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INSY 5375 / Fall 2011

Dr. James Teng

Team Project

Xchanging Solutions

Inspiring Innovation

Submitted By Team 5

Aneri Desai Manisha Kundoor Priyanka Bindumadhavan

Table of Contents
1. Company Overview .................................................................................................................................. 3 2. IT Management ......................................................................................................................................... 7 3. Strategic IT Overview ............................................................................................................................. 15 4. Suitability of IT ....................................................................................................................................... 24 5. Presenting business case for the technology ........................................................................................... 29 a. Benefits Framework ........................................................................................................................ 29 b. Benefits Dependency Network ....................................................................................................... 30 References ................................................................................................................................................... 31

1. Company Overview
Xchanging PLC (LSE: XCH) is an outsourcing company for business processes, with a wide range of multinational customers in 42 countries. Xchanging Solutions is a company providing business processing, technology and procurement services internationally for customers in almost every industry sector. Xchanging solutions has marked its name in industrial sectors like Aerospace and defense, Automobile, Banks and financial services, FMCG, HealthCare, Insurance, Manufacturing, Public sector, real-estate, supply chain and logistics, telecommunication etc. The company helps its customers in three sections Business Processing, Technology and Procurement. Xchanging offer a range of "partnering" and outsourcing contract arrangements. In "partnering", Xchanging share any profit and capital benefits from productivity improvements, scale advantages and entrepreneurship with the customer. These benefits are split 50:50 so that the interests of Xchanging and the customer are aligned. In outsourcing, Xchanging will typically take over a customer's business process, or back office function, and incorporate them into an existing platform in an attempt to provide better and cheaper handling of administrative tasks. Xchanging employs over 8,000 people worldwide. Xchanging was founded in 1999, by David Andrews, a former partner in Andersen Consulting. Andrews came up with the idea at Andersen Consulting, to create joint ventures with large multinationals to outsource the processing of backoffice transactions.[6] Xchanging operates on an Enterprise Partnership model forming joint ventures with large organizations in processing areas such as HR, accounting and procurement, as well as industry specific processing such as securities processing and insurance claims processing. The list of back-office processes which could be transformed is non-exhaustive. Xchanging provides procurement, finance and accounting, human resources, technology and customer administration services across industries. Procurement Managing direct & indirect spend and sourcing strategies Finance and accounting - Processing of receipts and payments, net settlement and clearance

Human resources - Providing employment services from recruitment through to payroll and pensions payment, back-to-work and medical compensation schemes Technology Design, build and run IT infrastructure and software Customer administration - B2B and B2C services to support customers customer Xchanging provides industry specific processing for: Banking and securities Processing securities transactions and retail investment accounting Insurance Processing of insurance policies, premiums & claims, and broker annuity Other financial services - IT systems & hosting for exchanges, processing services for fund managers, investors, as well as SWIFT managed infrastructure services to banks Industrial, commercial and public Including retail, real estate, manufacturing and logistics as well as services for the public sector in the USA and Asia-Pacific With customers in a wide range of industries and across many countries, Xchanging Solutions are a truly international outsourcing specialist. Their mission is to remove complexity from customers organizations and their vision is help customers win by giving them the freedom to focus on their core business. Xchanging has established a strong reputation in the fast growing global business processing market. With a strong position in Europe, Xchanging is now on its journey to establish a firm base in the US and Asia Pacific. With global presence and local expertise, the Company aims to drive forward its ambition to be the global business processor. The organization structure of Xchanging solutions is based on six pillars listed as Customer focus, Innovation, Speed & Efficiency, People, Excellence, Integrity. Corporate Social Responsibility (CSR) is embedded into our planning, processes and values and always aim to: Respond to our customers priorities Think clearly and act decisively Deliver what we promise Build long term relationships Encourage innovation

Go-to-market strategy The go-to-market strategy for the Company is to provide a range of offerings to meet the varying needs of customers for outsourced services. Xchanging's unique offering for dealing with complexity and scale is Partnering. On top of this, Xchanging provides four offerings outsourcing, products, Straight through Processing and Business Support, for customer flexibility and repeatability. In short, a distinctive '1+4 Go to Market Strategy' consists of: Partnering maximizing value together: Xchanging addresses complex industry-specific business processing and cross-industry processing in human resources, finance and accounting, technology infrastructure and largescale procurement. Our Partnering offering is open book with profit sharing so that our interests are aligned with our partners

