Revenue and Cost levers for IT transformation case

Hi there,

You have to think about this in a structured way. Think about a couple of ways to breakdown costs and revenues - and then go through them one by one to see which apply.

I won't go into a lot of detail (you can breakdown this further, particularly using the other coaches suggestions) but I'll give you the example.

So in type of costs you have:

• Labor (branches, back office FTE): you need less people for commercial activities (by automating part of the sales process; e.g. customer contact; contracts; etc) or for administrative activities (either by automation or error reduction)
• Rent (branches, central buildings Real Estate): you need less RE related to the previous point
• Travelling: e.g. you don't need to meet the customer to sign a contract (or better remote meeting tools)
• IT direct costs: think about the previous mentioned costs when considering the IT function itself (labor, RE, software licences is usually quite relevant)
• Utilities (telco, water, energy, mail)
• Other costs (security, insurance, office supplies, marketing)
• Financing costs: unlikely - but remember that fewer mistakes may reduce this

Revenues:

• Use Market Share perspective: Number of customers x Number of products x Frequency of Purchase: my expectation here is that a better system should lead to customers using more your bank (e.g. paying more transaction fees)
• You can also use a "churn" or "loyalty" (i.e. less customers leaving the bank, leading to higher retention).

Remember, while knowing how an industry works may help in doing this lists, what is being tested is your ability to THINK IN A STRUCTURED WAY.

(edited)

Hi there,

No only did I work on a digital transformation project at BCG, but in my career prior to that I build large-scale IT systems for a number of clients!

Here are the impacts I saw from improving IT systems

Cost Reduction

• Abiltiy to cut labor
  • System could either do a specific person's job (i.e. allocate/assign tasks/workers)
  • Or it could support them in doing so, thereby requiring fewer
• Fewer errors/mistakes
  • Fewer false claims
  • Reduced chance of too high/low payments
• Faster processing times resulting in reduced costs/overhead
• Data analytics allowing for optimized processes
• Data analytics allowing for optimzied workforce management
• Reduced rent (Ability to WFH)
• Reduced travel costs (ability to access remote)

Revenue Uplift

• Enhanced exceutive/management decision-making through reporting
• Faster processing times resulting in more sales/completes
• Reduced bottlenecks

Hey,

Here are some ideas:

Revenue

• Sales uplift (online/ecommerce)
• Reduced time to market
• Pricing improvement (data driven decision making)
• Customer experience uplift (digital)

Cost

• Labour/Personnel Salaries, Benefits
• IT as a Service (SaaS-license & maintenance, Outsourcing, BPaaS etc)
• Telecom (data, voice)
• Software (Maintenance & License)
• Hardware (Data Centre, End user computers, peripherals etc)

Some ways to reduce cost

• IT Spend should also be looked at as % spend of revenue and benchmarked against industry to get an idea of current spending levels vs peer group
• Use Cloud and SaaS more
• Trade off cost vs quality (non critical services)
• Drive system to system integrations and remove process inefficiencies
• Manage long tail of suppliers and consolidate ; drive strong SLAs