The European Business School (EBS) announced the results of a new study on the use of enterprise resource planning (ERP) software in the banking industry. This comprehensive study analyzes feedback from an in-depth questionnaire completed by senior managers at more than 100 of the world's largest banks, providing insights into banks' evolving usage of ERP software to manage and run their business operations. The study finds:
- Standard ERP applications are rapidly replacing custom-built software. ERP is a proven and growing technology in the banking industry, with approximately 50 percent of surveyed banks already using a standard ERP software package and an additional 14 percent considering an ERP purchase. Five years ago, off-the-shelf packages represented less than 40 percent of software in banks; the number is expected to top 60 percent in the next few years.
- The need for improved business processes is driving ERP adoption. Improving business process efficiency and the need for better transparency and quality of information are the two most cited reasons for adopting an ERP system, according to survey respondents. Usability is also cited as a key factor affecting buying decisions. New ERP solutions with portal functionality are increasing end-user acceptance and adoption.
- Banks require integration capabilities. The ability to integrate ERP with other IT systems is of critical importance to banks. The majority of banks surveyed, nearly 60 percent, favor using IT solutions from multiple providers as opposed to purchasing all software from a single vendor. Integration is also a critical factor for banks entering into mergers and acquisitions where the integration of data from multiple IT landscapes is required.
- Banks identified key criteria for a successful ERP system. Top management support, precise guidelines and early user involvement are overwhelmingly cited as the most important factors for a successful ERP implementation, demonstrating the increased strategic importance of ERP software that touches nearly all areas of a bank's business.
Banks have traditionally relied on home-grown, custom-built software systems to handle their back office as well as banking software needs. The move toward standard software represents a major shift for banks responding to tougher market competition, shrinking margins, new legal and regulatory requirements and increasing mergers and acquisitions. Competitive pressures compel banks to focus on how they can integrate IT systems to leverage existing IT assets for the most value as they build and deploy additional solutions or undergo a merger or acquisition. The evolution of IT systems into flexible and adaptable services-oriented architectures that facilitate integration will make standard ERP software continually more attractive for banks.
The study, entitled "ERP in Banking," was conducted by the European Business School (ebs), Endowed Chair for Banking and Finance and Chair for Information Systems, under the sponsorship of SAP.
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