Outsourcing guaranteeing sustainable savings: Xchanging takes on business processes or categories of spend where we already have platforms proving our capability and credibility. Through Outsourcing we scale up our platforms and deliver services to an agreed specification and usage charge or cost baseline

Products delivering the best solution: Xchanging supports essential parts of the business processing value chain with application software, such as Genius for international insurance carriers. Our Products are long-term strategic assets that can be tailored for customers' specific needs. Products enable us to extend our reach both geographically and across the value chain

Straight through processing optimizing the value chain: Xchanging extends the scope of the services delivered to customers, reducing the number of interfaces and where possible automating them. These additional services extend the process flow that Xchanging is already operating and enable us to maximize the efficiency of the whole process as a result

Business support applying know-how for results Xchanging offers experts to support specific business activities and customer improvement projects. Through Business Support, customers have access to Xchanging's expertise and reusable assets. Business Support includes services such as corporate immigration support, resourcing, programme management, process improvement and Six Sigma training and support.

With global presence and local expertise, the Company aims to drive forward its ambition to be the global business processor. We have basically gathered this information from Company website and have interviewed Mr. Sunil Bharadwaj, Assistant Vice President of Xchanging Solutions, India. (email : "Sunil Bhardwaj"

2. IT Management
a) Short case description: A leading European bank took 3,000 of its employees and created a new, standalone, subsidiary transactional bank to perform processing, printing and mailroom functions. The concept was new and the there were fair chances for the bank to gain profit and market share. If everything worked well then the bank could be a price taker in the industry and enjoy the success along with the high marginal profit. The vision was to introduce a new concept and make profit. For two years, no bank had joined the platform and after five years it had only two small customers .The initiative was not a profit making deal. They had specific requirements from the chosen partner.

The project should retain the positive benefit along with the Full time Equivalents (FTEs) cost savings. The service delivery should be improved. They were also seeking for neutrality from a partner to create an attractive proposition for other major banks and customers. They wanted a partner who could cop up with low budgeting issue. They also expected from the partner to provide a rapid solutions to address a failing business units.

The European bank had to look for a partner to market their brand new concept. The partner should provide Enterprise Partnership. Though there was one more option for the bank to deal Out sourcing of the work to another company, the bank preferred to go with the partnership with Xchanging solutions. Xchanging solutions are one of the largest and fastest growing businesses with a wide range of multinational customers in 42 countries and employing over 8,000 people, they are a truly global company. Their aim is simply to provide business processing services better, cheaper and faster.

It was not advisable for the bank to go for an outsourcing of the work but they contained few pain areas such as lacking of security, third party using unauthorized data, high budgeting and depending on the third party. They chose Xchanging solutions because it had a reputation as well

as experience in relevant market, proven implementation approach and Lean Six Sigma and IT excellence. In addition, Xchanging was able to provide a unique partnering proposition the Enterprise Partnership (EP). That would later on serve as a cherry on cake for the bank. The bank could gradually use Xchangings market value and good will for the proposed project.

b) Analysis of the case: In the late 1990s, a leading European bank took 3,000 of its employees and created a new, standalone, subsidiary transactional bank, to perform processing, printing and mailroom functions. By marketing the transactional bank to other European banks there was a vision to make a profit from what was previously an overhead. After two years, no other banks had joined the platform, and after five years it had only two small customers. Potential customers were wary of the security and sensitivity of outsourcing processing work to a competitor. Meanwhile, the transaction bank was still a large cost that was making no profit. Requirement from a partner: Cost savings Improved service delivery Deconsolidation in order to retain the positive benefits but also divest Full Time Neutrality to create an attractive proposition for other major banks and customers Investment avoidance though it was clear that there was a need for technology, the European bank wished to avoid funding IT speculatively due to the already high cost of running the transaction bank A rapid solution to address a failing business unit A processing platform that could cater for market demand and be flexible and cost efficient to attract large customers with varying needs.

Why Xchanging has been selected? The European bank had to look for a partner to market the platform. Xchanging was able to provide a unique partnering proposition the Enterprise Partnership (EP).

An Enterprise Partnership (EP) is a joint venture with our customer, through which they provide them with processing services. These customers are typically large organizations with significant processing needs. A typical EP contract is 10 to 12 years long.

The customer benefits from better processing and lower costs and also has the potential to earn profit, as they use the EPs processing platform to offer services to third parties.

