Transformation of a Korean Kwangju Bank - Case Study Example

? From A Dinosaur To A Chameleon: Transformation of a Korean Bank Kwangju Bank The Bank had problems with its computer systems that made it fail to operate appropriately in the market. The system was too rigid and could not work effectively to respond to the changes that were taking place in the market. The bank’s information system could not allow the bank to set its own strategies, since it could not support them. The support from vendors from whom the hardware for that information system was bought did not provide adequate support to address the problems of the system’s rigidity (Young, n.d.). There were some events in which the system came to a halt completely, stopping the processing of all bank’s transactions. This occurred for example in 1989, where the system failed completely, stopping the bank from operating for 32 hours. The hardware of the host computer was too faulty such that even the vendor who supplied the bank with a new Online Transaction Processing System required that the host computer be changed before they could continue to support the maintenance of the OLTP. The bank’s re-engineering was a highly risk affair. The bank wanted to downsize its OLTP, which was the lifeline of the banks information system. Any mistake done in the process could mean that the credibility of the bank is affected significantly, since it could interfere with the customers’ financial interests. The changes to be made on the information system of the bank was to be made flexible such that it could support the banks development of own strategies through its flexibility. In addition, the system was to be developed focused on the customer’s perspective, as opposed to the earlier one, which was focused on the perspective of the bank. Consequently, the bank’s reengineering changed the whole information system . The establishment of new client/server model introduced an interface through which the bank could introduce new products and strategies (Young, n.d). Furthermore, the client’s database was distributed to the regional servers to reduce the time consumed in information processing. The client server model served to eliminate the risks associated with a total system failure, since it maximized the local autonomy of the information system. An open system structure was introduced, making the need for vendor maintenance minimal and thus reducing the maintenance related cost. This made the client/server model better than the upgrading of the mainframe system. The significance of global competition in the IT decision reached by the bank was that the bank realized that it could not compete against other banks from the US, Europe and Japan due to its inability to develop strategies of its own. Compared to the other banks from other countries, the bank was too weak. This influenced the decision to establish an information system that would make the bank competitive globally. The risk associated with downsizing the OLTP is that any mistake made in the process would significantly lower the credibility of the bank, since the OLTP is directly linked to the client’s financial interests. However, the downsizing provided many opportunities than any other change of the system, since it was a new innovation. It allowed the bank to develop strategies of its own, develop and incorporate new products within its system, reduce the risks of collapse of the whole information system through making local servers autonomous and reducing significantly the processing time involved in transaction processing. In addition, this downsizing provided an opportunity to reduce the maintenance and upgrading costs. The new system is supporting the decentralization of operations by forming local servers that are placed in different bank’s branches. The customer databases were distributed to the new servers, to reduce the transaction time involved. Decentralization was also supported through the maximized autonomy established by the downsized OLTP (Young, n.d.). This decentralization eliminated the risks of a whole system failure, through the placement of servers locally in different towns and branches. This meant that even if the main servers that were placed in the head office would fail, those placed in the local regions will still continue functioning, and vice versa. Software development and application involved the selection of an appropriate operating system that would support the functionality of the banks transaction systems. Real-time security controls for the operating system were to be incorporated in the software. The operating system needs to support the cooperation of different servers when they are accessing information from the main serve. Oracle Data base management system was applied to manage the databases of the bank’s clients. The DBMS maintains the databases regionally and helps process the transactions of the banks regions. The bank reduced its transaction processes from the earlier 3,000 to 400. The bank created a new 200 new transaction processes based on the customers’ requests. Commercial software packages were utilized by the project team. This helped to reduce the program development cost from an initial 12.5 million dollars to a low of 2.5 million dollars. Some cultural, economic, and political factors are relevant to this case. As an economic factor, the vendors who used to supply the main frame tried to obstruct the changes that were being introduced, to save guard against loss of their market. There were also internal politics from the senior officers of the bank who were very doubtful about the appropriateness of the whole change. A cultural threat was being introduced by the new changes to the Senior staff at the Kwangju Bank computer center, since they were not comfortable with the new technology that was being introduced (Young, n.d.). The academicians who were supposed to evaluate the suitability of the new changes observed that the technology to be introduced was too risky and immature to be used. However, this did not hinder Mr. Song from impressing on the fact that the change was the best for the bank, something that proved correct later on. The business process reengineering had to accompany the new information system development, since reengineering was the basis of the banks transformation from its status and culture of failure to the new status of success. However, this new transformation, which entailed reengineering of the company could not be done without the new information system development. The two had to go hand in hand to achieve the desired changes and success. Work Cited Young M. K. (n.d). From A Dinosaur To A Chameleon: Transformation of a Korean Bank Dong-A University, Korea. Read More