CBS announced last week that Bill Clinton and Bob Dole were going to revive the old “Point/Counterpoint” segment of “60 Minutes.” (Remember Jack Kilpatrick and Shana Alexander trading barbs and swings on Sunday night all those years ago? And the even-better Saturday Night Live take-off?) Well this news, plus some nostalgic reflection on all the fun we had on the high school debate team, has us stoked up. We want in on this action.
Therefore, we offer the Gonzo flavor of Point/Counterpoint. For your consideration: Acme Bank is a $1.5 billion community bank focused on commercial and business banking but with a desire to also provide a complete range of financial services, resulting in retail, mortgage, investment, and Trust lines of business.
Our question is this: should Acme have a policy of buying best of breed systems for each line of business from multiple vendors or a suite of products from one vendor?
Arguing for the best of breed approach is Terence Roche. In the suite camp, Scott Hodgins. And, good readers, any accusations that we deliberately exaggerated our opinions or got a little too personal just to entertain you will be hotly denied.
Thus we begin.
TR: OK Hodgins, listen up and learn from someone who was selling and taking care of customers on tired and unfriendly mainframe systems while you and the rest of the Gen-X crowd were still getting excited about new episodes of “The Brady Bunch.” The lines of business at this bank need the best possible systems they can find. Two reasons. One, the competition is too tough and the goals too high for anybody to use second choices. Two, openness and integration are here. Middleware works. That’s the whole point of new systems.
Wait… let me put this in a way you can relate to. So I’m like, choose suites when there’s best of breed available? As IF!
SH: Terry, Terry, Terry – I can call you Terry, right? Are you in the middle of a Berkeley flashback, Captain Goatee? We’re talking about a vanilla community bank, right? Providing across-the-board services with no dominant niche, yes? That’s the script for a product suite bank, old timer. Let me address your reasoning directly:
One – Competition is tough and we need a hot rod system to meet goals? Puhlease. I don’t know many salesmen worth squat who are in any way dependent on their systems to meet goals. Maybe they need to upgrade to best of breed Corinthian shoe leather and Pirelli tire treads, but they don’t need no stinkin’ high dollar systems to meet their goals. Inadequate Systems is the oldest (and most expensive) excuse in the hizzouse.
Two – Did you really say middleware works? As Snoop Dogg chokes out during a particularly potent mid-morning bender – “Huh?” The integration and middleware story is like the Man on the Moon conspiracy theory – good for headlines and babbled often by optimistic crackpots and speed-addled paranoids, but full of holes and disillusion in the end. Middleware works in theory for the vendor sales reps and the ivory tower dwellers, but I’ll bet you can’t find a teller, new accounts rep or CIO who’s one bit happy with third party integration. Integration today works sort of like MapQuest “works.” If close enough to be in the same hemisphere is OK with you, I suppose it works, but otherwise… c’mon.
And finally – how cavalier of you to be so generous with the bank’s money. Best of breed at this bank means a busted budget, no chance for an ROI, and a CIO with prematurely gray hair. These CIOs hire us, TR — take it easy on them.
By the way – “The Brady Bunch”? No way, gramps, we were glued to Gilligan’s Island, plotting our way into the, uh, heart of Ginger or Mary Ann.
TR: Whew. Where to start? First thought – decaf. You’ll see things much more calmly, and those annoying sweats might just go away. And as for flashbacks, it’s a medical fact that they stop after 15 years or so. Trust me on this.
Two – Don’t start with your “nobody needs systems to make goals.” OK, I’ll give you that some salespeople can make goals without or despite technology. But any bank like this one has line of business managers – mortgage, commercial, consumer, retail – that are being pressured by their competition to be faster and smarter in delivery at less cost. Their performance and their pay are being judged on it – or they sure should be. The reason they go away from the suite providers, or their core vendors is that their solutions don’t get them these results. That’s why there’s a marketplace for third party vendors.
Cost? Sure, best of breed can be more expensive. But is technology a game of managing expenses or enabling payoff? It doesn’t take management vision to manage costs – just close the checkbook. What takes vision is spending that can double the size and profitability of a line of business. If that requires best of breed, so be it. Payoff, bubba, not expense control.
Middleware doesn’t work? Tell that to the banks and credit unions taking 40% of their loan apps from the Web and automating booking and funding. Tell it to the IT managers creating a common design for branch, call center, Web, and back office systems. It may not yet work perfectly, but it’s working.
And lastly… Ginger?? You’re giving me Ginger? You’re saying she even comes close to matching up to Mary Ann? She’s not even in the same league! Geez, that’s as bad as saying paint-by-numbers and Picasso are both art.
SH: Well, at least you didn’t call me an ignorant slut. Three things I will grant you:
Now, I’ll stick to my guns on the cost thang. This is a profile of a bank that screams out loud for managing IT costs — minimizing the “I” in the ROI ratio. A $1.5 billion bank that can boast of a positive ROI story for a best of breed ancillary system is a true rarity.
Let’s not forget the trends we’re seeing in the market. The asset size ceiling for banks buying suite products rises every day. The reason is that the ROI promise for best of breed systems at community banks was almost never fulfilled, and costs skyrocketed as hard-working IT groups scurried to support a forest of interfaces, middleware packages, and “fully integrated” ancillaries. And so the suites beefed up their own functionality and gained momentum as CIOs across the country screamed for less complexity. CEOs nationwide are no longer buying the “I need a better tool” argument because the better tools simply weren’t delivering the necessary bang for the proverbial buck. ROI? They’re getting plenty of “I,” and precious little “R.”
For the record, my preference would have been an alternating Tu-Thu-Sat and Mon-Wed-Fri schedule to address the Ginger versus Mary Ann Situation. And rest on Sunday? I think not. Maybe for a nice Sunday surprise you throw in Mrs. Howell carrying a cat o’ nine tails made of woven palm fronds. I’ll go with the full suite here, too.
TR: Hodge, I’m sensing some confusion and bitterness here. Look, the Devo reunion tour was cancelled before they played Phoenix. You just need to accept this and move on.
Here are my final thoughts. Where we are on the path to bulletproof middleware is something we can agree to disagree on. Enough said.
Sure, CIOs are scurrying to manage complexity. When I was a CIO, I wanted simplicity and horked every time somebody unnecessarily strayed from standards. But banks don’t pick systems to make IT life easier. They pick them to support making their goals. IT indigestion from this goes with the turf.
Now, I’ll give you your point on ROI, and I even have to concede that unnecessary best of breed systems are sometimes a big part of the problem. The way to address this is through the organization, by creating a process that holds managers accountable for payoff before any investment is made. Don’t fix a best of breed ROI problem with cost control. Fix it with results. I do agree that without that discipline, you stay vanilla.
Oh, I’m sensing compromise and middle ground here. Tea?
SH: This is so typical of you. The olive branch is extended only after it has come to this. Sometimes I feel like you argue just for the sake of arguing. It’s as if you’d rather argue than face your true feelings about what’s going on here.
Editor’s Note: At this point, Terence and Scott shared a brief, tearful moment of bonding before boarding an aircraft to kick off a strategy session with a mean-spirited group of personal lending specialists on the outskirts of Detroit’s warehouse district. And Ginger rules.
Stay tuned – another installment of Gonzo Point and Gonzo Counterpoint is coming soon.