B.2. Example system portfolio review report

Fit to objectives up 7.1 percentage points to 80.4%.

Like-for-like fit to objectives up 4.3 percentage points.

System portfolio size up 32.9%.

Systems with an excellent fit to objectives:

Systems with excellent improvement:

The figures after the recommendations are the notional value of meeting the recommendation. The *'s represent a relative scale of risk, where * = significant risk, ** = more significant risk, and so on.

When calculating the total value of improvements, the value of the two policy improvements has been halved to avoid double counting with system improvements.

The objectives to which system governance contributes are:

The objectives are reflected in a set of criteria against which systems are measured. The measurements form the basis of this review.

System governance calculates “improvement points”, which is a relative measure of the importance of different improvements. The improvement points can be translated to a notional value so that they can be compared with other business investments.

Notional values are based on a value of £520 per improvement point. This means that every 1% improvement in a system of relative size 1 is valued at £520.

(The improvement point value was agreed last year. The total potential improvement was valued at £570,000 per year. Given a payback period of 2.5 years, the investment that would break even on this improvement is £1.425m. This was divided by the total improvement points for last year (2050 points) to give an improvement value of £695. This was reduced by a safety margin of 25% to give an improvement point value of £520. The same figure has been retained for this year.)

Analysis should provide:

The terms of reference sets out the conditions under which system governance should identify special cases.

A system is considered excellent if either its score is 90% or higher, or its improvement in score is 5% or higher.

A system is considered a candidate for improvement if any of the following conditions apply:

Issues have been converted to “risk stars” by awarding 9 points for priority 1 issue, 3 points for a priority 2, and 1 point for a priority 3, and then awarding a * for each 3 points.

A criterion is considered a candidate for improvement if the value of improvements across all systems for that criterion is £1,000 or higher per total of system size. (This indicates areas where there may be a value in changing policy.) Because of the relatively small number of systems within BBB, criteria are not analysed further.

Increase in total size = (101 - 76) / 76 = 32.9%.

The systems removed were:

The systems added were:

The increases are percentage points increase (this year's score minus last), not percentage increase.

Like-for-like shows the score excluding from last year the systems that have been decommissioned, and excluding new systems from this year.

In-house maintained excludes new systems and systems that have undergone major redevelopment, to provide an equitable base for comparison with outsourced systems.

These summary scores all show good improvement. This is especially noteworthy given the increase of almost one-third in the total size of the system portfolio.

The new system score is higher than the other scores. This shows that CMS is successful in replacing old systems with better new systems.

The table below summarises the results by system. It shows the relative size of the system, score, percentage points change from last year, an estimate of the notional value of making further improvements to the system, the number of outstanding priority 2 and 3 issues, and a risk rating. (No system has any outstanding priority 1 issues.)

The table below summarises results by criterion (the results are the average score for the criterion weighted by system size).

The criteria for service consolidation (multi-brand capability, standardised interfaces and group-level potential assessed) all show very good improvements. The same is true for the criteria for legal and regulatory compliance (money laundering, data protection, cancellation rights and other regulation). This shows BBB's success in improving in these priority areas.

Cash Management has one priority 2 issue: it is running out of processor and memory capacity.

Recommendation: Upgrade processors and memory capacity on cash management server.

The notional value of improvement is only £5,265, but the improvement in capacity is required to remove the significant risk of disruption to service.

Corporate Email has 1 priority 2 issue and 3 priority 3 issues.

The priority 2 issue is that the recovery plans for email are insufficient. In the case of a disaster, email service and historic emails may be lost.

Priority 3 issues include performance, security and meeting the requirements of the data protection act. (It is not clear whether personal information stored within the email systems falls within the scope of the act.)

Recommendation: Review Corporate Email in line with the recent analysis of the service, and investigate further the case for changes. In particular, ensure that recovery plans for the email service and for historic email meet requirements.

The notional value of improvements to the email system is £27,253.

The eSaving system has one priority 2 issue: it is very inefficient at meeting money laundering regulations. It requires manual queries followed by copy+paste to inform authorities of transactions that fall within the money laundering regulations. Although this meets legal requirements, performing and then checking the queries is very time consuming.

The notional value of meeting this requirement fully is £23,400.

Recommendation: Investigate and implement a more efficient method for the eSaving system to meet money laundering reporting regulations.

The HR system has two priority 2 issues: it is not sufficiently secure, and it is uncertain whether it can be recovered after a disaster.