Business support and products: In addition to their processing services, they offer their customers a range of business support services and products.

Business support: They deliver professional advisory services in areas such as technology, insurance services, recruitment and corporate immigration. These services are provided on either a cost-per-project or a time and materials basis.

Products: Xchanging has a number of business processing software products for the insurance, financial services, manufacturing and logistics sectors. They charge for their software services on either a subscription or cost-per-seat basis.

Quality: Whatever service they are delivering and whichever way they are contracted to do it, they have a relentless focus on providing the high-quality service expected by their customers. They have a rigorous performance measurement methodology. They measure their performance regularly, in great detail and in the same way across each of their processing centers around the world. For example, our quarterly service reports measure thousands of data points across hundreds of

processes, measuring both quantitative and qualitative outputs, such as customer satisfaction. They believe that their customers perceptions of their service are just as important as the actual results.

The EP model would enable the European bank to retain a 50/50 share in the transactional bank with the visibility, control and transparency not found in traditional outsourcing contracts. The European bank also saw that they could utilize an independent processing specialist to operate the business and take responsibility for bringing in new customers. National financial services regulators viewed Xchangings approach as a way to allow third parties with specialist processing knowledge to work within the confines of the regulatory regimes. Additionally, the unions saw Xchangings partnering approach as a socially responsible means of ensuring continued employment on comparable terms. This was viewed as a major difference from other outsourcing models.

The solution The assets, employees and infrastructure of the transaction bank were transferred to a 50/50 co-owned partnership between the European bank and Xchanging. Xchanging assumed day-to-day operational control with responsibility for delivery of service, the preparation of three-year business plans and setting the annual budget. The EP aligned the interests of all parties. Five major changes were introduced in order to increase productivity and service, and create spare capacity to absorb new business wins. 1. Service Review Board meetings held each quarter to review performance and highlight areas of opportunity 2. Champion team building programs to channel employees talent and energy 3. 155 Six Sigma Lean Processing process improvement projects resulted in productivity improvement or an increase in service performance

4. Technology optimization through the existing architecture refocusing the approach to technology operations and utilizing a tactical implementation team 5. Environment consolidation to create a central operating unit that could better serve the needs of the customers Benefits from this activity: Through Xchangings partnership model, the bank switched from owning a cost centre to being a partner in an entrepreneurial and commercially-orientated profit- making business. Within a year of engagement, the EP was a dedicated securities processing hub in the heart of the European financial market. As of 2010, the hub houses approximately 700 employees who process millions of securities transactions a day according to the requirements of German withholding tax. From the Strategic Alignment perspective, In outsourcing, Xchanging will typically take over a customer's business process, or back office function, and incorporate them into an existing platform in an attempt to provide better and cheaper handling of administrative tasks. Since 1999, Xchanging has aimed at securing a competitive edge and distinctiveness, Mr. David Andrews the CEO of Xchanging initiated a paradigm shift from a silo organization to IT driven SOA (Service oriented Architecture) and Enterprise Partnership model at various investments. Xchanging chose to be Customer Centric. It meant a quantum change that impacts everyone in the company and every customer of the company in both enriched and enlarged ways. The company since founded has customer centric. The decision of being customer centric was just appropriate and well implemented.

The objectives of Xchanging are: Enhance the Financial services industry by providing specialized personalized business solutions and financial solutions Control the cost and increase the sales Increase efficiency and customer satisfaction Maintain agility to serve Focus on integrity and team work.

For Xchanging, SOA combined all loosely linked and services. They can be reused in different combinations to provide flexibility to users in a flexible manner. SOA is implemented using web technology. SOA ensures businesses to respond quickly and cost effectively to dynamic market conditions.

The process was implemented over following steps: 1. Initiation and Implementing a cultural change 2. Enterprise Partnership Program 3. Transforming IT to support Enterprise Partnership model 4. Implementation ; Proof on concept on Disaster recovery system 5. Moving transformation forward 6. Delivering Value benefits.

