Kiwibank has booked a $90 million impairment in its software assets and flagged a major change in its SAP core banking rollout.
“Although the strategic review has not yet concluded, a potential change to how we build the core ‘back end’ IT system (CoreMod) to match the demands of the ‘future front end’ has prompted a re-assessment of the value of the work in progress since successfully migrating our batch payments to SAP,” the bank said today.
You have to wonder why boards tolerate large-scale SAP projects when the failure rate is so high.
I’ve been told, off-the-record, by a number of high-ranking technology executives that dumb decisions are imposed from the top down with CIOs left to carry the can and pick up the pieces.
One recurring theme is that most of the cost and time overruns are due to extensive integration and customisation.
Make that unnecessary integration and customisation.
It is as if every bank or large business has unique, arcane and esoteric processes that can only be covered by expensive and risky software rewrites.
We know that simply isn’t true.
To think there is something magic tied up in those processes is madness. And expensive.
A smarter strategy for a bank, or any large-scale enterprise, would be to purchase off-the-shelf technology and redesign internal business processes to fit the software. Packaged software usually comes with flexible enough options and settings to cope with essential exceptions.
That’s how it works for small businesses buying accounting software from firms like Xero. Speaking of Xero…