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Transforming Business Through Judicious Application of IT

PLUS Instant money transfers have helped UBI win many a customer. The bank’s move to implement Enterprise Application Integration has made this possible while improving operational efficiencies.

INTERVIEW Venkatesh Natarajan, Special Director – IT, Ashok Leyland shares how the company got its employees to rally behind its SAP migration process.


Money AT THE

Speed Of Light Company Union Bank of India Industry Banking Offering Various banking products such as bank accounts, deposits, loans, etc.

Instant money transfers have helped UBI win many a customer. The bank’s move to implement Enterprise Application Integration has made this possible while improving operational efficiencies.



ime and tide, it is said, wait for no man. Union Bank of India (UBI) discovered that the popular saying ought to be amended to accommodate money transfer transactions too. Its customers were seeking instantaneous transfer of funds — irrespective of any channel or type of processing involved. For instance, the application handling foreign inward remittances was not integrated with the bank’s core banking application, hence the e-remit transactions had to be manually processed in CBS. The difference in time zones also resulted in delays. This was impeding the speed and efficiency of the operations. All that changed when the bank implemented Enterprise Application Integration (EAI). The EAI approach has met with considerable success in recent times and that was one of the factors that prompted the bank to move to an EAI implementation. With TCS as a consultant, the bank opted for an EAI implementation based on Service Oriented Architecture (SOA), promoting high re-usability of the components. The loosely coupled characteristic of the framework makes it very easy to create new services or customize existing services and expose them to subscribing clients independent of the platform they are hosted on. SOA makes it possible to expose services without the clients having to deal with the internal details. The decision to implement EAI was taken in June 2010 and, over the next few months, the application was piloted on a test server. The bank procured the necessary hardware in June 2011 and the application went live soon thereafter. EAI processes the data instantly in a more secure manner and ensures prompt service. Besides the instant remittance facility, EAI brought in a slew of operational efficiencies. “EAI is allowing legacy applications to continue without major replacements /customizations. This is bringing about a lot of cost savings to the bank,” said Ajit Rath, General Manager - IT for UBI.

Processing ECS transactions used to keep staff members busy. Now they have more time to devote for their core responsibilities.” Ajit Rath General Manager - IT, UBI.

THE GENESIS The Union Bank of India (UBI) is one of the first large public sector banks in the country to have all their branches on a single core-banking platform. UBI has always looked at technology as a key facilitator to provide better customer service, and has a well-defined ‘IT strategy’ that can meet its business goals. UBI has taken rapid strides in this direction with 100% computerization of all its branches. The bank has many disparate systems catering to various business needs of the bank’s customers. UBI has also rolled out several systems and is also constantly in the process of implementing new systems. Some of the key systems include CBS implemented across all UBI Branches, Lending Automation System, Cash Management System, Document Management System, Channel Finance, HRMS, SFMS (Structured Financial Messaging System) and an integrated treasury. The bank also has multiple external interfaces with various payment channels. With a view to integrate its disparate systems on a single platform, UBI sought to have a robust middleware

It was a primary design goal that the services in the EAI gracefully handle all error conditions and that manual reconciliation be eliminated.


so that IT would be able to meet business needs related to quick turnaround seamlessly. Middleware implementation was to bring IT standardization (in terms of processes, interface, integration standards, messaging standards and guidelines), automation and build a robust integration framework for both internal and external systems.

FAILOVER SAFEGUARDS Among the changes that the bank was seeking was a framework that provided its systems the ability to handle large workloads with a small amount of processor time by utilizing standard hardware scaling techniques. Besides, it wanted to eliminate manual intervention in as many processes as possible in order to reduce the tampering of the data and increase accuracy and speed. These considerations were to be given high priority in the EAI architecture. The bank also wanted to ensure that the new architecture permitted easy extension to support future requirements. Such requirements could include new business functionality such as new product offerings from the bank, new product features, changes in existing services to customers and changes in operation processes within UBI. It was also essential that the component design facilitate easy introduction of new components as well as easy modification of the existing components and their inter-relations with the architecture. The architecture was to support guaranteed highest possible availability, and the design was required to provide for failover at all levels of the system —including software, operational and hardware failures. Facilitating easy maintenance and ongoing support of the runtime components was also an important consideration. The architecture was required to adhere to industry standard protocols for exporting management and statistics information. Another important design goal was for the architecture to adhere to industry standards and best practices in order to promote inter-

operability with heterogeneous carrier host system environments. This, too, was achieved in the EAI design that was implemented. Finally, it was very important that the architecture be robust, and that it caters to all possible error conditions, reporting these to clients/carrier host systems in a controlled manner. It was a primary design goal that the services gracefully handle all error conditions.