The features of the strategic IT-business Model: There is a need of alignment between business (both strategy and structure) with the IT (both strategy and structure) Both business and IT have the interface with the external and internal domains; there should be perfect fit and match between the domains. This fit should be between the business block or IT block with other blocks as well The strategy and structure in each block can be broken down into Scope Competencies and Governance

The model highlights four strategic choices or perspectives for any business to choose from the transformation steps of Xchanging can be plotted broadly in the 4 blocks of Strategic Alignment Model as under

Business Strategy (Scope Competencies governance) Initiate cultural change towards vision Customer centric organization including training on accountability and cultural practices for all Enterprise Partnership Program Moving the transformation forward (Implement co-ordinate-review-results) IT Strategy (Scope Competencies governance) Initiate cultural change towards vision Customer centric organization including training on accountability and cultural practices for all Enterprise Partnership Program Moving the transformation forward (Implement co-ordinate-review-results) Organization Infrastructure and Processes (Infrastructure processes skills) Transforming business organization to support Enterprise partnership Integrate the business processes Moving the transformation forward (Implement co-ordinate-review-results) IT Infrastructure and Processes (Infrastructure processes skills) Transforming IT organization to support Enterprise partnership Integrate the IT processes Implementation startup: Proof of concept of Disaster recovery system Moving the transformation forward (Implement co-ordinate-review-results)

In plotting the steps, it was noted that IT and business belong to one unified entity of organization and total linkage exists in an ideal setup, some steps may overlap and get plotted in one block where emphasis is more distinctive comparatively. The implementation methodology of Xchanging realizes above is by transforming to a customercentric organization with service oriented architecture, a sophisticated IT and business campaign.

The transformation is in total across the organization. All business process and IT process are designed to fit the proposed architecture. The company has been investing in the multi-dollar SOA, recruiting experts both in IT and business, motivating and training people to adapt the system and ensuring their conviction, commitment and contribution; established total interconnectivity and interface including customers in BFSI sector.

3. Strategic IT Overview
Xchanging Solutions host the software and hardware to run systems and provide the extensive data warehousing facilities needed by their customers. They are the largest processor of ACORD messages with 3.5 million message interchanges a year for the insurance, payment and securities industry. Over the last 30 years, the worlds banks have developed an international payment system that has been instrumental in fostering global economic prosperity, allowing financial transactions to be processed with confidence, speed, and efficiency. The smooth functioning of this system is vital to global financial stability. The system is large and complex.

1) Origin and development of the technology The payments infrastructure of the global financial system is a complex patchwork of national and cross-border systems, not seamless, not uniform, but closely connected. The global payments system has evolved in a way that, first and foremost, promotes efficiency and effectiveness, i.e., the system concentrates on information essential for processing a payment transaction and on including all countries and financial institutions within the system to allow payments to pass readily across international borders.

Payment system issues have become increasingly important during the last 10-15 years, and central banks as well as private operators and payment system participants have put in a lot of resources to analyze various payment system risks. A contributing factor to the increased interest has been the growing internationalization of financial markets, partly as a result of the abolishment of foreign exchange and capital controls in many countries, which have increased the movements of funds cross border. Several incidents in the financial market have also shown that there could be major financial risks embedded in payment systems. Risks that, if not managed in a prudent way, could create a systemic risk situation in which the financial market

could stop functioning, leading to potential catastrophic development in a country's economy affecting, if grave enough, even the world economy. In banking and financial services specifically, Xchanging provides solutions include a platform for processing equity exchanges in India together with a proprietary middleware solution that links legacy systems and the SWIFT gateway for over ninety banks across the subcontinent. 2) Major technical elements of the technology Xchanging solutions has expertise itself in delivering successful integrations across multiple applications like SAP, Oracle, Legacy systems in the BFSI Domain. Supporting this expertise, the company has broad service offerings for internal integration (EAI), partner and customer integration (B2B/EDI), and web services (B2C). They also provide strategy and architectural services around service oriented architecture (SOA) and Business Process Management (BPM) as well as payment solutions and SWIFT offerings. In the BFSI Domain, the company is retaining its legacy system providing improvements to it. Xchanging solutions have upgraded its legacy systems to an extent to incorporate SOA and Network IP architecture in its organization. The company has developed itself to a customer centric organization which represents an enormous change that affects every single employee in the front office or back office. The company has upgraded the legacy systems into Middleware systems. The Middleware systems have been integrated to payment solutions and SWIFT. The architecture between Middleware systems, SWIFT and clearing-settlement systems is called as the IP Network Architecture. 3) IT Capabilities The middleware developed by the company is in general termed as a Payment System or Core Banking solution. With the advent of computers and electronic communications a large number of alternative electronic payment systems have emerged. Payment systems may be physical or electronic and each has their own procedures and protocols. Standardization has allowed some of these systems and networks to grow to a global scale, but there are still many country and product specific systems. Specific forms of payment systems are also used to settle

