How Much Value Is Being Delivered?

Issue

A leading European bank wanted to be sure that it was achieving clear and measurable value for its substantial investment in technology. In addition, it was anxious to know what potential technology investments could be made in the light of new competitors entering one of its prime market sectors.

Engagement

A small Morgan Hill consulting team worked with senior members of the client executive to establish a suitable reference framework for answering the value question. The Morgan Hill Financial Model was used as the framework and it was calibrated to fit the bank. Key objectives from the strategic plan were loaded into the model. The divisional structure of the bank was loaded as were key products and delivery channels. Finally a portfolio of investments taken from the previous twelve months was added.

Using the Morgan Hill Financial Model the team was able to demonstrate the proportion of the investment that met different strategic aims as well as the proportion that directly supported specific products and or delivery channels.

Using this information the team was able to produce new investment portfolios that focussed the investment on the prime aims of the bank. This process freed up a significant amount of funds, enough to embark on a major customer facility upgrade.

In addition, the value and risk assessment process built into Morgan Hill Financial Model was used to extract the important areas of measurement for new investments, in particular the measurement of benefits. This enhanced ability to track benefits led to a change in the governance processes used to allocate funds to new investments.

Outcome

The application of Morgan Hill Financial Model brought an ability to define the value delivered to the bank by its substantial investment in technology. Further, it allowed this investment to be focussed on those areas deemed most important by the bank. One of these areas was new investment made in direct response to competitive pressures.