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BUYER CASE STUDY
YES Bank Uses Cordys to Integrate and Automate Critical
Customer-Centric Processes
Maureen Fleming
Jeff Silverstein
Global Headquarters: 5 Speen Street Framingham, MA 01701 USA
P.508.872.8200
F.508.935.4015
www.idc.com
IDC OPINION
Fast growth is an indicator of market success. This Buyer Case Study outlines how
two fast-growing businesses came together — an emerging corporate bank in India
and an emerging global BPM vendor based in the Netherlands — to integrate and
enhance the bank's core banking applications with a BPM platform and an SOA
platform. While growth is one measure of success, this Buyer Case Study illustrates
that there are multiple facets to success and that they don't always cleanly align with
each other. In addition:
 YES Bank's purchase of Cordys' Business Operations Platform (BOP) started in
India shortly after the bank was launched and was predicated on the bank's
strategic decision to outsource most of its IT functions.
 Although it purchased core banking functionality from a large platform vendor,
YES chose to integrate and enhance the core banking functionality with a BPM
platform and an SOA architecture rather than purchase incremental applications
from its original vendor.
 While favoring large, established platform vendors initially, YES chose Cordys
because Cordys demonstrated a superior rapid development cycle in an onsite
proof of concept.
 Cordys' implementation at YES succeeded in dramatically reducing the
onboarding time and cost for commercial customers and sharply reducing the
time and cost of enhancing core banking applications, but a significant shortage
of professional services resources prevented YES from meeting its ambitious
implementation schedule.
IN THIS BUYER CASE STUDY
This IDC Buyer Case Study looks at how YES Bank, a private bank based in Mumbai,
India, selected Cordys' Business Operations Platform as the process management and
application integration middleware layer for its SOA-based enterprise architecture.
This IDC Buyer Case Study details YES Bank's strategic technology decision to
implement Cordys in conjunction with an ongoing service-oriented architecture (SOA)
initiative. It also details the bank's initial requirements, the vendor selection process,
results, and lessons learned.
Filing Information: March 2011, IDC #227356, Volume: 1
BuyerPulse Analysis: Business Process Management Software: Buyer Case Study
SITUATION OVERVIEW
YES, founded in 2004, chose to outsource most of its information technology. Without
the burden of a legacy infrastructure, YES Bank's IT organization had the challenge
and the advantage, initially, of building the bank's enterprise architecture from the
ground up. IT investments initially focused on core banking technology such as
transaction processing and customer-facing applications. The bank outsourced all of
its development and still has not hired a programmer.
After four years, YES realized that it needed to start planning for the future.
Maintaining infrastructural agility — tweaking applications and mixing and matching
disparate applications — without hiring a full-service IT department was a major
challenge. YES decided to embark on two initiatives: building an SOA framework and
building a BPM platform solution.
Table 1 provides a summary of issues and factors that led to YES Bank's decision to
purchase Cordys' Business Operations Platform.
TABLE 1
Buyer Case Study Capsule
Category
Details
Vendor/product
Cordys/Business Operations Platform
User organization
YES Bank
Vertical
Financial services
Size
Midsize
Purchase trigger/need
BPM and integration middleware to link core systems to external functions and to extend
functionality of core systems
Key tech requirements
SOA interoperability, simple product architecture, rapid deployment
Short list
IBM, TIBCO, Newgen, EMC, Cordys
Key win factors
POC performance, strong customer references
Decision cycle time
Nine months
Implementation time
Seven processes in production in year one
Source: IDC, March 2011
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Organization Overview
YES Bank has grown quickly to be the fifth-largest private bank in India. It employs
3,000 people across 150 branches. The company's IT organization consists of 60
people, half of whom are in business analyst rather than technology-focused roles.
For this Buyer Case Study, we interviewed Umesh Jain, president and CIO of YES
Bank.
Challenges and Solution
YES Bank began to evaluate BPM products in 2008. YES Bank's intention in
investing in BPM was to provide the bank's architecture with a process layer that
would orchestrate workflow among employees, customers, and back-end systems.
The selection team looked at vendors that other banks in India typically use. This
group has a wide array of vendors including global technology leaders TIBCO, IBM,
Oracle, and EMC; BPM pure plays, Lombardi and Cordys; and Newgen, a small
content management and BPM software company based in India.
An initial round of product demonstrations from each vendor helped evolve the
selection team's thought process around its evaluation criteria.