financial transactions for products in the equity markets, bond markets, currency markets, futures markets, derivatives markets, options markets and for transfer funds between financial institutions both domestically using clearing and Real Time Gross Settlement (RTGS) systems and internationally using the SWIFT network. Due to the backing of modern fiat currencies with government bonds, payment systems are a core part of modern monetary systems. For international payments, The Company makes use of Network IP Architecture while connecting to SWIFT systems as mentioned earlier. What is a network is something one should basically understand. The term network refers to any interconnected group or system designed specifically for sharing information among them. The basic goal of network infrastructure was to provide connectivity and it acted as a bridge between a communications medium and the applications that are built upon this medium. Most of the IT industry is based on network infrastructure without which almost all communications in the world would come to an end. The network infrastructure allowed the rapid development of many computer technologies related to connectivity and created a marketplace for new concepts. It is based on the standard reference model of the industry such as the four-layer Internet Protocol Suite model. It is observed that, the payment system basically performs business processing within the software. Xchangings software performs security processing involving elements like Order management, Order routing, Transaction processing, Corporate actions, General meetings, Tax services, Safekeeping of securities, Regulatory required reporting and Customer communications (such as tax statements) as white label. The system is integrated to IBM Websphere MQ to send and receive messages. Websphere MQ, which is often referred to simply as "MQ" by users, is IBM's Message Oriented Middleware offering. It allows independent and potentially nonconcurrent applications on a distributed system to communicate with each other. MQ is available on a large number of platforms (both IBM and non-IBM). 4) Major Vendors: XMM Xchanging Message Middleware: This is Xchanging solutions own platformindependent, SWIFT messaging middleware product providing Straight through Processing between a customer's transaction systems and the SWIFT gateway.

Message Oriented Middleware: For its Middleware development, along with its organization, Xchanging has oracle, IBM and SWIFT as its vendors. IBM is providing its Websphere architecture to most customers in the Banking & financial service sector. SWIFT provides its partners like Xchanging solutions with the SWIFT Alliance gateway and SWIFTNet connectivity. 5) Development of industry standards In the Websphere architecture there are two parts to message queue (hence "MQ"): Messages are collections of binary or character (for instance ASCII or EBCDIC) data that have some meaning to a participating program. As in other communications protocols, storage, routing, and delivery information is added to the message before transmission and stripped from the message prior to delivery to the receiving application. Message queues are objects that store messages in an application. Messages are sent from one application to another, regardless of whether the applications are running at the same time. If a message receiver application is not running when a sender sends it a message, the queue manager will hold the message until the receiver asks for it. Ordering of all messages is preserved, by default this is in FIFO order of receipt at the local queue within priority of the message. With the middleware solutions interacting with Websphere MQ, MQ is configured to SWIFT Alliance gateway. SWIFT gateway communicates with the SWIFT Network.

SWIFT moved to its current IP Network infrastructure, known as SWIFTNet, from 2001 to 2005. The process involved the development of new protocols that facilitate efficient messaging, using existing and new message standards. The adopted technology chosen to develop the protocols was XML, where it now provides a wrapper around all messages legacy or contemporary. SWIFT provides a centralized store-and-forward mechanism, with some transaction management. For bank A to send a message to bank B with a copy or authorization with institution C, it formats the message according to standard, and securely sends it to SWIFT. SWIFT guarantees its secure and reliable delivery to B after the appropriate action by C. SWIFT guarantees are based primarily on high redundancy of hardware, software, and people. With the Middleware connecting to clearing systems, SWIFT and customers database, it is necessary to maintain the infrastructure and information security. The middleware is capable to receive messages from SWIFT and send messages to SWIFT which is either FIN CBT messages or XML messages though MQ. The middle is capable to send and receive RTGS messages specific other clearing systems like FEDWIRE, CHIPS for US Clearing, IFN for India,