POWERING EFFICIENCY With the EAI in place, the bank raised its customer service levels by several notches. It was able to provide credits like pension payment on a timely basis. Though most of the bank’s operations are handled by its core-banking application, Finacle, the bank had a legacy application for pension funds. In the earlier system, there would be some delay before the pension could be disbursed to pensioners. But with the integration, the delay was completely eliminated. Besides, many repeated and time-consuming jobs for processing large volumes of transactions received for Electronic Clearing System (ECS) are now processed through EAI in a seamless manner. For instance, the bank receives more than 40,000 ECS transactions everyday which are processed by 40 service branches all over India. Previously, bank employees used to manually download and upload the data for processing, verify customer details and charge customers as per the provisions. After implementing complete roll out of EAI, the ECS transactions are processed automatically within minutes with no manual intervention and, hence, save a lot of time of nearly 100 staff members across the country. This also leaves no scope for any manipulation of data files. Non-repudiation concerns relating to electronic transactions are now addressed. The erroneous records/rejected transactions from the Core Banking Application will be available in human task work flow of respective user with maker-checker facility for rectification/rejection, developed as a part of EAI.

Number of ECS transactions which are processed every day by 40 service branches all over India.


“Staff members now have more time to devote for their core responsibilities,” says Rath. The EAI implementation has also helped the bank increase its accuracy in processing bulk transactions. “While entering bulk data manually, there is a possibility of inaccuracies due to human errors which has now been eliminated,” says Rath. As a result of the EAI implementation, the bank is able to easily integrate disparate systems to merge the financial data. “Transactions flow from the source application to the target application instantly, hence eliminating delays,” says Rath. The next phase of implementation will see a performance evaluation of staff and integration with customer ERP. The bank is also integrating HRMS (PeopleSoft) with other applications for doing performance evaluation. The integration has sped up the reimbursement process for its own employees too. Once an employee’s supervisor approves the reimbursement request, the amount is directly credited to the employee’s account. Union Bank of India and TCS have won the Best Middleware (for Enterprise Application Integration Project) in The Asian Banker’s 2011 Technology Implementation Awards.

On The Fast Track The EAI implementation has helped UBI quicken many processes, some of which are customer-facing while others are internal: Speedy ECS processing: In the previous scenario, there used to be many repeated and time-consuming jobs for processing large volumes of transactions received for Electronic Clearing System (ECS), pension and salary. The EAI now processes the same in a seamless manner. Pension funds: In the earlier system, there used to be some delay between the time the pension was received from the government and the time it could be disbursed to customers. But with the integration, the delay was eliminated. Salary remittance: The integration has sped up the salary remittance process for its own employees too. Once the HR department approves the salary, it is directly credited to the employees’ account. Balance sheet assistance: As a result of the EAI implementation, the bank is able to easily integrate disparate systems for generating a unified balance sheet.

THE NUTS AND BOLTS The procured software for EAI is IBM’s WebSphere Message Broker, which extends the messaging capabilities of WebSphere MQ by adding message routing, transformation and publish/subscribe features. WMB provides a runtime environment that executes message flows, which consist of a graph of nodes that represent the processing that is needed for integrating applications. WebSphere MQ forms the underlying transport layer, ensuring guaranteed message delivery, and has built-in security and message storage. WebSphere Transformation Extender (WTX) WebSphere Transformation Extender enables the integration of customers and partners with rapid deployment of industry transformation solutions by extending enterprise service bus functionality, integrated with WebSphere Message Broker (WMB) for industry solutions. The solution also includes WebSphere Process Server WebSphere Process Server which is a high-performance business process automation engine to help form business processes and workflow for an organization. Another component of the solution is the WebSphere Business

Monitor(WBM). This component provides aggregation, analysis, and presentation of real time information about activities involving internal activities and transactions. IBM ITCAM enables a common data model for a consistent view of information across all components and agents. This information is then consolidated in one easy-to-use, role-based interface — the IBM Tivoli Enterprise Portal. IBM Tivoli Storage manager (TSM) is a backup solution management for scheduling the online/ offline backup of production database onto media such as tape/CD and can also be used to restore the backup of database, whenever required.

