IIBA UK Credit Suisse 18th October 2012

1. Business Analysis in the New Normal
IIBA at Credit Suisse
IIBA UK Chapter
October 18th, 2012

2. Welcome
Cathryn Graham
Business Engineering Job Family Lead, EMEA
IIBA UK Chapter October 18th, 2012

3. Business Analysis in the New Normal
The Importance of Simplicity in Design
− Matt Searle
− Business Architect for the Strategic Risk Program spanning Trading, Chief Risk Office and Chief
Finance Office
How Business Architecture reduces complexity
− Gillian Christie
− Head of Business Architecture and Innovation, based in New York
Response to Regulatory Drivers
− Miles Barker
− Lead BA for Dodd Frank, former Director of UK Chapter of the IIBA
IIBA UK Chapter October 18th, 2012

4. Defining the “New Normal”: low growth and increasing volatility
IIBA UK Chapter October 18th, 2012

5. Simplicity in Design
Matt Searle – Credit Suisse
IIBA UK Chapter
October 18th, 2012

6. “There are two ways of constructing a software design. One
way is to make it so simple that there are obviously no
deficiencies. And the other way is to make it so complicated
that there are no obvious deficiencies.”
-- C.A.R. Hoare
IIBA UK Chapter October 18th, 2012

7. “Perfection in design is achieved not when there is nothing
more to add, but rather when there is nothing more to take
away.”
-- Antoine de Saint-Exupéry
IIBA UK Chapter October 18th, 2012

8. “The difference between a good and a poor architect is that
the poor architect succumbs to every temptation and the
good one resists it.”
-- Ludwig Wittgenstein
IIBA UK Chapter October 18th, 2012

9. “Any intelligent fool can make things bigger, more complex,
and more violent. It takes a touch of genius - and a lot of
courage - to move in the opposite direction.”
-- Albert Einstein
IIBA UK Chapter October 18th, 2012

10. “Simplicity does not precede complexity, but follows it.”
-- Alan J. Perlis
IIBA UK Chapter October 18th, 2012

11. Addressing Business Complexity
Gillian Christie – Credit Suisse
IIBA UK Chapter
October 18th, 2012

12. The nature of the Investment Banking industry is changing, resulting in
three primary external drivers that impact strategy
Challenge Implications for Investment Banks
1. The fundamental shape of the business is Create a more efficient front to back cost model to
Market changing, with an emphasis on increasing volume protect profitability
at competitive (and compressed) margins
External Drivers
2. Regulators are demanding a cleaner, more straight Demonstrate progression towards a clearly
Regulatory forward Operating Model. They want to see a defined roadmap and simplified target state across
planned target state the Front to Back Operating Model
Client requirements appear to diversifying. Some
want bespoke products and value personal As the shape of the industry changes, it’s critically
3. relationships and service. Others require fewer important that we listen and respond to customer
Client advisory services, knowing what they want to buy demands, accepting that those may be contrary and
and from whom they will buy diverse through the period of industry change
IIBA UK Chapter October 18th, 2012

13. The complexity of the current infrastructure was driven by product aligned
revenue generating opportunistic investments to exploit high margins
without regard to cost to maintain
Attributes
Legal Entities
 Rapid time-to-market for new products
LE LE LE LE LE LE LE LE
a ta
LE LE LE LE LE LE LE LE D and functionality
f.
Re  Capable of responding quickly to
dynamic business priorities
 Product-aligned development (e.g.
multiple risk systems)
 High complexity and TCO
 Multiple “sources of the truth”
 Line-of-business governance
 Limited Business / IT accountability for
the platform TCO
IIBA UK Chapter October 18th, 2012

14. The aspirational Target Operating Model (TOM) supports the strategies of
business and technology
Hedge Corporate
Banks
Funds
Inst. Inves.
s
UHNW HNW Retail Attributes
Client
Sol.
Enterprise Content Portal  Dramatically reduce complexity due to
Trading
Order Management
reduced number of business rules
Intelligent Order Routing
 Lowest RtB and TCO without forcing one
Banking
solution for all
Bespoke
Post
Hybrid
Flow
Trade Risk
 Allows for a more rapid response to regulatory
and market changes
Risk Cross-product Risk and Collateral Management
Finance Finance and Product Control
 Enables cross-product reuse
Ref.
Data
Common Shared Reference Data  Allows for opportunistic revenue generating
investments without adversely impacting the
strategic core platform
 Single golden source for client, product and
book data to reduce reconciliations
IIBA UK Chapter October 18th, 2012

