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Business process improvement case study: Cooperative Financial Services

Virtualisation and business process optimisation are key to the strategy of The Cooperative Financial Services following its merger with Britannia in 2009.

Virtualisation and business process optimisation are key to the strategy of The Cooperative Financial Services following its merger with Britannia in 2009. Cliff Saran and Jenny Williams report.

When Britannia Building Society and The Cooperative Financial Services (CFS) merged in August 2009, Neville Richardson, chief executive of The Co-operative Financial Services, stressed the need to integrate the two banks.

Initially, the plan was for CFS and Britannia to retain their independent products. At the time of the merger announcement, the company said integration would take up to three years - during which time customers would increasingly see more products and services available to them. Such a vision requires more than simply connecting IT systems - and there are plenty of challenges in just getting the two systems to talk to each other. For the Britannia/CFS merger to work, the bank needed to optimise its business operations.

For CFS, the expanded branch network would be core to the new business. Along with providing remote access to existing Britannia systems, CFS had to connect Britannia directly to one of its mainframes, to give staff access to a CFS system.

CFS used virtualisation, combined with business processes optimisation across the two banks, to deliver an integrated banking service.


Desktop virtualisation

To support customers during the transition, Britannia is using Citrix XenDesktop. XenDesktop is used as a stop-gap to provide access to its core mortgage services department from a single CFS site.

Britannia introduced Citrix's XenDesktop a year ago to provide 200 virtual desktops and allow its corporate apps to run in CFS's physical environment in the interim.

Dave Turton, Wintel server manager at Britannia says: "Managing a merger can be challenging from an IT perspective, especially when the success of the business is directly linked to staff having access to the right applications and systems."

"We introduced Citrix XenDesktop sitting on top of Microsoft's Hyper-V to present apps to Stockport users in a basic virtual desktop."

"This allowed the business to put mortgage services in the same physical location as we couldn't run Britannia systems from Stockport at the time," he adds.

Britannia and CFS plan to merge their IT systems and networks over the next three years, as well as creating a single desktop for its combined workforce.

"At the moment, we've still got separate organisations from a systems point of view," says Turton.


Piloted virtual desktops

Britannia initially piloted Citrix using XenDesktop 18 months ago. Turton says the company decided against desktop virtualisation at that time due to issues getting applications to work.

"In the branch network, we use a front-line banking system that's got some thick-client apps that wouldn't run without additional development," says Turton.

"We would have to go back to the vendor to re-write some code. That would still be the case. The apps we run in Stockport aren't branch apps but just part of mortgage service apps that we run."


How Britannia runs Citrix

Although CFS was already using Citrix XenDesktop before the merger, Britannia runs XenDesktop separately to access its network.

"We run a virtual farm using Microsoft's Hyper-V, a number of servers and failover across two datacentres," says Turton.

Turton says employee training was one of the biggest challenges alongside a few log-in problems.

"The desktops are running constantly rather than being on-demand as it gets around issues of patching and anti-virus updates. But this means some users get locked out," he says.

"If the desktop is up and running for so long you need to give it a reboot to make it re-available," he adds.


Future integration plans

Britannia's three-year banking transformation programme (BTP) will replace all its core banking systems. The firm plans to use Finacle as its new corporate banking app.

A new branch network planned for early 2012 will combine Britannia's and CFS's existing networks across a combined total of 335 high street branch stores.

Turton says Britannia needs to refresh aging equipment in its 245 branches.

"BTP is a large project. The challenge is to make sure we do things as a prerequisite for merging the network early next year."

"The business may want us to deliver earlier and to run separate infrastructures and merge later. We still don't know what apps we need to run on the Britannia side and whether to remove legacy apps or not," he says.

But progress has been made. Customers can now open CFS current accounts in Britannia branches and will be able to complete transactions soon.

"We had to put a link straight into the CFS mainframe via a terminal emulator to bring a mainframe screen into a Britannia branch," says Turton.

Beyond the integration, Britannia is considering how it can use Citrix in the future on thin-client devices, introducing Citrix XenDesktop or XenApp to run its apps on the new branch network.

