Digital debacle at ING illustrates the risk of lack of IT knowledge at board level

It was with interest and amazement that I read about ING Group’s debacle with the Unite programme and IT project in Belgium in the article ‘Digital future dream ING top man degenerates into deception’ (FD 13 June). The story resembles yet another international project in which IT is used as a crowbar to force organisations into one corset, with the aim of making savings. All CIOs who have been involved in large-scale international IT projects know that this is not how it works. If you want to achieve uniform IT systems across borders, you first need to ensure that the processes and cultures between the countries involved are synchronised before you start the IT project.
Synchronising business processes on an international scale is already quite a job. After all, you have to appoint international managers to ensure that uniform financial and commercial processing is set up in different countries. The IT department should not be responsible for synchronizing these processes, that is of course up to the business itself: commercial, financial and logistics.

Spreading the Dutch banking with a single IT system over the Belgians is richly arrogant
However, the biggest problem is always the large cultural difference, as in this case with Belgium. Of course, people in Belgium bank differently from people in the Netherlands. It is richly arrogant for a Dutch party to spread the Dutch way of banking over the Belgian way of banking. That is of course never accepted and certainly not if you want to enforce that by means of an IT system. ING should have started, before it started thinking about IT at all, streamlining business processes and solving cultural problems.

But still. As every international CIO knows, an IT system is a virtual blueprint of the company’s governance. If you have central control, for example in IT platforms like amazon.com or at a production company, you may very well have the same IT systems in every country. After all, you sell the same services or products everywhere. But as a company, do you have a decentralised way of operating, with different types of services and customers, where the headquarters is mainly a holding company and consolidation of results from countries? Then you are better off with decentralised IT systems, which differ per country or region. At ING, it seems that there was no unambiguous international governance of the Belgian and Dutch companies, while attempts were made to arrive at a single IT system with central control. This is, of course, an impossibility and, rightly so, has led to great resistance in Belgium. It’s incomprehensible that something like this should happen to a large bank like ING.

The FD asked itself in the Commentary ‘Belgian regulator overplayed hand’ whether it was necessary to demand a double governance structure from ING. The operation was purely technological, no more, no less (FD, 15 June). The fact that such far-reaching processes are limited to technology is a joke. On the contrary, an IT structure should reflect governance. ING should have been clear about that first. Maybe a long process, and also very frustrating, but if all goes well, IT is an end point, the consolidation of the synchronisation of business processes, and not the starting point.

It is the typical fault of many boards of directors: trying to squeeze savings through one IT system while there is no agreement in and between countries.
Of course, a sensible CIO does not lend itself to this either, so it is understandable that both CIOs have resigned. The Belgian regulator was quite right to put a stop to it: Please do your homework before you start installing systems.

Finally, in his column ‘Failed IT projects’ Ed Groot comes to the cautious conclusion that we may have pretty good companies and governments, but an IT industry that is still too weak (FD, 14 June). That would make sense if the IT industry were involved in this policy and decision-making process at all, apart from executive involvement. In my opinion, the failure has more to do with the lack of knowledge on the part of administrators when it comes to steering international IT projects. In my experience, this is meagre on the boards in the Netherlands.
The ING project once again shows that it’s high time for more CIOs or people with sound IT knowledge on a board of directors to avoid this kind of unnecessary failure. Unfortunately, there has been overdue IT maintenance within Dutch companies in this area for decades.

Original article: page 25, 26-06-2020 © Het Financieele Dagblad Digital Debacle ING

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