How to Develop Your 2014 Bank IT Strategic Plan and Budget

Transcription

1 How to Develop Your 2014 Bank IT Strategic Plan and Budget August 21, 2013

2 Speaker Brad Smith President, Abound Resources 20+ years experience helping community and regional banks achieve their business goals by integrating strategy, sales, marketing, operations and technology 500+ vendor evaluation projects in de novos to multibillion dollar institutions Lead negotiator representing community financial institutions on 200+ software, hardware and outsourcing contracts valued at $150+ million Former Manager of Deloitte & Touche s Community Bank Technology Consulting Practice Instructor at several banking schools Advisor to several community bank trade associations

3 Who We Are Management consulting firm for the community and small regional banking industry We empower banks to achieve their goals. Goals achieved. Guaranteed. Based in Austin, TX; clients in 48 states Founded in 1997 by former bank execs and Big 5 consultants 500+ software evaluations, 700+ contract negotiations Vendor Neutral Acquired Sheshunoff Consulting in 2012 Advisors average 25+ years in industry Endorsed by IBAT, ICBM

4 Abound Resources - What We Do Technology Practice Strategic technology plans Vendor evaluations Vendor utilization improvement Vendor contract negotiations Vendor implementation Vendor management program Information security assessments IT audits Penetration testing BCP plans and testing

5 Agenda 1) Trends and Strategies for Consideration 2) Planning and Budgeting Process 3) Takeaways 4) Your Questions

6 Source: Abound Resource s Insights into 2012 Survey

7 Source: Abound Resource s Insights into 2012 Survey

8 Source: Abound Resource s Insights into 2012 Survey

9 Source: Abound Resource s Insights into 2012 Survey

10 Source: Abound Resource s Insights into 2012 Survey

11 Source: Abound Resource s Insights into 2012 Survey

12 Top 5 Strategies for Differentiate your bank in a commoditized market 2. Choose profitable and strategic growth opportunities 3. Improve efficiency through workflow improvement and continuous expense management 4. Support strategy and efficiency efforts with effective technology utilization 5. Manage compliance costs using a multi-pronged approach including new staffing models

13 Industry Disconnect? Is technology aligned with strategy? CEO s Strategic Priorities for Grow commercial loans 2. Use technology for better efficiencies 3. Address regulatory requirements Technology Priorities for Improve use of fraud mgmt systems 2. Improve use of Internet banking systems 3. Improve use of core

14 Typical Technology Planning and Budgeting Issues We See Plan without a budget Budget without a plan Plan that s never approved Budget that s never approved Plan is really just a wish list Plan is just a list of projects Plan is just a list of IT audit findings Budget is for infrastructure only No business line or IT Steering Committee involvement CFO dictates budget to IT executive Plan and forget

15 FFIEC Guidelines on IT Plans and Budgets Plans should address these 4 key factors Senior management participation Role of IT in your bank Relationship between IT and the business strategies Scorecard on past performance

16 Board should FFIEC Guidelines on IT Plans and Budgets Approve IT plans and confirm IT plans are aligned with the business strategy. May delegate responsibility to IT Steering Committee Ensure the IT department is delivering on time, within budget, and to specification Direct IT strategy to balance investments between systems that support current operations, and systems that transform operations and enable business lines to grow and compete in new areas; and Focus IT resource decisions on specific objectives such as entry into new markets, enhanced competitive position, revenue growth, improved customer satisfaction, or customer retention

17 Abound s Recommended Planning and Budgeting Process Bank Strategic Plan Business Line Plans IT Department Plans Project plans Upgrade plans Rotation schedule Wish lists Staff changes and comp Target metrics Audit and exam findings IT Steering Committee Strategic Technology Plan Technology Budget Bank s Budget Process

18 Get into the Planning Rhythm Bank-wide planning Planning session to answer the 5 Big Questions Document the bank-wide plan (ideally on one page) Departmental planning sessions Planning sessions to identify your Top 5 priorities Document the departmental plan (ideally on one page) Build departmental budgets Get executive approval on departmental plans and initial budgets Build the bank-wide budget Present bank-wide plan and budget to Board for approval Review all plans monthly Update all plans quarterly

19 Technology Planning - Short Version Key questions to answer: What are the top 3-5 IT actions to support the bank s goals? What key performance metrics do you want to track and what are your targets? What do you expect IT spending to be over the next 3 years? 3Year 1 Year 90 Days Top 3-5 Priorities to support bank plan Top 3-5 Initiatives to support bank plan Name by each 2-3 milestone dates Top 3-5 Initiatives to support bank plan Name by each Key metrics Key metrics Key metrics Expected IT spending Expected IT spending Expected IT spending

20 The One Page Strategic Technology Plan Format

21 A Few More Comments on Metrics Types Spending IT Expense as % of Assets, IT Spending per FTE, IT Spending as % of NIE, Budget Variance, etc Delivery % of SLAs met, Uptime, Turnaround time, response time, etc. Satisfaction Employee satisfaction with IT support, Internet banking/mobile/atm customer satisfaction, etc Risk/Compliance IT Audit Findings, IT Audit Repeat Findings, BCP Recovery, Vendor Management Difficult to compare to peer but it s still important to compare to yourself

22 Your IT Budget Degree of Flexibility Non-discretionary Existing contracts Sunk costs Audit or exam promises Semi-discretionary Personnel costs Maintenance Upgrades Some compliance related expenses Discretionary New strategic investments

23 Takeaways Start with your bank s strategic plan Big questions to answer in your strategic technology plan What are the top 3-5 IT actions to support the bank s goals? What key performance metrics do you want to track and what are your targets? What do you expect IT spending to be over each of the next 3 years? Involve IT Steering Committee Review progress monthly and update quarterly Celebrate accomplishments

24 Ready for the Hard Questions

25 What We Do Technology Practice Strategic technology plans Vendor evaluations Vendor utilization improvement Vendor contract negotiations Vendor implementation Vendor management program Information security assessments IT audits Penetration testing BCP plans and testing

26 Questions