"As we went along, we realized that BPM and middleware are two parts of the same
thing. To me, middleware helps you integrate and weave processes into the back
end," according to Jain. "If I want to optimize process flow, various steps of the
workflow will have to talk to back-end systems in every BPM process. If I don't have
this kind of integration in place, I'll have a manual flow that may do the same things as
an automated flow, but people will have to key data into the BPM front end and
people will have to key in data to the back-end systems."
Key Requirements: SOA-Based Interoperability, Simplicity,
Rapid Deployment
To maintain a focus on process optimization through automation, the team decided to
change its selection paradigm. "We started thinking that we should not be looking at
BPM and SOA as separate products. We should be acknowledging and looking at
them as one and the same thing, even if we procure these products from separate
vendors," Jain said.
In addition to SOA compatibility for application interoperability, the team had two other
key requirements. First, the team wanted a simple solution, one with a simple
architecture. Second, the team wanted a rapid deployment life cycle. The team
planned its first project around approximately 40 discrete processes. Because of this
volume, the team wanted a vendor and a product that could take processes from
development to production, and then rapidly reuse and produce new processes to
deliver the entire project within two years.
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Product Selection
Over the course of nine months, the selection team carried out vendor briefings,
product demonstrations, and ad hoc proofs of concept with each vendor.
The team eliminated Lombardi early in the selection process. At the time, which was
prior to Lombardi's acquisition by IBM, the vendor's presence in India was too limited
to suit the team's confidence in the vendor's ability to provide a robust support
infrastructure. When the YES team presented TIBCO with its proof-of-concept (POC)
scenario, the vendor decided to drop out of selection process.
The vendors left — EMC, IBM, Newgen, and Cordys — built and presented proofs of
concept to the team, with varying degrees of success.
EMC positioned Documentum as both a BPM platform and a document management
solution. Although YES later adopted Documentum to satisfy the latter purpose, YES'
evaluation was that Documentum lacked integration capabilities sufficient to meet
YES' needs for SOA-based, application integration middleware.
Prior to the selection process, YES purchased and implemented Newgen's content
management product to provide an imaging and workflow application customized for
check processing. Newgen produced an adequate proof of concept by leveraging
aspects of this prior implementation into the YES Bank test scenario. But YES also
had concerns about Newgen's pricing flexibility, its long-term stability, and the
maturity of its product road map.
IBM presented its proof of concept after approximately one month of offsite
development. The vendor's product portfolio, which at the time included FileNet,
WebSphere, and several applications, would have entailed purchasing additional
hardware and software components, thus failing to meet YES' simplicity objective.
The team also felt more comfortable with the prospect of purchasing a seamlessly
built, if less mature, BPM platform.
Cordys developed and presented the POC scenario over the course of one week of
onsite development. "Cordys actually installed its entire system while we watched. It
took 18 minutes. Then, it took around three days to write the process. In another
three days, it demonstrated the process to our satisfaction," said Jain.
Despite Cordys' exceptional performance in the proof-of-concept phase of the
decision cycle, YES wondered about the maturity of the vendor's market presence in
the financial services vertical. "It had a few implementations in India in the insurance
business. The customer references were outstanding, both formally and informally. It
was very glad to demonstrate to us the processes it had implemented and the kind of
speed it had achieved," said Jain.
YES selected Cordys' Business Operations Platform for a variety of reasons. Cordys'
solution met the selection team's key requirements of agility for SOA-based
integration, minimizing the technology management load on the bank's IT department,
and a rapid deployment life cycle. Cordys provided YES with persuasive customer
references and priced its solution aggressively.
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"We were still apprehensive about the fact that Cordys was not an established player
and that its solution was relatively new. We were looking for an enterprise strategy
partner. A big question was, Can we put our money on a platform which has not yet
proven itself?"
"Because of the philosophy of our organization — agility, keeping it simple,
outsourcing to avoid getting into technology management, and focusing on the value
that solutions can deliver for us — we said Cordys is the right choice."
Late in 2009, after an additional six months of cost-benefit analyses and internal
approvals, YES and Cordys signed a five-year license agreement for eight CPU
cores. YES signed a separate professional services agreement to cover the
implementation process.
Implementation
YES' ambitious goal was to implement approximately 25 processes within a year and
50 processes within two years. Cordys began the implementation with 2 services
people dedicated to YES and expanded that team to 10. YES may also hire a thirdparty support partner, Virtusa, which has a BPM practice and a strategic partnership
with Cordys.
One set of processes manages corporate touch points. BOP connects YES' core
banking systems with a customer's enterprise resource planning (ERP) system to
receive information, translate information to messages, and relay messages into YES'
architecture. Once YES' core banking systems have processed the messages, BOP
sends out appropriate payments and confirmations. As of March 2011, seven of YES
Bank's customers were integrated into the platform.
