November 2, 2012 - Introducing exciting new apps or other IT into banks and other organisations is often prioritised over ensuring integration with existing systems or integration following a merger, but according to research from Freeform Dynamics and Liaison Technologies, this is the wrong approach.
The two companies report that their recent survey of 120 mid-to-large sized UK companies revealed some surprising attitudes to integration and a resignation about ever getting it right. Nearly half (48%) of the respondents are dissatisfied with their current integration capabilities, but most of them (41%) believe addressing the problem was too much trouble. Almost 37% cite internal complacency and inertia as reasons why they never get around to improving their systems and processes.
Recent high-profile IT system integration problems mentioned in the report include the failure of a deal under which Royal Bank of Scotland (RBS) was to have sold over 300 UK branches to Santander, as part of its bailout deal, but this foundered on the difficulty of taking one bank infrastructure and integrating it into another. The 'Project Verde' deal under which 632 branches and 4.8m customers of the Lloyds Banking Group in the UK are to be taken over by the Co-op Bank, again to reintroduce more competition after the 2008 bailouts, is also believed to be struggling due to integration and funding difficulties. The £350m deal, with $400m to follow if it goes ahead smoothly, has already cost the job of the Co-operative Group's Peter Marks during August and seems very ambitious.
After integration difficulties cited in the report include the Bank of Scotland (BoS), which was fined £4.2m when its mortgage systems were found to be 'inadequate' after problems arising from the integration of data from Halifax mortgages. Both are part of the Lloyds Banking Group.
The most notorious UK integration failure this year also involved RBS. Its retail banking infrastructure in the UK went down for a week in the summer after a botched software upgrade failed to integrate with existing systems at the bank.
"It is shame that it takes such high profile failures to make organisations take more notice of this issue but I am sure the potential financial impacts have made a number of chief executive officers (CEOs) feel extremely nervous," said Mikko Soirola, vice president of Liaison Technologies.
"Companies must realise that proper data integration is fundamental to all business performance. If you start from a position of poor data you will be compromised on all future projects, which will have adverse effects on operational efficiencies and employee motivation. It is vital they are addressed from the beginning."
Dale Vile, research director at Freeform Dynamics, added: "While integration technologies and best practices have moved on considerably over the past decade, the temptation is always to take the short-cut route and join things up using quick and dirty bespoke developments. Another common problem is putting too much focus on the points of integration, and not enough on ensuring that the underlying systems and information landscape are up to the job. The upshot is fragile systems, and a lot of accidents waiting to happen."
