Return On Investment in eBanking Services Projects

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Return On Investment ine-Banking Services
Projects

• Dr. Osama A. Rayis
• Sudan University of Science and Technology

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Investment in IT

• Is a business case with
• Mission, Vision, objectives and plan.
• Costs
• Benefits
• Risks
• Return on Investment ROI should be calculated

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Elements of a Business Case for IT Investment

• Project Definition
• A mission, vision statement Project Objectives
• Approach Definition
• Expected Benefits and Returns
• Costing Finance
• Risks Management, Monitoring and Mitigation Plan
  (RMMM)
• Plan of work, Inputs, Deliverables, Timeline,
  Milestones
• Project Management and Staffing
• Performance and Progress Measurements and Metrics
• Alternatives

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Definitions

• Banking IT system
• Is a collection of hardware, software and
  networking facilities that when placed properly
  within the banking environment and the business
  processes will help to lever the bank total
  performance.
• Return on Investment ROI
• ROI Sum of benefits / Sum of Costs

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Banking IT systems
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Electronic Banking Services

• ATM
• Online Debit and Credit (Visa, MasterCard,
  electron, )
• e-payment (Cybercash, Digitalmoney, )
• Phone Banking
• Web Banking
• Electronic Settlements and Clearance
  (Intrabranch)
• CRM
• etc .

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IT Project Lifecycle 1- Waterfall
Requirements
Specification
Design
Coding
Testing Debugging
Integration
Maintenance
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IT Project Lifecycle 2 - The spiral model
Planning
Risk analysis
planning based on customer comments
initial requirements
toward a completed system
initial prototype
Engineering
Customer evaluation
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IT Project Lifecycle 3 - Rapid Prototyping
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Benefits Returns

• Tangible (Hard)
• Increase in Productivity
• Time Saving
• Increased Coordination
• Increase in Quality
• Intangible (Soft)
• New Opportunities and Strategic advantages
• New Bzns form of wealth
• Stronger Management Grab and control

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• Brynjolfsson Hitt (2000) found that payoffs
  from IT
• Capital deepening Labour productivity can
  increase when providing workers with more
  capital. Capital may include land, structures,
  equipment, or the relevant capital may be a more
  narrowly defined input (e.g. computer equipment).
• Multifactor productivity (MFP) Technical
  progress in the production process or in the
  quality of output can increase the level of
  output without additional investment in input. An
  improvement in MFP is considered to be of great
  importance as it reflects structural gains that
  are permanent.
• Dedrick et. al. (2003) suggest that the unique
  value of IT is that it enables fundamental
  changes in business process and organisational
  structures that can enhance MFP.
• Westerlind (2004) stated that working harder
  would only increase the output, working smarter
  would enable the business to increase its
  productivity.

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Costs

• Total Cost of Ownership TCO for IT Projects
  includes
• Consultancy and Supervision
• Costs of Hardware and Software (Capital and
  Licenses)
• Costs of Support (Help Desk, Training, )
• Costs of Management (IT management, bzns
  Management)
• Costs of Change and Development
• Operational Costs (Communications, updates, )
• Soft Costs
• Usually Project lifetime of IT projects is
  calculated for 3 years (IT exhibits high
  depreciation)

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Risks

• Complexity
• Unrealistic Expectation
• Long Time to Cultivation (Typically 4 7 Years)
• Failure to Manage and redesign Bzns Processes
• Change and Configuration Planning Management
• Lack of Organization Support and Acceptance
• Misperception of the Dimensions of the new
  Technology (Strengths and Limitations)
• Lack of Concrete Alignment between Project Goals
  and Organization Strategic Objectives

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Value Model (Jurison 1996)
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Public ROI Models
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