The second set of processes augments the features and capabilities of YES' core
banking applications and are difficult to modify and customize natively. YES uses
BOP to modify and add functionality to those core banking processes. YES has rolled
out two applications in this category.
One Cordys process manages the bank's end-to-end processes regarding paperbased interest/dividend warrant checks. BOP manages and tracks customer requests
for paper-based checks, from customer request to printing to customer receipt.
The second application manages a product YES developed to allow customers to
take advantage of a new method of paying for shares of companies in the process of
going public. Before the Securities Exchange Board of India (SEBI) launched the new
process in 2008, an investor applying for shares of an IPO had to make an up-front
payment for the entire amount of shares it wanted. If the investor originally requested
40,000 shares but in the end only received 10,000, the investor would have to wait
two months to receive a refund check.
SEBI's new subscription mechanism for IPO shares allows investors to receive
refunds immediately. YES Bank uses Cordys to manage all of the processes related
to the new refund process.
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The YES team overseeing BOP consists of four people — an administrator from the
IT side, primarily responsible for monitoring and managing the technology, works with
an engineer and a programmer. In addition, a program manager from the line of
business tends the platform's general architecture by laying out standard process
guidelines and manages the bank's relationship with the vendor.
Implementation Challenges
"When we evaluated Cordys, we did consider the partner ecosystem. We spoke to
Cognizant, we spoke to Wipro, and we spoke to Cordys. We were more or less
convinced that they all have some expertise on the product, and we can take services
from any of them. Our plans were very aggressive."
"However, when we eventually started, there was frankly no expertise existing. What
we did realize is that all the partners have everything on paper only."
YES was forming a support partnership with Virtusa to fill the gap between what was
available from Cordys and the aggressive YES project schedule. In the meantime,
Cordys' support department continues to be YES' main services partner.
"I must acknowledge that the guys in the management of Cordys have all been
supportive. They never shied away from the fact that there are issues. So, they've
actually been very engaged. But, they've not yet been fully able to get their act
together. That's part of the risk that we took and part of growing up together."
Results
Late in 2010, YES' customer onboarding process took a quarter of the time at a
quarter of the cost compared with the previous year because of the Cordys
deployment. YES manages several other mission-critical processes through the
platform and plans to expand the deployment continuously over the next several
years.
However, YES was able to implement only 7 of the 25 processes it had planned to
put into production during the first year of implementation, not because of product
issues but because of a shortage of professional services available from Cordys and
its partners. Combined, they were unable to supply the volume of professional
services YES needed to execute its process development plan without a major
expansion of its IT staff.
Benefits
YES saw a return on its investment in Cordys' software well within a year of the initial
purchase. The platform continues to add value to the bank by automating and
managing both mission-critical and value-added processes.
Customer Onboarding
Prior to implementing Cordys, each time YES wanted to bring a new commercial
customer into its system, the bank had to contact Oracle Financial Services, its core
banking vendor. Each new onboarding took four months to complete and cost
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approximately $20,000. Although this cost and time frame were standard for the
banking business, YES recognized an opportunity to gain a differentiating advantage
by increasing the speed and efficiency of its onboarding process.
YES rolled out its first customer on Cordys in three months. YES used this initial
project to create a reusable process infrastructure for future projects. Now, YES
onboards a customer in less than 10 days for approximately $2,000.
Value-Added Application Development
YES also uses the Cordys platform to enrich its architecture with value-added
functionality without buying new, function-specific applications.
For example, YES is migrating its accounts payable process to the Cordys BOP. This
process will affect all of the bank's suppliers, regardless of whether they submit
electronic or paper-based invoices. When a vendor submits an invoice, the document
will go through the Cordys platform, into an approval cycle, and out to post in the
bank's accounting systems. The process will have 4,000 end users, including 300
vendors and all of YES Bank's internal employees, by the spring of 2011. Cordys'
business rules engine is a key part of the application. "Accounts payable uses a lot of
rules in terms of who approves what amount, especially in large organizations where
there are delegations. These are very definable properties. However, to code this
would have been difficult and I think the rules engine came in handy as the back end,"
Jain said.
YES could have bought a separate, out-of-box accounts payable application, but it
was much less expensive to develop one using BOP. "If I were to buy this application
and implement it, my initial capital investment would be around $75,000. Then the
maintenance cost for everything would be about 20% of that — something like
$15,000 per year. If I do it on Cordys, however, it's a onetime development cost, with
maintenance costs already subsumed into the platform," Jain said.