XML defined by ISO 202022 for SEPA clearing. It is also observed that messages used for domestic payment clearance is also different. These messages contain financial information like BIC Codes, Sort Codes, Customer account numbers, Bank address of the sender and receiving parties and transaction references. For a Bank to process a payment, it requires certain identifier codes like BIC, NCH. The user requests for a payment to be processed by the bank, the user provides all details necessary for the bank to process the payment. These details are converted into identifier codes called straight through processing. The Middleware performs straight-through-processing. Straight-through processing (STP) enables the entire trade process for capital markets and payment transactions to be conducted electronically without the need for re-keying or manual intervention, subject to legal and regulatory restrictions. The concept has also been transferred into other sectors including energy (oil, gas) trading and banking, and financial planning. STP solutions were needed to help financial markets firms move to one-day trade settlement of equity transactions, as well as to meet the global demand resulting from the explosive growth of online trading. Now the concepts of STP are applied to reduce systemic and operational risk and to improve certainty of settlement and minimize operational costs. When fully realized, STP provides asset managers, broker/dealers, custodians, banks and other financial services players with tremendous benefits, including greatly shortened processing cycles, reduced settlement risk and lower operating costs. Xchanging provides four distinctive offerings in addition to Partnering. These offerings deliver economies of scale, processing breadth, product depth and know how to our customers. Outsourcing delivers our customers better and cheaper processing and procurement spend. Products supplies customers with improved solutions for business processes and information requirements. STP extends the scope of existing services to customers and secures additional processing and spends efficiencies for them. Business Support provides experts and re-useable assets to support specific improvement activities in a customers processing operations. Together, these offerings enable Xchanging to be flexible in meeting changing customer needs as they seek to improve the performance of their back office functions. Processing services are provided both directly to financial institutions and on their behalf to the end customers. Xchangings major customers include Deutsche Bank, Sal. Oppenheim,

Citi, Sparda-Banken and netbank AG and Allianz Global Investors. They provide our services in Germany from our processing centers in Frankfurt Today, the goal of each bank and a financial service company is to achieve 100% STP, so that banks need not pay high prices to process a foreign exchange transaction. To achieve STP, Nowadays, Xchanging is looking at various as aspects like Artificial Intelligence and Natural language parsing. Bank and the Financial Service sector are aiming to reduce the payment processing time from T+2 to T transactional days. Achieving this has been challenging for banks and companies providing software in this sector. The long-term market opportunity for BPO companies is substantial. The BPO market is still in its early stages of development with low penetration levels of the corporate cost base available for outsourcing. Having grown steadily in favorable stock market and economic conditions, the current corporate environment provides the basis for acceleration in BPO.

Large corporate, particularly in financial services, are under increasing pressure to deliver long-term profit improvements. The economic environment is constraining growth and core businesses are requiring more attention and investment than in recent years. At the same time, medium-sized companies are seeking access to economies of scale and to reduce investment requirements to remain competitive.

Despite the need to drive down costs, improve efficiency and reduce investment in back office processing, increased regulation is having the opposite effect. In many cases companies have already secured the more easily achievable cost savings (IT outsourcing, shared services, basic offshoring) and economies of scale have peaked. Business process outsourcing resolves these conflicting pressures as the outsourcer provides guaranteed cost reductions, undertakes investment in a shared platform and enhances the service quality. The ability to provide these benefits across boundaries be they geographic or functional, will deliver the economies of scale that customers are seeking. Every year, SWIFT release its changes in messaging standards. These changes are applicable to the payments, securities, trade operations and other sectors in the financial sector.

The company incorporates these changes as a maintenance procedure. Any new amendments in the sector are implemented as a new upgrade or an enhancement. There have been many developments in the market practices set by US Department of Financial crimes. In November 2011 the US high value payments systems Fedwire and CHIPS will implement a new message format that caters for extended remittance information. Following the Banking rules and regulation, the company looks forward in upgrading the information. This change is currently under discussion with the management with an impact analysis being performed to understand the impact of the new guideline.

6) Case Study: In the year 2009, the payment market practice group had introduced a new payment transaction called Cover payment. This was introduced in response to recommendations made by the Wolfsburg Group and the Clearing House in 2007 to improve the transparency of Direct and Cover Payments. The use of cover payments within the Bank processing made its implementation not just a technical issue, but required detailed business analysis of internal policies and procedures. Specific requirements from their chosen partner: Deconsolidation in order to retain the positive benefits but also divest Full Time Equivalents (FTEs) Cost savings Improved service delivery Neutrality to create an attractive proposition for other major banks and customers Avoiding a lapse With the new cover payment being used by other banks, there was a need to incorporate in the existing solutions A rapid solution to address a failing business unit A processing platform that could cater for market demand and be flexible and cost efficient to attract large customers with varying needs. Xchanging solutions were able to successfully complete this requirement and their customer was capable to make cover payments using XMM.

