IBM-Cisco Alliance Announces Branch Transformation Offering

Transcription

1 Gartner Dataquest Alert IBM-Cisco Alliance Announces Branch Transformation Offering On 5 November, IBM and Cisco jointly introduced a Branch Transformation Networking offering aimed at the needs of banks to replace aging bank branch infrastructure. The announcement was made at the BAI Retail Delivery Conference in Atlanta, Georgia. This offering builds on the existing strategic alliance between IBM and Cisco established in 1999, linking complementary skill sets, including Cisco's networking expertise and IBM's infrastructure and middleware expertise. The offering extends the strategic alliance by committing joint resources to develop the networking layer of the vertical-specific branch transformation offering. An implementation is already in place at IBM's ebusiness Solution Center in Dallas, Texas for customer review, with future implementations planned for Europe and Asia in the next two to three months. IBM emphasized that it will also team with other vendors, including providers of automatic teller machines (ATMs) and of branch automation software, to offer the multichannel Branch Transformation solution. IBM and Cisco envision the shift to new branch architecture as the foundation for the Branch Transformation offering. The shift involves phased migration from multiple, single-service overlay networks (for data, voice, ATMs and video) to integrated, multiservice Internet Protocol (IP) networks (see Figure 1). In turn, the technology refresh of the network is targeted at improving network and business resilience and agility, reducing operations/maintenance costs of multiple disparate networks and enhancing customer loyalty. The Branch Transformation solution includes networking, hardware and software products, and support services. The solution also encompasses a broad spectrum of IT professional services, including consulting, implementation and outsourcing. The IBM-Cisco alliance envisions the converged IP network as the foundation to support new ways of doing bank branch business: Enhancing content delivery and collaboration via Web-enabled ATMs and kiosks, portal services, and videoconferencing to support sales as well as employee training needs Achieving multichannel integration across the branch, call center and ATM channels Supporting new technologies such as personal digital assistant (PDA) and wireless access Integration of existing and new IP services (for example, interactive voice response [IVR], computer telephony integration [CTI], automatic call distribution [ACD], Intelligent Call Routing and so on) across the call center and branch channels and addition of productivity applications November 11, Gartner, Inc. 1

2 Figure 1 Transformation to Converged Voice/Data/Video Network Source: IBM and Cisco November 11, Gartner, Inc. 2

3 IBM and Cisco seek to link the Branch Transformation offering to key business and technology drivers. Goals identified by the alliance include achieving differentiation for customer loyalty, achieving profitability, and ensuring network convergence and resiliency. The solution is intended to meet these goals through the Branch Transformation vision articulated by the IBM-Cisco alliance: Make every employee a customer-facing asset Make all products available to all customers at any time, anywhere Enable enterprisewide customer intelligence IBM and Cisco point to their shared Branch Transformation vision as a key differentiator for their offering. In addition, the companies reference their track record as business partners since The broad capabilities brought together to create and deliver the Branch Transformation offering, encompassing IT support and professional services as well as networking and middleware products, also contribute to the alliance's value proposition. Gartner Dataquest Perspective Bank branches represent the classic case of technology refresh needs. However, IT solution providers do not necessarily enjoy an automatic boost with revived capital spending on branch automation and ATM systems. Many providers, including IBM, benefited from the diversion of channel investments to Internet banking. With the Branch Transformation offering, IBM and Cisco address the challenge of creating a vision for branch banking, which integrates with the other channels such as the call center and the Internet which claimed center stage in the past five years. They also address the networking challenges that have proliferated along with the accumulation of channels. Furthermore, IBM and Cisco are capitalizing on the marketing platform presented by BAI's Retail Delivery Conference, refreshing complementary offerings that the vendors have offered independently or on a one-off basis in the past. Bank branch needs took a back seat during the heyday of 2000, first-generation Internet banking and customer relationship management (CRM) spending in the late 1990s. The sharp brake on capital spending in banking in 2001 capped off approximately half a dozen years of underinvestment in branch banking. The tide is finally turning, with banks recognizing the ongoing value of branches in an integrated multichannel-banking environment. Early indicators of this coming tide of bank branch importance and investment can be seen in bank branch openings by large and community banks and plans announced by large banks to replace their ATMs. In a fall 2002 survey by Gartner Dataquest, 28 percent of banks indicate that they plan to invest in refreshing their branch automation systems in 2003 and 2004, while another 22 percent indicate that initial investments in refreshing branch systems are already being made. The IBM-Cisco alliance walks a fine line in terms of addressing the critical near-term business goal identified by banks namely to cut costs. Although IBM and Cisco point to the converged IP network as an opportunity to gain efficiency and cut costs, the Branch Transformation offering focuses more on driving customer loyalty and driving profitability through productivity and new revenue. IBM and Cisco also state that this offering will complement partner sales of Web-enabled ATMs, which definitely appears to be an area earmarked for significant bank investment in the next two to three years. November 11, Gartner, Inc. 3

4 Gartner Dataquest makes the following recommendations: Building out the business case associated with business resilience and avoiding network downtime would provide IBM and Cisco with additional firepower regarding cost savings, which remains a key driver of IT spending in the near term. Address the risk associated with converged networks. Currently, there have not been any largescale, enterprisewide deployments of converged voice, video and data networks outside of a few manufacturers and systems integrators. The next-generation converged network represents a significant risk to enterprises in terms of availability and performance. Cisco and IBM should present these offerings to financial services organizations as phased migration rather than a forklift revolution. IBM and Cisco should look to add additional partnerships related to the telecommunications requirements and costs of Branch Transformation. Transport services are crucial to the development of a truly converged and connected network on which banks will build their internal and customer-facing capabilities. IBM and Cisco should articulate how their offering can help banks face increasing scrutiny from regulators regarding security, privacy and operational risk. For competitors: Be advised, this offering brings together a combination of networking and infrastructure expertise, key areas in which banks are seeking to upgrade their IT. Business transformation requires more than IT investment: The disillusionment with CRM has taught that large changes wrought quickly do not necessarily bring the business results intended. Demonstrating that IBM-Cisco can also transform the bank branch employee behavior would go a long way toward: Demonstrating IBM indeed acquired business process expertise linked with change management skills with the PwC Consulting acquisition Diminishing the skepticism regarding IT investments that followed on the big binge of CRM spending By Susan Cournoyer and Eric Goodness November 11, Gartner, Inc. 4

5 This document has been published to the following Marketplace codes: ITSV-WW-DA-0166 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: The content herein is often based on late-breaking events whose sources are believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The conclusions, projections and recommendations represent Gartner's initial analysis. As a result, our positions are subject to refinements or major changes as Gartner analysts gather more information and perform further analysis. Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden