Introduction
First Atlantic, a bank in Nigeria, was looking for a competitive edge. Technological innovation would allow it to avoid investing in an extensive branch network as a condition for matching competitive advantages of its peers. I am going to take a financial perspective when analyzing the technology failure at First Atlantic.
The bank was going to launch related electronic banking applications that would allow it to realize its objectives of increasing earnings. Therefore, success would be measured by growth in business after the launch of the technology (Huang, Makoju, Newell, & Galliers, 2003).
Problem
The choice of the technology framework was direct, with scaling in size and functionality being the key determinants that led to the purchase and installation of the Infosys’ solution called ‘Finacle’. The bank made ambitious choices. First, it bought a whole suite of services including an internet-banking platform.
Secondly, it set up a six-month target to go live. Being in a hurry would cost the bank time for proper analysis of its risk exposure to business success and technological failure. Limited time also affected change management processes at the bank. The bank hoped that it would be able to become competitive by providing internet banking.
Market data before and after product launch showed that, the uptake was very low to make it a meaningful source of income for the business. According to Venugopal and Rao (2008), critical success factors for project success include management support and good project management, as well as hybrid approach at integrating legacy systems and the new system introduced.
The key problem for the bank was a lack of an appropriate return on investment for its e-commerce venture. It arose because the new technology infrastructure did not properly tie with the legacy system at the bank. Thus, there was no alternative pathway to follow when the decision did not pay back.
Project management was also poor as stakeholders were left out of the process, and they included staffs and customers. They later on participated as end users of the electronic banking platform (Huang et al., 2003).
Analysis
This part looks at the bank’s technology investment decision according to the Valuable, Rare, imperfectly Imitable and Non-substitutable (VRIO) framework. The biggest input in the technology was the people doing the marketing and using it on a daily basis.
As a technology, “Finacle” presented the right promise, but it was not appropriate for the First Atlantic because it did not provide sufficient value and could easily be imitated by rival companies. After its deployment, the bank needed to train staffs and market the services launched on “Finacle”.
It still faced the same problem of trying to outdo its rivals yet it had already made the investment. If the technology proved to be outright successful, other companies would contract Infosys and buy its products, learn from the mistakes of First Atlantic and require incremental installations. The failure of the technology was due to a failure of management to set the right expectations and practice financial austerity.
The business was introducing a technology that is effective only when staffs are innovative, yet it did not consider ways of transferring innovative skills to workers to make full use of the technology. As a result, First Atlantic had to revert to norms of relying on tested applications that only provide threshold competitive attributes instead of VRIO matching advantages.
Alternatives
The first alternative is for the bank to continue with the project as it is and take it as a lesson while focusing in employee training. The second alternative is to come up with additional electronic banking implementations that attach the new technology with other existing bank systems. The third alternative is to modify the “Finacle” technology solution so that its success is not only dependent on internet banking.
Solutions
The first solution is for the bank to have internet banking as a facilitator of agent banking. Internet banking would create service kiosks, instead of a full branch network. The service kiosks would have bank workers to provide basic bank services on an internet-banking platform to a majority of customers who do not have the Internet.
The second solution is to abandon the internet banking and focus on enterprise resource aspects that improve efficiency in legacy operations.
The third solution is to have third party service provider handling the end user market application of the technology infrastructure for First Atlantic to limit its outright financial expenditure on the project.
Recommendations
The bank should proceed with the first and third solution options to ensure that it is limiting its financial exposure in the project, and at the same time is linking implementation to existing capabilities. This will allow it to achieve value from the implementation, as internal staffs will have meaningful integration with the new project, while technical aspects of the project would be availed by the third-party contractor.
Management will still be able to input on critical decisions and react to market information according to the organization’s culture such that the project becomes non-substitutable. Use of third party contractors can save the bank the need for outright full-scale implementation, and therefore make the project capable of expanding in reaction to competitive pressures facing the bank, thus making it both valuable and imperfectly imitable (Munteanu, 2015).
Conclusion
Deployment of “Finacle” as a technology infrastructure at First Atlantic was a failure because management did not prioritize returns on investments and project ownership. The bank will be reducing its outright capital expenditure, considering the recommendation of going with a third-party service provider; thus, it will be improving its prospects for a fair return on investment.
The service kiosks approach will bring up project ownership in present bank staffs and give room for an innovative practice that is critical in making the technology implementation unique and capable of using the existing marketing resources of the bank.
References
Huang, J., Makoju, E., Newell, S., & Galliers, R. D. (2003). Opportunities to learn from ‘failure’ with electronic commerce: A case study of electronic banking. Journal of Information Technology, 18(1), 17-26.
Munteanu, A. I. (2015). Exists a relationship between strategic human resources management, innovation and competitive advantage? Ecoforum, 4(1), 105-110.
Venugopal, C., & Rao, K. S. (2006). Learning from a failed ERP implementation: A case study research. International Journal of Managing Projects in Business, 4(4), 596-615.