The Business challenge faced by Xchanging solutions was to understand the impact of cover payments on its customer who were banks and other financial corporations. Cover payments being new to processing, Banks and other financial institutions were not aware of how these payments would be used. Any incorrect information would prove costly for the bank and its customer (account holders). XMM product was changed to support the cover payment as an enhancement. Following changes were made: Business Analysis: A detail analysis team being conducted to understand the requirements and processing of cover payments at the banks end. The gap analysis was conducted to identify where the changes were necessary. Assessing the current state of solutions: It was necessary create a copy of the existing solution and asses the changes to be made Design the solution with the new requirements: The new solution on draft included features for successful processing of cover payments and enhanced STP Rate. Prepare the change specification Document to understand the changes, its feasibility and benefits Building the enhanced solution The enhanced solution of XMM was deployed at customer sites and went live in November, 2009. With the development changes being incorporated at a short notice, the maturity level of the application was such that the change incorporation was completed in a very short time. The time was consumed more on the gap analysis being performed.

4. Suitability of IT
Porters five forces perspective: If we see from Porters five forces perspective:

Porters five forces model is a competitive analysis model and it helps company to analyze and understand the industry trend. It also provides a simple yet powerful framework. Here with this companys case Porters five forces helped to determine what is needed in the industry .The European bank could find out the market scenario and introduced a technological change in the banking industry. Thru the partnership with Xchanging solution ,the bank could gain a competitive advantage over other banks. Industry Analysis: Industry analysis process enabled the bank to identify the need of the proposed system. This was an origin of the proposed concept and on the base of factual analysis and Industry analysis the bank made up a decision of bringing a change.

Macro Analysis: Here Macro Analysis helped the bank to analyze the need of the proposed system as well as the possible advantages over the competitors in the market. The bank was also able to find out the internal flaws within the organizational boundaries and came up with the solution. (Partnering with the Xchanging solutions for service) Financial Markets or the BFSI Domain comprises of Banks, international organizations like SWIFT and regulatory boards like CHIPS, FEDWIRE, ACH in USA, RBI in India, EPC (European Payment Council), EBA (European Bank Association), EQUENS (regulatory body at Netherlands) etc.

These organizations determine and release new payment methods like SEPA (currently being adopted in Europe), procedures (how payments need to be made through SWIFT) and regulations to maintain compliance against threats of anti-money laundering. The recent challenges faced by Banks were incorporation of Cover payments for compliance which created some panic among banks.

Threat of new Entrants: The BFSI Domain being so large and transparent, it is very easy for a company to adapt to the market and play a vital role in helping the banks achieve their goal. For a new company to enter this market, the investment is high. It is very important for a new entrant to seek collaboration with SWIFT and other regulatory bodies or get into partnership with other companies who already in collaboration with SWIFT and other regulatory bodies. To sustain this threat, Xchanging has come up with the idea of Enterprise Partnership Model.

Bargaining Power of Suppliers: Here, the Suppliers are IT companies like Xchanging, who develop software solutions and provide services based on the requirements of the Bank or other financial organizations. Xchanging does have the bargaining power to negotiate the enhancements made in the Software product, based on the changes of the financial markets. Currently Xchanging is working on an enhancement based on changes announced for CHIPS and FEDWIRE messaging structures by

US Regulatory bodies CHIPS and FEDWIRE to improvise their market practices and payment processing with respect to strict compliance.

This feature can be opted by the Bank with the enhancement or can continue with the existing solution. Therefore Xchanging is in a better position to sell the enhancement at a price depending upon the Banks need and penalties if incurred. Bargaining Power of Buyers: The Buyers are banks and financial corporations who deal with consumer accounts and other corporations accounts. The bargaining power of the buyer seems to a weak in comparison with the suppliers when there is an urgent requirement to incorporate the change impacting the business processing. E.g. Banks to incorporate Cover payments was urgent requirement to comply with as stated by the payment regulatory bodies to meet the international compliance standards.

Therefore Xchanging being the supplier had the utmost advantage to sustain the changes in the market changes. Enhancing XMM, to support the new concept of cover payments not only helped them sustain in the market but also help them gain an upper hand towards their customers demands.

In cases where the banks have no regulations to comply to and the banks looks to enhance their existing solutions, the banks look for low cost investment and higher return on investment. New methods adopted by Financial software based companies help banks to decide and have a good bargaining power in the market.