AIMING HIGH The bank earned recognition for its corporate governance practices when it was awarded the “Certificate of Recognition” for Excellence in Corporate Governance at the 10th ICSI National Award for Excellence in Corporate Governance, 2010. “After the successful EAI implementation, the bank is focusing on striving for excellence in customer service,” Rath said.



LOOKing BACK A new ERP may not fit perfectly. But quitting was not an option, says

Venkatesh Natarajan,

Special Director – IT, Ashok Leyland. By moving on to the new system, the company’s processes were closely aligned with the global best practices.

Venkatesh Natarajan, Special Director – IT, Ashok Leyland


The manufacturing industry has seen turbulent days in recent years. In what way has IT helped Ashok Leyland navigate this turbulence? Being in a very competitive landscape, we have looked at various ways to increase productivity and also boost employee morale. Some time ago, we introduced an initiative called GEMBA to look for improvements and cut waste. (Gemba in Japanese means the place where all activities are actually taking place — in other words, the place where value is added) It was also our intent to have employees’ efforts aligned with the objectives of the organization and we sought suggestions from all employees. To support the GEMBA initiative, a lot of IT modules were required to be designed. One such is GEMBA Mpower, where employees’ suggestions are rewarded with points which are entered in a GEMBA passport. When employees accumulate sufficient points, they can redeem them for gifts such as a trip to Singapore and so on.

Can IT really be of any consequence to the people on the shop floor? Yes, and we have shown how that can be. One of our projects conserves workers’ energy by redesigning the shop floor to reduce workers’ movement. IT tools helped us create an “employee effort” and ergonomic index to check employee fatigue. We have an IT application to offer rebates on spare parts for mechanics and retailers, helping us strengthen our ties with this community. For a specific category of components, identified as MITR components, an attached bar code provides mechanics with a serial number which must be sent over an SMS to earn the rebate. A service provider validates the SMSes and credits the amount to the MITR cards held by the mechanics. The mechanics can, alternatively, communicate the code number orally over the phone, as the application has a voice-recognition interface as well. A share of the rebate goes to the retailers too.

More than two years ago, your company took a decision to move from your homegrown solution to an ERP. What precipitated the move away from your legacy system? For almost a decade, our homegrown solutions had served us well. But, by 2008, other considerations came into fore. Our joint ventures with companies such as Nissan, Alteams and John BM made it desirable that we have a standardized IT platform on a shared services model. Moreover, the Oracle database which supported our ERP was reaching its end-of-life point with support from the vendor scheduled to be discontinued after 2013.

At the time that you switched your ERP, the industry was reeling from a recession and decision-makers were pulling the plug off investments. What made you go ahead? Our management is very progressive and believes that even when the going is slow, one should not stop investing in IT if the investment is critical for the company. We paused during the depths of recession in 2008, but just long enough for the economy to show the smallest signs of recovery. By June 2009, the management had given the nod for the ERP switch.

An ERP transition can be a major nightmare. How did it go down with your company? The IT team adopted a policy of continuous engagement with business users. There was regular communication about various aspects of the new ERP, detailing, for instance, how the terminologies would change. Nonetheless, it was not easy for many of the workers. Some processes required workers to spend more time on documentation while, in other places, the flexibility that the earlier home-grown application afforded was no longer available. In many ways, an ERP transition is like shifting from an old house to a new one. At first, you feel al little lost trying to find where you keep your essentials. Once you start getting used to it, you start appreciating it. Similarly, it took our employees a while to realize the benefits of a packaged application like SAP. A CIO has to deal with this very adroitly, wearing the HR hat and sharing his longterm thinking with business users. We also had the support from the management who sent a very clear and firm communication to employees stating that everyone had to rally behind the new ERP. The management had communicated that we should look at the migration as an opportunity to effect a business transformation and ready the company for its next stage of growth.

Was it a good thing or a bad thing that some of the flexibility went out of the window along with the old application? It’s true that the new system doesn’t match our processes as closely as our homegrown solution did and we had to make adjustments. However, there was another angle to it: the flexibility that our old system provided had its benefits but not it was not without faults — some of the practices did not concur with the global best practices. By moving on to the new system, we did away with the bad flexibility that had crept in.

Analytics has been quite a buzz lately. Do you think BI / analytics has matured? Yes, decision support systems have indeed matured. There is some data that can’t be captured as part of the ERP data. Analytics helps capture such market data. Then again, some of the data may be unstructured, but if that is so, the CIO has to structure it and make it relevant to his organization. For me, it is important to have the right data to measure not just my progress but also compare my performance with that of my competitors. And I need to do it while the data is still relevant and the company can use it.

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