15. Investment Portfolio choices
Outcomes of Different Investment Priorities
BAU Model
If we continue to manage our cost base
1
and investment budget without a long-
term vision, our maintenance costs will
Current State outpace our business growth
Legal Entities
LE LE LE LE LE LE LE LE a
LE LE LE LE LE LE LE LE at
D
f.
Re
RTB Spend
App. Rationaliz ation
Optim iz ed Model Using the
Aspirational Target Aspirational TOM
Business Architecture Operating Model
Optim iz ed Model Hedge Inst. Corpor UHN
as a tool to align
IB Securities
Entity Neutral Globalizing from
Banks
Funds Inves. ates
Investment Bank
W
HNW Retail
investment
Reference Data and Market Data
Client
Only investing
Enterprise Content Portal
prioritization
Reference Data and Market Data
Client Facing
1800 current Sol.
Order Management
Trade Execution strategically towards applications to
Trading
Intelligent Order Routing reducing business
Risk Management reducing technology 200 – 300 strategic Banking
and technology
Post
Validation and Enrichment
complexity would be Trade Flow Hybrid Bespoke Risk complexity will
Collateral Management and Margining
Collateral Management and Margining
very costly and could enable successful
Clearing
stifle business
Risk Cross-product Risk and Collateral Management
business delivery
Settlement Finance Finance and Product Control
Finance growth opportunities Ref.
Data
Common Shared Reference Data
and a lower RtB
Benefit Realiz ation
IIBA UK Chapter October 18th, 2012

16. Investment Portfolio choices
Outcomes of Different Investment Priorities
BAU Model
If we continue to manage our cost base
and investment budget without a long-
term vision, our maintenance costs will
Current State outpace our business growth
Legal Entities
LE LE LE LE LE LE LE LE a
LE LE LE LE LE LE LE LE at
D
f.
Re
RTB Spend
2 App. Rationaliz ation
Optim iz ed Model Using the
Aspirational Target Aspirational TOM
Business Architecture Operating Model
Optim iz ed Model Hedge Inst. Corpor UHN
as a tool to align
IB Securities
Entity Neutral Globalizing from
Banks
Funds Inves. ates
Investment Bank
W
HNW Retail
investment
Reference Data and Market Data
Client
Only investing
Enterprise Content Portal
prioritization
Reference Data and Market Data
Client Facing
1800 current Sol.
Order Management
Trade Execution strategically towards applications to
Trading
Intelligent Order Routing reducing business
Risk Management reducing technology 200 – 300 strategic Banking
and technology
Post
Validation and Enrichment
complexity would be Trade Flow Hybrid Bespoke Risk complexity will
Collateral Management and Margining
Collateral Management and Margining
very costly and could enable successful
Clearing
stifle business
Risk Cross-product Risk and Collateral Management
business delivery
Settlement Finance Finance and Product Control
Finance growth opportunities Ref.
Data
Common Shared Reference Data
and a lower RtB
Benefit Realiz ation
IIBA UK Chapter October 18th, 2012

17. Investment Portfolio choices
Outcomes of Different Investment Priorities
BAU Model
If we continue to manage our cost base
and investment budget without a long-
term vision, our maintenance costs will
Current State outpace our business growth
Legal Entities
LE LE LE LE LE LE LE LE a
LE LE LE LE LE LE LE LE at
D
f.
Re
RTB Spend
3
App. Rationaliz ation
Optim iz ed Model Using the
Aspirational Target Aspirational TOM
Business Architecture Operating Model
Optim iz ed Model Hedge Inst. Corpor UHN
as a tool to align
IB Securities
Entity Neutral Globalizing from
Banks
Funds Inves. ates
Investment Bank
W
HNW Retail
investment
Reference Data and Market Data
Client
Only investing
Enterprise Content Portal
prioritization
Reference Data and Market Data
Client Facing
1800 current Sol.
Order Management
Trade Execution strategically towards applications to
Trading
Intelligent Order Routing reducing business
Risk Management reducing technology 200 – 300 strategic Banking
and technology
Post
Validation and Enrichment
complexity would be Trade Flow Hybrid Bespoke Risk complexity will
Collateral Management and Margining
Collateral Management and Margining
very costly and could enable successful
Clearing
stifle business
Risk Cross-product Risk and Collateral Management
business delivery
Settlement Finance Finance and Product Control
Finance growth opportunities Ref.
Data
Common Shared Reference Data
and a lower RtB
Benefit Realiz ation
IIBA UK Chapter October 18th, 2012