The HR system has recently been outsourced to Isisco, and they have improved the system over the past year. Their ongoing improvement plan includes improvements in security and inclusion of the HR system within the main system recovery plan.

The notional value of addressing these problems is £3,429.

Recommendation: No further action required, improvement is planned.

The mortgage system is considered a candidate for improvement for a number of reasons:

This is a very significant system for BBB. The system has undergone modification this year to meet urgent business requirements. These modifications have resulted in a decline in test quality and system autonomy. The underlying hardware has not been upgraded, which has resulted in lower scores for service availability and capacity. Because of the changes, the system has not been fully assessed for group level potential, but it can not support multiple brands well and many of its interfaces are very “stovepipe” and could not readily support data flows to and from other group companies.

Fixing all these problems would be a significant undertaking for BBB. The success with the Customer Database shows that BBB has the capability for major renovation, and the notional value of fixing all the problems (£276,000) indicates that this could be worthwhile. However, the future of the system does depend on the group-level review of service consolidation. It would be prudent to clarify the system's future before embarking on a major renovation. This will to a large extent be achieved by completing the assessment of group level potential.

Recommendation: Complete the assessment of group level potential for the Mortgage system. If this shows that it is likely to be required within the new group services structure, review the Mortgage system in line with recent analysis, consider improvements in all areas identified by the analysis and refresh technology to ensure that viability and capacity issues are addressed. If the assessment shows that the Mortgage system is not likely to be required, form a tactical plan to ensure it has sufficient capacity for its remaining time.

The Tessa system has a score of 66.0%, below the 70% threshold. It has four priority 3 issues.

The low score, relatively high notional value for improvement (£70,000) and number of issues suggest that the Tessa system could be improved. However, there are a number of reasons why this is not likely to be worthwhile.

Recommendation: No further action required, Tessa system is being managed in line with its declining importance.

Travel money is a candidate for improvement because the notional value of improvement £111,000 exceeds the threshold of £100,000.

Travel money is a package system that has been installed during the past year.

Most of the potential for improvement reflects outstanding work on the project, which is in hand.

Some of the potential for improvement reflects functionality which could be requested from the package vendor:

Other potential areas for improvement include how the system has been integrated, and the completeness of the test packs.

A post implementation review of Travel Money is planned.

Recommendation: During the post implementation review of Travel Money, consider the improvements identified in the recent analysis, including whether to request better support for regulatory requirements from the package vendor.

Unsecured loans is candidate for improvement for three reasons:

Other than this, Unsecured Loans is a good system, with a score of 79.5%.

Looking in more depth at these and the other areas, it is clear that the underlying weakness with Unsecured Loans is that it is does not provide efficient facilities for interfacing. Providing it with a more flexible interface capabilities would help it more efficiently meet its regulatory requirements, and address many of the other issues with the system.

Recommendation: Review the application integration approach used by Unsecured Loans, with a view to automating the extraction and use of data required to support regulatory requirements.

The technology viability criterion is a candidate for improvement because the notional value for improvement (£126,000) exceeds the £1,000 per unit size threshold.

Looking more closely, technology viability has declined 5.9% to 70.8% over the past year. The decline reflects the tendency for technology to get out of date, and suggests that there may be a value in tightening the policies to ensure systems remain on viable technology.

Recommendation: review the policies in place to ensure that viable technology is selected and that technology is upgraded to remain viable.

When considering the value of this recommendation, be aware that some of the value is also included in system recommendations. Avoid double counting.

The multi-brand capability criterion is a candidate for improvement because the potential value for improvement (£126,000) exceeds the £1,000 per unit size threshold.

Looking more closely, however:

Recommendation: No further action required, existing policies in this area are sufficient.

The standardised interfaces criterion is a candidate for improvement because the potential value for improvement (£138,000) exceeds the £1,000 per unit size threshold.

Standard interfaces has increased by 14.0% to 73.7%. This shows that the policies to improve standard interfaces are working. However, unlike multi-brand capability, the potential for improvement is spread across many systems. Some further guidance or additional investment may help. Further investigation is required.

Recommendation: Review the policies on standardised interfaces (removal of stovepipe interfaces in anticipation of group-level services), to see if further guidance or greater funding would be worthwhile.

When considering the value of this recommendation, be aware that some of the value is also included in system recommendations. Avoid double counting.