Challenges in ERP Implementations – Industry-wise – BANKING INDUSTRY

Dear All

I just thought of writing the Industry-wise Challenges in ERP Implementations to create awareness for ERP Implementers. There could be multiple Solutions for Each challenge based on the ERP you choose to implement, but the core is the Challenge is common across most of that Industry. Hence understanding of the Problem is of prime importance before you venture on how to solve it.

Let me Start with Banking Industry

Core Banking Softwares: Temenos, Flexcube, Finacle, Laser Panacea, Bancs etc.,

ERP Softwares: Oracle , SAP, People soft etc.,

1.?????? The Banking Industry generally will have Core Banking System which manages the Deposits and Advances and hence ERP system is needed for a Banking Industry only to manage administrative aspects like Purchasing, Human Resources Etc., As for as Financial Reporting is concerned it is Management decision to derive the final Financial Reports from the Core Banking System or from the ERP System – This is one of the biggest Challenge and Normally this Process takes longer time. But of late to my knowledge Core Banking System also started adding the Administrative Functions in the Core Banking System itself. Building the Interface between ERP System and Core Banking System is very Vital since from which system you are planning to generate the Financial Statements and Reports.

2.?????? Data is very Critical and Important in Banking Industry as which needs to be allowed to extract, Enter, Update. Many Sensitive Data needs to be masked or viewing and updating with appropriate authority

3.?????? Banks tend to plan expansion in a big way and generally they plan to open 5-6 new branches at a time. This will be taken as a Program and each branch is considered as a Project and the Costs incurred till the branch is put into operation needs to be capitalized for that Project and create it as respective asset and the Project needs to be closed. This involves Purchasing, HR and Finance activities for the Project to be tracked. This is where ERP is important to keep Project, Purchasing, HR and Finance in Scope. There will be common purchases at Program level and allocation of costs to individual Projects, Capitalization bifurcating asset class-wise and convincing Auditors on the methodology are key challenge

4.?????? Banks needs daily closing Trial Balance each Branch-wise and at Region Level, Zone Level, Country Level and Global Level. This is another great challenge as many ERP can provide Calendars can be defined Daily, Weekly, Monthly, Quarterly etc., but still generating Daily Trial Balance is NOT a Standard Report. It is Customized Report. Also if you use Budgetary Control for Purchasing (Like Purchase Requisition and Purchase Orders) this will have additional challenge as budgetary calendar do not support daily calendar in general to my knowledge. (Ex: In Oracle EBS it support only 60 Budget Periods which means it is only for 60 days – Not useful)

5.?????? With reference to above the banks wanted to run and pass daily depreciation also from Fixed Assets module automatically before the daily Trial balance is generated. This poses additional problem on Leap Year as Depreciation is not generated for the day (29-Feb-XXXX)

6.?????? Also many banks will manage Purchases in a centralized manner and they wanted a Global Blanket Purchase Agreement (GBPA) with Budgeting Control Functionality. The expectation is it should block creation of a Purchase Requisition and Purchase Order by anyone at any branch referring to GBPA if the budget is exceeded. This is not supported by ERP (Ex: Oracle EBS).

7.?????? HR Module and Data: Which One is Primary data for HR?. Core Banking or ERP System? – This is another critical aspect that needs to be finalized before Implementation as it depends on where you store the Master Data and how do you process Payroll, revisions, Approval Hierarchy, recruitment, training, selection, Appraisals Etc., Obviously you need HR Data in both system but which one is Primary and how to keep the Data in synchronized way is important

8.?????? System Login and Access: Both System (Core Banking and ERP) will have separate Login/ passwords or Single Sign On, Security, Access Control all these needs to be planned and designed

9.?????? The Core Banking System may have a CRM Application to address Call Center, Service Requests etc., In that case, there needs to be a plan to integrate ERP System with the Core Banking CRM Application as well. Ex: In a day there are 100 requests coming to issue Credit cards or From the CRM system to print Brochures for Bank Loan Products, Credit cards etc., then a Purchase Order needs to be initiated which needs to interface with ERP System

10.?? Compliance with Regulatory Reporting: Banks have stringent reporting requirements to several authorities and hence whether to keep any of these two (Core Banking or ERP System) as a base for Compliance Reporting (BASEL, CREDIT CARD AGENCIES, RBI etc.,) or to push the data from both to a Data warehouse and have a separate platform for Compliance reporting and How to keep the data Synchronized among these system is another challenge

11.?? As mentioned above Budgeting for the Banking company could not use as the number of Budget Periods allowed to be defined in ERP system (Oracle EBS) is only 60 periods which means 60 days.

12.?? Defining Chart of Accounts to generate reports at various levels is another major challenge as we need to know how to keep the Chart of Accounts synchronized between Core Banking System and ERP System.

13.?? Another major challenge is making Payments for Supplier Invoices because the payments have to be made from Core Banking System. How to Interface the Supplier Invoice to Core Banking and make Payment and bring back the payment data from Core Banking back to ERP system and knock off Supplier balance?

14.?? Defining the Approval Hierarchy (Purchasing, HR and Finance) ?in ERP and how to keep it synchronized with Core Banking System

15.?? Assets given to Employees like Laptop, AC etc., - Even if it is managed in ERP System but still they want to reference in Core banking as Employees are entitled for lower rate of Loan Interest etc., which is managed from Core Banking system.

The above are only high level and you may come across many more when you implement at ground level and addressing those issues will only make you an Expert.

My objective of this exercise is just to highlight the challenges. Anyone is more welcome to keep adding more points which will be an eye opener for the Implementers.

Please share your honest feedback to write about other industries based on my experience?

Hope this helps