How is this possible? Rather than committing to a large program, we have found that rapid prototyping, which accelerates business results prior to investing in systems and data stores, works far better. In rapid prototyping, banks can try out various approaches for measuring profitability before settling on a specific method. While somewhat counter-intuitive for many organizations, rapid prototyping allows for the evaluation of the information and insights gained from each method before implementing the necessary enterprise-wide systems and underlying data stores. Additionally, rapid prototyping can potentially create a funding mechanism for the full implementation, by executing expense reductions and efficiency gains to offset implementation costs.
In one recent project, we were enlisted to implement a rapid prototype in the technology division of a major financial institution. The purpose of the project was to develop transparency into the technology division to help the CIO deliver on his expense reduction target. Because budget dollars were unavailable, the project had to be completely self-funding. In seven months' time, we built a prototype cost model for the technology division and helped the institution meet its cost reduction targets and achieve a four-to-one savings for every dollar invested in the project.
In today's environment, precise and timely profitability data is no longer a "nice to have" capability but rather is a necessity for corporate and business unit leaders to make critical business decisions.
Frank Mackris is a partner at Capco and the leader of its North American Banking, Wealth & Investment Management practices.