS as $ithout that being amongst the to# banks in South %ast Asia $ould be ne3t to im#ossible- as innovation is $hat sets DBS a#art from its com#letion All of DBS’s business returns enable DBS to accom#lish its business #lan- $hich is to become the leading bank in the South %ast Asian region
Analysing Returns using IT Portfolio Theory '()Infrastructure: These investments are mainly to do $ith business integration- standardisation and #roviding services to the business that are both measurable and changeable by management +5eill- (- 6 Ross- 7 5 899:. DBS standardised their core banking system by de#loying a common core banking system called !inacle As a result- less maintenance sta; $ere re"uired therefore costs $ere saved Another e3am#le is of using the same collaborative technology services such as uni2ed communication infrastructure- video< tele#resence conferencing systems and enter#rise #ortals These services are measurable and changeable by management These investments are moderate risk and moderate return The returns that the business is looking for here is ra#id im#lementation of future electronically enabled business initiatives +Standardisation. and also higher cost e0ciency The risks associated $ith infrastructure investments 8
are mainly 2nancial +De$an- S- Shi- C- 6 )urba3ani- =- 899>. - for e3am#le overinvesting in infrastructure or im#lementing $rong infrastructure- $hich $ould result in $asted resources Another risk is of underinvesting $hich $ould result in rash investing and therefore making bad decisions 4imited sharing of resources- integration and e3#ertise are all further risks of #oor infrastructure investment +5eill- (- 6 Ross- 7 5899:. 8. Transactional: Transactional assets are essentially any investments $hich increase through#ut and cut costs + Weill, P., & Aral, S., 2006) ID%A4 ?9 $hich is DBS’ internet and mobile banking #latform for businesses- o;ers a customisable dashboard to cor#orates to manage trade and cash 2nance transactions via straight through #rocessing Therefore costs are cut as #rocessing is "uicker and time is e"ual to money 'ore data is able to be #rocessed and therefore through#ut is increased Another e3am#le is of mobile banking a##lications reduced the need for customers to come into the bank branch as they could sim#ly take care of most of their banking needs on the go reducing the necessity of banking sta; The risks associated $ith Transactional IT investments are minimal- as eventually the costs $ill be recovered by automation The business return that this asset class targets is reducing unnecessary overheads as systems are clearly automated and increasing o#erating e0ciency as the more automated a service is the more customers are able to use it- therefore increasing through#ut
3()Inforational: Informational assets are investments- $hich #rovide the business $ith intelligence so that they can better monitor and analyse the business Some e3am#les of informational asset investments are setting u# voice analytics- having re#orting soft$are built into AT' machinesrestructuring the team and investing in SAS soft$are =oice analytics allo$s the management team to monitor conversations on call centres so that issues facing their customers can be identi2ed and analysed + Weill, P., & Aral, S. 2006) ,aving re#orting soft$are built into AT' machines enables monitoring of usage and consumer #atterns SAS enables data to be analysed and #redictions for the future to be made The business returns addressed in this asset class are customer satisfaction as more information is analysed the better customer e3#erience the com#any $ill be able to o;er The biggest return here is actually kno$ing ho$ much to invest in each individual asset class The risks associated $ith investing in this asset class for e3am#le- information assets decay nearly as soon as they accumulate therefore the information needs to be regularly monitored This is a moderate return- moderate risk class +@umar- RAan- ,- 6 iu- 899.
#()Strategic: These assets give the com#any a com#etitive edge over its com#etitors This is a high risk< high re$ard ty#e of asset class *(ay4a’ and *S'S )o Service’ #rovide features to their customers $hich enable them to interact easily $ith the bank and each other DBS has stregically marketed its #roducts on social media by ada#ting to the local conte3t An e3am#le of this is the ouTube channel *Chilli (aneer’ in India *(ay4a’ enables customers to transfer money from one account to another by sim#ly ta##ing one’s #hone $ith another’s The *S'S )o Service’ is a ?
sim#le technology that sends out an S'S to the bank’s customers informing them of the $ait time they may have to e3#erience before coming into a bank branch The business returns for this asset class are making managers more technologically a$are- localised customer serviceleading in local innovation and the gro$th of the business The risks associated $ith strategic investments in IT are the risk of no< return relative to the amount invested Considering that Strategic investments are one of if not the most heavily invested asset class- the risk the com#any faces is #otentially to go broke +De$an- S- Shi- C- 6 )urba3ani= 899>.
