The banking world is once again being confronted with the perennial issue of IT costs. Everyone wants to prepare for tougher times. But where can savings still be made without hitting the bottom line? The IT Infrastructure Library (ITIL) provides clarity.
Anshu Jain and Jürgen Fitschen are looking at the money. Under their leadership, Deutsche Bank is to save 1.7 billion euros a year on infrastructure by 2015. The rest of the banking world is also currently being confronted with the perennial issue of IT costs. Everyone wants to prepare for tougher times. But where else can savings be made without hitting the bottom line? The IT Infrastructure Library (ITIL) provides clarity.
Private banking in particular needs a clear overview. It has been struggling with high IT costs since the financial crisis. According to a study by Eurogroup Consulting, their share of total expenditure has risen from 23 percent to more than 27 percent since 2007. This is the result of a vicious circle: old IT systems consume a large part of the budget, which has been tight for years, while the rest is used to implement regulations and manage the complex business. "There is often not enough money to get rid of expensive legacy systems, even though this is where the most savings could be made in the long term," says afb CEO Jan Ph.
The authors of the Eurogroup study also believe that instead of focusing on legacy issues, banks should improve their IT cost structure and follow an overarching IT strategy. This contradicts the "lawnmower method", in which the budgets of all cost centers are cut by a fixed percentage across the board. This is widespread in the IT sector. It is difficult to gain an overview of the cost structure due to the large number of cost types and the strong integration with the specialist departments. However, only those who know exactly where to invest can make long-term savings.
ITIL makes IT calculable
ITIL Financial Management offers a helpful process for this, which can be found in the ITIL book "Service Strategy". Using the best practices described, banks can better manage their IT service costs via the budgeting, accounting and charging sub-processes. "afb has generally had good experiences with ITIL for years," reports Wieners: "IT becomes calculable, its benefits for the business measurable." With ITIL Financial Management, costs can be precisely allocated - right down to the individual service.
With budgeting, banks plan future IT expenditure - usually once a year - and make adjustments at any time if necessary. The "Accounting" process compares the current costs for service delivery with the estimated costs. However, budgeting and accounting must be coordinated with the central accounting department and should follow clear guidelines. For example, the company should define the cost types, the allocation for billing, the procedure for budget deviations and the distribution key for overhead costs in advance. Finally, "charging" is used to allocate IT services and is optional according to ITIL.
If you want to find out for each service whether it is worth the effort, too expensive or perhaps even dispensable, you also need a link to Service Level Management. This area records the service requirements in accordance with the business objectives, monitors compliance with the levels and documents them. For Wieners, ITIL is therefore also "an excellent tool for cooperating successfully with service providers on many levels."
