Showing posts with label IT. Show all posts
Showing posts with label IT. Show all posts

Monday, September 10, 2012

Lack of long term strategies

Post the frenzied activity that begins in any sector opened up in the Indian Economy, many entrants, including the larger ones, lose out due to lack of long term strategies and inability to adapt to business dynamics. Ultimately, market forces take them off road, putting paid to all the aspirations that convinced them to enter the sector in the first place

The same has been the case in the insurance sector, where the state-owned Insurer LIC stands tall among its counterparts with close to 73% market share (as of September 2010) and 22 players are fighting for the remaining 27% market share. Clearly the market hasn’t picked up like it was expected (one wonders about the possible scenario when the new banking licences are issued, currently sought by a number of players). There were even forays made by a number of players in the IT and BPO space, but players like L&T & Birla failed to make a mark. For that matter, even steel has proved to be an El Dorado in India. Some Indian steel players may beg to disagree, but ask an Arcelor Mittal or a Posco and brace yourself for ayes galore! Players entering the power sector face innumerable constraints in terms of infrastructure, raw material, labour, et al, ever since they entered the sector to take advantage of the new electricity policy. The list goes on.

The fact is that new entrants come into the sunrise sectors solely on the basis of potential. However, only a few years later, they realise that success in the respective sector may be too elusive due to competition, market readiness, regulatory hurdles, infrastructure constraints, et al. If they have gone too far to start afresh from square one, they are left with no option but to move out. Resources can sustain them to an extent, but industry dynamics can take no time to overwhelm them if they are not prepared. And then there is no sense in putting more good money where the bad disappeared! B&E provides an in depth analysis into four major sectors that are giving every indication of being future El Dorados, even as the players remain engaged in a relentless battle in the hope that they won’t be the chosen ones for capitulation.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Monday, August 20, 2012

FINACLE: INFOSYS’ BEST FOOT FORWARD?

Quite a few global IT giants have proved that it takes just one big killer product or application to enter the Fortune 500 league. Finacle was supposed to be that for Infosys! Today, it contributes just about 4% to Infosys’ revenues. What went wrong? by Virat Bahri

Apparently, one of the major reasons why Finacle has not been into the big bucks has been the fact that the US market, which is otherwise the highest contributor to Infosys’ revenues, has actually been very inimical for core banking solutions; as banks sitting on legacy systems for 2-3 decades were unwilling to change. As late as 2006, a report by Aite group revealed that around 12% of US banks and top 500 credit unions had reached a critical point for core system replacement, but only 4% were actually expected to do so. And the major culprits of complacency were the large banks, as the mid-sized banks have been more proactive. In 2008, an Oracle report reiterated, “Despite the costs and challenges associated with running antiquated solutions, most US financial institutions continue to proceed with caution and postpone their inevitable replacement of these crucial systems.”

The financial downturn seems to have ruffled feathers quite a bit, and underscored the need to get rid of legacy systems, which presents a great opportunity for core banking solution providers like Finacle. A global survey of 1500 banks by Accenture and SAP done recently reveals that around 20% of North American banks are planning core banking replacements within the next five years; compared to 30% for Europe and over 35% for Asia Pacific. Over 70% said the main problem they faced was flexibility. David Cartwright, ANZ Group MD, Operations, Technology and Shared Services (where Finacle was deployd recently), said: “Technology is key to ANZ’s aspiration to become a super regional bank. Implementation of a new core banking platform is crucial to our plans to grow our business and provide leading products and services to our customers in Asia.”

Infosys also did a study last year with BAI of 116 banking executives from 100 banks in the US. Around 88% admitted that innovation was the ticket to driving future efficiencies. Around 59% said IT was among the top two drivers to innovation in customer service and around 50% rated it as among the top two drivers to enable innovation in products and delivery. It is a time when the mid-sized banks are looking to gain customers of larger banks and the larger banks are, in turn, looking to defend their customer base and also develop a new platform to ensure faster future growth and market expansion. Consulting firm Celent has predicted that IT spending by US and Canadian banks will reach around $50.9 billion by 2010, driven largely by rehiring, post-merger integrations and new investments in wholesale banking “In 2010, bankers need to take a hard look at their business model and find new ways to generate revenues,” says Gwenn Bézard, Research Director, Aite Group.

Ostensibly helped in part by these changing paradigms, Finacle was able to take 31 projects live last year. Their customer spread shows that their presence in North America is still very low and is largely spread into Europe, Middle East, Africa and Asia Pacific. The company also launched Finacle 10 in 2008 to enable banks to be able to manage multinational operations on a standard platform. The software now has a set of over 5000 parameters and an enhanced scripting studio and also caters to Islamic banking, wealth management and mobile banking.


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