DBS has a $ell
Business Returns’ !easureent and Credi"ility Custoer satisfaction E Measurement: Surveys- increase in com#liments by :FG- reduced $aiting time on #hone calls Credibility: 'oderately credible as measurement itself is not a *lo"alisation+ *ro,th: Measurement: Increased customer base- raised share #rice- umber of branches $orld$ide &verall rising income and the increase in the number of loans Credibility: ,ighly credible as gro$th can be "uantitatively measured !anagers "eing technologically ready: Measurement: Amount of savings Credibility: 'oderate as not all the savings can be attributed to management being technologically literate Standardisation: Measurement: =ery hard to measure Credibility: HA Raised -.ciency: :
Measurement: Increased through#ut and greater number of transactions #er unit of time Credibility: ,ighly credible as this measurement can be soundly measured /eading in inno0ation: Measurement: R6D budget divided by annual sales Total number of #atents 2led in the #revious year umber of active #roects Credibility: ,ighly credible
Tangi"ility of Business Returns Business returns are tangible if they directly add to the com#any’s bottom line andHor can be #hysically "uanti2able Intangible business returns are tough to measure and to "uantify- ho$ever they are the gains com#anies makes- $hich are not "uanti2able + Kaplan, R. S., & Norton, D.P ,200)
Business Returns Custoer Satisfaction
Tangi"le
*lo"alisation + *ro,th Tangible since DBS has to gro$ therefore- there $ill be more customers and more assets $ill have to be invested in This gro$th can be measured through the 2nancial statements !anagers Being Technically Sound
Standardisation
Intangi"le Customer satisfaction is e"uivalent to the good$ill customers have in your services It can be measured but it still is intangible- as you cannot #hysically feel this gain
Intangible since this is a skill and therefore cannot be directly "uanti2ed Intangible as the economic bene2ts can be felt ho$ever there are no ne$ assets This return is very hard to measure F
Raised -.ciency
/eading in Inno0ation
This is tangible as the rise in e0ciency can be measured and the e;ect can be found in the 2nancials !or e3am#le in the call centres less time is re"uired to address customers’ needs $hich results in 2nancial savings Tangible as the assets develo#ed are #hysical in nature- for e3am#le the a##s These can be measured in the 2nancials as $ell as counting the ne$ assets created Table1
Conclusion DBS bank has clearly identi2ed its business goal of becoming the *Asian Bank of choice’ and therefore gro$ing the com#any The business model that $ill get DBS to that #oint is heavily de#endent on Information technology and it is "uite evident that they have strategically invested their money into the di;erent asset classes $ith a #articular return in mind
References De$an- S- Shi- C- 6 )urba3ani- = +899>. Investigating the Risk doiE19:91Hirm8999>919: 5eill- (- 6 Ross- 7 5 +899:. IT governance: Ho to! !erformers manage IT "ecision rig#ts for su!erior results ,arvard Business (ress Kaplan, R. S., & Norton, D. P. !200). "he #trateg$ %ap g'i(e to aligning intangile a##et#. Strategy & Leadership, 32 !5), 10*1+. Weill, P., & Aral, S. !2006). enerating pre%i'% ret'rn# on $o'r -" ine#t%ent#. MIT Sloan Management Review , 47 !2), /. Kien S.S, Soh C, Weill P, Chong Y, !2015). Reiring "he nterpri#e 3or Digital -nnoation "he Ca#e o4 DS an, Nan$ang '#ine## S7hool. 1*10.
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A&&endices Breakdo$n of IT (ortfolio and DBS’s asset allocationE Infrastructur e Collaborative Technology Services ID%A4 ?9
'obile Banking
!inacle
Transactional
Inforational
Strategic
ID%A4 ?9
Business Analytics SAS etc AT' machine inbuilt analytics
Investing into a team to develo# future technologies
=oice Analytics
S'S L service
ID%A4 ?9
'obile Banking
'obile Banking
5ealth 'anagement (latform AT' features being the most advanced in the region
,eavy #ush to make everything online therefore reducing costs 'obile Banking A##s 5ealth 'anagement (latform AT's ID%A4 ?9
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