Barclays banking on e-transformation

Barclays plans a make-or-break e-transformation.

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.

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