Threat for substitutes: Substitutes are hard to find in this domain. The BFSI domain is transparent. Transparency allows companies in this field to implement the business processing methods in a manner where the goal is achieved. The goal for a financial institution is to decrease the transactional processing time and increase the STP (Straight through Processing) rate.

The Data and information is easily available from the regulatory bodies. The techniques and methods used by different companies are different. Therefore substitutions are not easy. Currently Xchangings strategy may not have threat against substitutes. Xchangings Enterprise partnership model and service efficiency have been the key to fight the threat against substitutes.

Value chain Model: Here in this case Xchanging Solutions Value chain model shows a chain of activities done by the company.

The primary activities can be categorized as under:


Inbound logistics: Inbound logistics means a raw data which is processed and generate a finished good or output. In Xchanging Solutions, it gets a data from the bank and process over it and generates a final output. The client requirement is one of the major part of the inbound logistics.


Operations: The process where input is being processed and becomes a finish product/service. Here Xchanging gets data from the bank and processes a transaction and generates a service. The operations are related to the work and processes being utilized during the development and working of software.


Outbound logistics: The software or outsourcing facilities is developed by Xchanging solutions. These solutions developed by Xchanging solution are delivered in phases or as a whole based on client requirements.


Marketing and sales: The Xchanging then advertises about its service and raise a possibility to get another customers.


Service: The support after selling products or services.

For serving Xchanging solutions customers the company makes changes in Human capital on regular bases as per the market demand. The Employees are required to get training on the emerging technologies. This technology introduced by the European bank is highly suitable for Xchanging Solutions because it is an emerging technology and there are very few substitutes and very low risk /threat of new entrants.

5. Presenting business case for the technology

a. Benefits Framework
Benefits Framework For Xchanging Solutions Objective Financial Doing New Things Doing things Better Benefit: Increased customer retention due to product Enhancement/services Measure: Reduction in Transaction Processing Time Stop doing things Benefit: Stop keeping transactions on hold due to incomplete information Measure: the number of transactions kept on hold were 50% of the total transactions processed in a year Benefit Owner: Customer Account Manager Benefit Owner: Transaction Process Manager Benefit: Reduction in Product defect Management Measure: Cost incurred by the company for defect resolution Benefit Owner: Customer Service Manager Benefit: Increase the STP Rate for the transactions processed Measure: The number of transactions which are NON-STP are 70% of the overall transaction processed in a year Benefit Owner: Customer Transaction Processing Staff


Benefit: Increase the Compliance hits for the Transactions processed Measure: the number of transactions containing complainance information passed were 40% of the total transactions processed. Benefit Owner: Customer Complaince Officer Measurable Benefit: Bank introducing new features with Benefit: Customer using the companies the help of vendors and promotion products and services extensively Measure: number of defections to Measure: Increase in sales due to the new competitors. There are few customers features switching from Xchanging. Benefit Owner: Customer Account Manager Benefit Owner: Marketing Manager observable Benefit: Bank Employee motivation by Benefits: Ability of develop future services training sessions on the use of new features based on new Financial market data from of the software SWIFT, Compliance Vendors and Customer Data Measure: Increased number of processing of Measure: Quantity and Quality of Financial transactions Market Data Benefit Owner: Customer Employee Manager Benefit Owner: Development Manager

Benefits: Stop Customers becoming frustrated because too many bugs and product fixes Measure: Business Staff Opinion Benefit Owner: Customer Service Team Manager

b. Benefits Dependency Network

SWIFT Website Http:// IBM Website : Xchanging Solutions : Study Cases of the company : MIS Course Articles Article #4 -- ERP Definition and Solutions, Compiled by Christopher Koch and Thomas Wailgum,, April 17, 2008. (available on Blackboard) Article #5 -Service-oriented Architecture: Myths, Realities, and a Maturity Model, by:. Hirschheim, Rudy, Welke, Richard, Schwarz, Andrew, MIS Quarterly Executive; 2010, Vol. 9 Issue 1, pp. 37-48 Article #19-- Building Better Business Cases for IT Investments, by: Ward, John; Daniel, Elizabeth; Peppard, Joe. MIS Quarterly Executive, 2008, Vol. 7 Issue 1, p1-15. Article #20 -Managing the Realization of Business Benefits from IT Investments, by: Peppard, Joe; Ward, John; Daniel, Elizabeth. MIS Quarterly Executive, 2007, Vol. 6 Issue 1, pp. 1-11.