Barclays plans a make-or-break e-transformation.
Barclays is, as its TV adverts insist, a big bank. So it is
appropriate that the high-street giant is set to transform its
entire business model in an e-big bang.
Barclays has decided on a programme of e-transformation that
will change both external and internal relationships between now
and 2003. But, while comprehensive in its vision, Barclays'
e-strategy is driven by fear rather than courage. The radical
character of its new strategy flows from recognition that it has
lost first mover advantage, and that piecemeal e-projects are part
of the problem, not the solution.
Barclays' e-enablement project is striking in three respects.
First, it is a recipe for massive outsourcing. This commitment to
outsource whole segments of the business, in turn, is driven by the
need to deliver tangible profit increases while investing in
e-technology.
Secondly, it involves a corporate mindset change, in which the
search for certainty of outcome is replaced with an approach to
products, partnerships and technology described by insiders as
"controlled gambling".
Third, the need for "plug and play" outsourcing, and a uniform
technology architecture, is driving the bank away from bespoke
systems towards industry standard solutions.
Coming on top of last week's Bank of Scotland outsourcing deal
with IBM, Barclays' initiative confirms that the days of massive IT
outsourcing, linked to hiving-off service departments like call
centres and HR, are far from over. In fact, the need to strip costs
from the internal operations to provide funds for massive
investment in customer-focused e-business is driving the financial
sector even further down the road of huge outsourcing deals.
But will it work? Barclays' e-transformation plan is a "do or
die" scenario. The bank's e-movers and shakers also acknowledge
that a piecemeal approach to e-commerce - what consultants like to
call "low hanging fruit" - actually got in the way of a
top-to-bottom transformation.
Most tellingly, the Barclays strategy team has acknowledged that
IT's role in e-transformation to date has been far from ideal. A
picture emerges of semi-independent infrastructure projects, driven
by different parts of the business, divorced from the big picture
of business change.
What lessons can IT decision-makers draw from the Barclays
experience? Barclays is an example of what happens when a major
blue chip allows online rivals to gain first mover advantage and
then compounds the problem by attacking it in piecemeal form.
Its solution is a big turn to outsourcing combined with
acceptance of greater risk. It sets out to transform products,
customer relationships and internal procedures all in one go, using
the Internet Protocol as magic dust.
If Barclays seems late to the e-transformation game, it can draw
comfort from the fact that its vision for the future is now
coherent, that IT's role in that vision is now central, and that it
is nowhere near as late as many of its companions in the FTSE
100.