The Practice of Outsourcing by Leslie P. Willcocks & Mary C. Lacity & Mary C. Lacity

Author:Leslie P. Willcocks & Mary C. Lacity & Mary C. Lacity
Language: eng
Format: epub
Publisher: Palgrave Macmillan
Published: 2008-12-31T16:00:00+00:00

Bank objectives

Many organizations seek to hire contractors for in-house, large scale IT projects that occur from time to time. One such example was the Columbus project at Royal Bank of Scotland. Unlike the CREST system discussed above, IT sourcing for the Columbus project was largely through the hiring of external expertise. This was in the form of large and small IT consultancy firms, in addition to hiring contractors from IT recruitment consultancies. One of the bank’s objectives was to demonstrate its own innovative capabilities and skills in large-scale project management. The Columbus project was perceived by senior management as a major innovation that would enhance the bank’s overall competitive position in a cutthroat industry. Key objectives of the Columbus project were:

• Become best bank in UK by 1997;

• Change from account-based to customer-based service;

• Provide a “seamless service” to customers;

• Create a mini bank at each branch;

• Develop specialist mortgage centers (mortgage shops);

• £200 million profit improvement by 1997;

• Fully exploit new technology;

• Reduce/eliminate credit card fraud;

• Over £100 million committed to developing new technology.

As a consequence of London Stock Exchange “big bang” in 1986, the stock market crash in 1987, and the UK financial services act which effectively deregulated the British financial services industry, the Royal Bank faced intense competition in the late 1980s and early 1990s, particularly from other banks, building societies, and insurance companies. Coupled with this, the deep economic recession, mounting bad debts (£1.1 billion bad debt provisions were made between 1991/92 – FT, 1995), lack of underlying profit and costs of 63% of income all provided the impetus to embark on the Columbus project in 1992 (Oram and Wellins, 1995). Senior management at the bank conceded that lifetime customer loyalty could no longer be guaranteed. Indeed, customers were becoming more in tune with the range of financial services offered by competitors, and were becoming fickle in their choice of financial institutions (Currie and Willcocks, 1997). The Columbus project was launched with the support of a Change Management Group (CMG). According to a corporate report published by the bank, Columbus was intended to transform the bank into “the best retail bank in the UK by 1997”, and this would be achieved by implementing major changes to structures, products, services, job titles and roles, training policies, technology and marketing/sales. A summary of the key strategic objectives of the Columbus project, as detailed by senior managers in 1992, is outlined below:

• Branch Banking Division (BBD) to be organized around three customer streams – retail, commercial and corporate;

• New managerial roles to be introduced network-wide during 1995;

• Each branch to have ready access to specialist centers and knowledge without having to house all the traditional back office functions;

• Five branches to test the New Branch Design;

• Well over £100m committed to developing new technology;

• Human resource policies and processes to be designed to reflect the new organization.

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