"Once we've merged and integrated, we won't have to use Citrix to get across the systems. But we're looking at virtualising desktops as a strategic effort to enable employees to be more mobile."

"The branch implementation is just phase one of allowing people to get to a desktop from any location or office," he adds.


Business process optimisation

Along with the IT integration, CFS has also embarked on a business process improvement programme, driven from the top down.

The company formed a structure in June 2010 for devising new approaches to business processes. "We look end-to-end at how the business operates to make improvements for the customer," says Christine Spencer, function leader, CFS connect.

CFS has linked business and IT by aligning process and modelling standards. The standard process models show where procedures are automated by IT and where lower-level process steps use applications.

CFS has been using the Mega Suite process modelling tool to capture and document business processes. Spencer says: "By documenting a business process we can simulate what is implicated through making changes and demonstrate how to enhance the process." The data in Mega Suite can be used to enhance the process, whether it is manual or computerised.

As an example, she says Mega will show, for instance, if a piece of information is sent to three teams before being changed by a fourth. Spencer says this information, backed up with statistical analysis, can be used to illustrate to management how a business process can be improved.

Spencer says: "Our process architecture provides us with a multi-dimensional view of our business and its processes. The new architectural approach, supported by the Mega Suite, is in use by all major CFS change programmes as a means to develop a better understanding of end-to-end processes."

IT also has access to the Mega repositories, which enabled teams to build IT services that interface between the human side of a business process and the computerised part.


Benefits of optimising business processes

CFS has seen the benefit of process improvement within its electronic account switching service.

When customers switch bank accounts their direct debits and payments should be switched to the new bank. Previously this has largely been a manual process. Spencer says: "We designed a simple electronic facility to expedite and track the progress of an application and allow us to communicate to customers where they were in [the account switching] process, leading to a 50% reduction in cancellations."

By analysing its online banking payments process, CFS has also increased online payments by 11%.

Mega provides CFS with a way to document its business processes in a single place. Other customers of Mega include Proctor & Gamble, P&G uses the Mega Suite to provide a complete view of its processes and technology resources. Mega is used for business process analysis (BPA), IT systems design, enterprise governance, risk, and compliance (EGRC), and operational risk management (ORM).

Virtualisation and mainframe access is often just the first step towards far more complex IT integration, which is where business process optimisation plays its role. But as CFS has found, getting the basics going in IT integration can at least offer customers an improved experienced dealing with queries across the two banks. Beyond providing staff with access to the different IT systems available at Britannia and CFS, the bank now has a strategy for process optimisation, which is starting to deliver tangible value.

The role of IT in business process optimisation

 Standardised and optimised cross-functional and domain-specific business processes

BPPs are expected to deploy processes such as order-to-cash or procurement-to-pay using standardised packaged applications for enterprise resource planning (ERP). These automate and optimise work across business units - from customer relationship to supply chain - and accelerate the spread of best practices across the enterprise.

• Specialised BPM tools to support cross-functional and customer-facing processes. BPPs deploy business process management (BPM) suites and tools either on their own or in combination with packaged enterprise applications to automate, improve, and optimise horizontal processes across the full range of process activities - including human-, document- and integration-centric scenarios. In many instances, business stakeholders use them to track exceptions that do not follow a well-defined process or to handle data quality issues.

• Integrated BI solutions and predictive analytics for better decision-making. BPPs deploy business intelligence (BI) solutions - sets of processes and technologies that transform raw, meaningless data into useful and actionable information. Many BPPs view the combination of BI and BPM as the next step in aggregating and visualising business metrics and, even more importantly, in turning transactions into decisions to optimise end-to-end business results.

• Advanced process improvement methodologies and skills. Part of the BPP's work is to also provide leadership, program management, and skills for change methodologies, such as Lean, Six Sigma, and Total Quality Management (TQM); their role is to improve the sustainability of the process improvements benefits reached through ERP, BPM, and BI platforms.

 Source: Forrester: How business process pros can increase IT's business process orientation - six steps process professionals and IT need to perform in collaboration, by Alexander Peters.

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