18. Investment Portfolio choices
Outcomes of Different Investment Priorities
BAU Model
If we continue to manage our cost base
and investment budget without a long-
term vision, our maintenance costs will
Current State outpace our business growth
Legal Entities
LE LE LE LE LE LE LE LE a
LE LE LE LE LE LE LE LE at
D
f.
Re
4
RTB Spend
App. Rationaliz ation
Optim iz ed Model Using the
Aspirational Target Aspirational TOM
Business Architecture Operating Model
Optim iz ed Model Hedge Inst. Corpor UHN
as a tool to align
IB Securities
Entity Neutral Globalizing from
Banks
Funds Inves. ates
Investment Bank
W
HNW Retail
investment
Reference Data and Market Data
Client
Only investing
Enterprise Content Portal
prioritization
Reference Data and Market Data
Client Facing
1800 current Sol.
Order Management
Trade Execution strategically towards applications to
Trading
Intelligent Order Routing reducing business
Risk Management reducing technology 200 – 300 strategic Banking
and technology
Post
Validation and Enrichment
complexity would be Trade Flow Hybrid Bespoke Risk complexity will
Collateral Management and Margining
Collateral Management and Margining
very costly and could enable successful
Clearing
stifle business
Risk Cross-product Risk and Collateral Management
business delivery
Settlement Finance Finance and Product Control
Finance growth opportunities Ref.
Data
Common Shared Reference Data
and a lower RtB
Benefit Realiz ation
IIBA UK Chapter October 18th, 2012

19. The aspirational TOM enables a long term strategy for investment
prioritization, while transitional state operating models enable each
business line to pursue opportunistic innovation
2012
Current Logical
Architecture Model
Legal Entities
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ta
LE LE LE LE LE LE LE LE Da
f.
Re
.
…
Transitional
State .
?
…
…
. Aspirational Target
Transitional
Operating Model
State
Client
…
Trading
Transitional Banking
Post
State Trade Flow Hybrid Bespoke Risk
As long as we build toward the aspirational TOM, we have still
invested intelligently with outcomes with interim business benefits Risk
Finance
Ref.
Data
IIBA UK Chapter October 18th, 2012

20. Our response: Enable Business Architects across the Bank to drive
transformation towards the target state
Transforming
Managing the Bank
the
Innovation
Cycle
Value
Proposition
Business
Architecture
And
Innovation
Telling the Establishing
Story a common
language
IIBA UK Chapter October 18th, 2012

21. Transforming
the Bank
We run a jointly sponsored IT/Business design governance committee
Issues escalated to DAWG and Issues
Ratify and escalate IB DA m andated
IB Design Authority
DAWG decisions on Issues escalated1:
IB FTB design
n DAWG > IB DA
• Trade Capture
Architecture
• Back Office Data
Sourcing
Issues escalated in 2012:
• Structured Notes
nn DAs > DAWG • Reference Data
• Global Book Master
• Collateral End to End
Decisions on design DAs
issues
Design Authority nnn open / closed/defer design
Working Group issues
Decisions
 IB DA Escalation
 One of the recommendations - will be raised to
Program level design the Design Authority for action and resolution
coordination and  Closed Design Issues:
escalation to DAWG Following four design issues were closed since
the last DA update:
− […]
− […]
− […]
Prime
Risk Reference Dodd Basel III Finance
Financing CRO DA Ops DA
(SRP) DA Data DA Frank DA DA (CFO) DA
DA
IIBA UK Chapter Program DAs Functional DAs October 18th, 2012