Future Plans
YES has budgeted substantial funds for process development during 2011. In
addition to fully deploying the accounts payable process in the spring of 2011, YES
planned to roll out an employee reimbursement process.
Future development and expansion of the Cordys platform at YES is contingent on
Cordys' ability to deliver services directly or through its partners. Jain said that internal
demand for BPM deployment has increased much more quickly than his development
team can deploy new processes. However, he anticipates new deployments will roll
out more frequently as Cordys' partner ecosystem gains expertise and can provide
the bank with development resources independent of Cordys' services team.
YES has long-term plans to package and resell SOA-based middleware to other
banks in India. These applications will be based on Cordys.
"We want to build our process layers specific to banking and take it to market. Our plans
are on Cordys. An account opening is an account opening. I think, by the time other
large banks that are usually a little slow to react and a lot of small banks that are either
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not able to visualize and execute on BPM, or they don't have the money to execute —
by the time other banks wake up to this, some core processes will be in production in
our system, which we can then go and sell as a product offering," said Jain.
Lessons Learned
"I would say, on the product side, everyone needs to do their own due diligence. For
small to medium-sized organizations," Jain said, "I think Cordys is a fantastic buy. I've
not seen Cordys in extreme volumes, but if you're talking about processing extreme
volumes you should do additional due diligence. But as a general BPM middleware
platform, I think it's a fantastic tool."
Purely from the product and platform perspective, Jain is impressed with Cordys'
responsiveness. Jain recommended Cordys to peers with less ambitious projects,
and they reported good results. But YES laid out aggressive plans for its Cordys
deployment that proved to be far more demanding than the combined internal and
external resources of YES, Cordys, and professional services companies could
handle. One lesson is to be sure that the scope and the timing of your rollout plan can
be supported by available skills.
Several peer customers also advised YES to use its own project managers to ensure
delivery of results. YES followed this advice and recommends others do the same.
"Have your project managers manage the projects," said Jain.
Finally, successful process development requires a standards-based development
mindset. Systematized development guidelines are important in large, complicated
implementations such as the one at YES, particularly since the company's IT
department consists primarily of business analysts. Relentless execution against this
mindset is the key to avoiding costly complexities when it comes to change
management and scaling. "You can't have a volatile shop in a large development.
Working out of a complete project management and program framework is key," said
Jain.
ESSENTIAL GUIDANCE
Success in business can be measured in a variety of ways. Return on investment is a
common measure of investment success. By this measure alone, the Cordys
implementation was a significant success.
Another goal for YES during product selection was to find a product that could deliver
quick results. Cordys not only helped YES achieve and surpass an ROI on its product
investment;it helped YES deliver quick value.
But YES' definition of success was demanding and multifaceted. It wasn't just about
ROI and quick time to value. It was about a series of processes and a schedule. And
there, the professional services gap left YES short of its goals.
YES' ability to learn and evolve an understanding of what was critical to the bank's
success led YES ultimately to the right kind of product. YES took time to understand
its architectural requirements, placing a greater emphasis on product competency
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around SOA, when it realized the success of the effort would be highly dependent on
integration.
While enterprise application interoperability may not be critical in a particular selection
process, strong interoperability with user applications, portal infrastructure, or content
assets may be important. We continue to find that enterprises with rigorous
procurement processes sometimes miss the architectural alignment step of their
purchasing decision and base their decisions on word-of-mouth or best-first
impressions or other relationship-centric scenarios. A big point of failure or cost
escalation in projects is the failure to correctly identify the way in which the product
handles interoperability.
But YES still fell short of its specific goals. The results YES was able to achieve over
a relatively brief period were impressive. And frequently, a fast success leads to the
next success and creates its own momentum within a company. But in this case, the
"success" built momentum that couldn't be supported by Cordys and its partners. The
gap between the availability of support for specific BPM products and processes and
demand is not peculiar to Cordys. It is an industrywide gap.
Prospective BPM buyers need to understand that BPM is still considered an emerging
area of technology by platform vendors and professional services firms. The
professional services companies may see limited volume from a market that, while
growing, is still relatively small and divided among a more than a dozen significant
vendors.
Prospective buyers need to heed the often expressed advice of the customers that
we have done case studies with previously — start BPM with small, simple projects.
And develop internal expertise with the product that will allow you to properly oversee
additional development projects. The initial projects are almost as much about
learning and skills transfer as they are about ROI and the rapid delivery of business
value.
LEARN MORE
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