22. Establishing
a common
language
We provide standard frameworks – our Business Capability Model is used via Models
& Tools
to drive transformation
Benefits of BCM Business Capability Model (BCM) Benefits of BCM
 Provides a consistent  Helps analyze how budgets
framework and common are aligned with underlying
language across the bank capabilities
 Helps define the Target
Operating Model (TOM) and
 Helps clarifying align IT architecture
responsibilities and
accountabilities on a
functional level  Understand functional
redundancy in the
application portfolio
 Helps define the scope for
 Provides a platform for
new initiatives and align
mapping resources to
initiatives
business capabilities
IIBA UK Chapter October 18th, 2012

23. Telling the Story
We train the firm’s Business Architects
IIBA UK Chapter October 18th, 2012

24. Managing the
Innovation Cycle
We aggregate innovation and encourage new ideas
Connect the Dots Crowd Source
Innovation Aggregators
Innovation Exchange Cham pion Solutions
IIBA UK Chapter October 18th, 2012

25. Regulations and Business Architecture
Miles Barker– Credit Suisse
IIBA UK Chapter
October 18th, 2012

26. Talking Points
 Who regulation impacts – far more than banking!
 What Regulation impacts – across organisational boundaries
 Understanding Regulation 1 – it’s always business process
 Diversion Understanding Regulation 2 – BA skills and PESTLE
 Regulation – understanding themes and change
 Regulation – opportunity from pain (process and service)
 A case for doing what you really know you should, anyway!
 Challenging your understanding of business
 Wrap-up
IIBA UK Chapter October 18th, 2012

27. Who regulation impacts – far more than banking!
IIBA UK Chapter October 18th, 2012

28. Who regulation impacts – far more than banking!
The Locom otive Act 1865 - Rem oved by Locom otives on Highways Act 1896
IIBA UK Chapter October 18th, 2012

29. Regulatory impacts – across organisational boundaries
IIBA UK Chapter October 18th, 2012

30. Understanding Regulation 1 – it’s always the business process
IIBA UK Chapter October 18th, 2012

31. Understanding Regulation 2 – BA Skills and PESTLE
IIBA UK Chapter October 18th, 2012

32. Understanding Regulation 2 – BA Skills and PESTLE
……………..
IIBA UK Chapter October 18th, 2012

33. Understanding Regulation 2 – BA Skills and PESTLE
IIBA UK Chapter October 18th, 2012

34. Credit where credit’s due!
©Crown Copyright . Source
IIBA UK Chapter October 18th, 2012
http://www.oft.gov.uk/shared_oft/business_leaflets/cpregs/oft1008.pdf

35. Standardisation curve
IIBA UK Chapter October 18th, 2012

36. Regulatory Background and Relationships (Reporting)
IIBA UK Chapter October 18th, 2012

37. Regulation – An Opportunity
Deploy com m on cross-product
securities processing engine
RISKS OF TAKING A TACTICAL,
Leverage FID TOM to build a SHORT-TERM APPROACH:
strategic FI architecture
1. Duplication of efforts
Fulfill regulatory Key Goals: * 2. Failure to advance toward a target
m inim um s Cross-product architecture
Key Goals: collateral management Key Goals: *
Connectivity to SEFs and margining LASAR
Central clearing for OTC derivatives CVA Same-day /
REWARDS OF TAKING A
Event-driven transaction and position Joint cash / OTC intraday
collateral STRATEGIC, LONG-TERM
reporting processing engine
APPROACH:
Event-driven risk management (CCSS)
eCommerce
1. Credit Suisse can save significant
money through synergies
2. We can make significant advances
toward a target architecture
Our initial focus is bounded by regulatory timelines, but the architecture should be built with a view towards immediate operational changes
to the Fixed Income business and the long term aspirational enterprise architecture for common cross-product securities processing
IIBA UK Chapter October 18th, 2012

38. System Architecture
IIBA UK Chapter October 18th, 2012

39. Talking Points
 Challenging your understanding of business
 Abstraction
 Commonality
 New regulation means there may not be an SME
IIBA UK Chapter October 18th, 2012

40. Q&A
IIBA UK Chapter October 18th, 2012

41. IIBA Update
Mailing list, please sign up if you have not done so already
− Details are on the IIBA UK Chapter website
Events coming up:
− 25th October: Bristol
− 6th November: Manchester
IIBA LinkedIn Group
− Feel free to join the group!
IIBA UK Chapter October 18th, 2012