A year ago Center-Invest announced the new stage of cooperation with SAP company. After successful building up of the centralized corporate data storage on SAP BW platform, implementation of SAP Human Capital Management and SAP Process Integration systems, the financial-lending entity being the largest regional bank of the southern Russia is ready for implementation of the banking solutions from SAP AG. Yuri BOGDANOV, the deputy chairman of the bank's board, has informed in his interview to NBJ about the reasons why the bank has chosen particularly the SAP solution as the target solution for automation of the major business, which criteria the bank has taken into account thereby and which effect Center-Invest expects to gain from implementation of the SAP Banking Services product.

NBJ: Please, tell us about the essence of the project that Center-Invest Bank is implementing in cooperation with SAP company.

Y. BOGDANOV: Our cooperation with SAP company is a long-term one (since 2006). The bank's board of directors has made a strategic decision to replace the solid automated banking system with detached modules of the system that will be integrated between each other and will be developing in scopes of new order. According to the international standards, we held the tender, examined offers of 16 different suppliers of automated banking systems in detail, both Russian and foreign ones, and as a result we chose the solutions of the SAP company. A long-term program of projects was developed, which was later included into the bank's mission and provided for the implementation of a set of SAP systems, both basic (integrating bus SAP PI and data storage SAP BW), and applicable ones (SAP HCM and SAP system modules for the bank functionalities).

NBJ: Why did you choose namely SAP? What are, in your opinion, the advantages that the bank might gain in case the SAP Banking Services solution is implemented? Why did you reject the system operating at that time?

Y. BOGDANOV: A key factor underlying the choice by Center-Invest Bank of the SAP company's solutions was a rich set of functional and by-product settings in SAP systems. Widest opportunities for configuration of the system allow for the flexibility and promptness in formation of offers to customers, enabling to construct the new products and services, which were not offered in Russia in past. This particular feature sets the SAP systems apart from the corporate IT developments of the banks, possessing only the functionalities that were in need back to yesterday. In other words, the advantage that the bank may rely on, if it has implemented the SAP solution for the banking functionalities, and that we are relying on, is the time-to-market (the time as necessary for getting the new financial products or modifications of already existing ones onto the market) reduction. SAP company has the findings of surveys, and Center-Invest Bank has the confirmed patterns in its own practice testifying to the degree that such parameter will be improved after SAP solutions are implemented.

Other outcome of the SAP systems' implementation, as shown by experience, lies in simplification and costcutting of processes in the bank's back office. The accounting of products is simplified, which products are offered by the lending institution to its customers, based on standardization of technological operations and accounting procedures. Here it is vital to understand that it goes about the improvement of the products' accounting rather than about the reduction of the number thereof. The bank may offer a diversified product line and expand it according to the bank's mission, but it will take less time to perform accounting operations.

The core of the ABS as independently developed and used in the bank was formed under absence of wide-band data links between the offices of the lending entity, so the system was decentralized. Currently the ABS modules that require continuous finalizations and contain no specificity of the bank have been replaced with the modules of the up-to-date systems of third party suppliers. However, in terms that we possess the operating ABS and we have managed to solve the matters of reporting centralization through use of SAP BW, it is evident that sooner or later we will have to introduce the industrial, easily zooming, faultless product in place of our own developed system. This task should be resolved step-by-step, in advance, without waiting for the moment when our own developed automated banking system becomes impaired or becomes a bottle-neck from the point of view of business processes' productivity. As a result the implementation of the SAP company's solutions will cause the improve­ment of the bank's clientele servicing, as now the level of the bank service depends not only on the speed that the lending entity is ready to provide services to the customer, but on whether it is ready to offer the new products and services for business today and tomorrow to him or other customers.

NBJ: As far as I am concerned, the project on implementation of the bank functionalities from SAP company has turned to be quite a long one. Why is it so?

Y. BOGDANOV: Before the crisis, SAP company was working in Russia pursuant to the same pattern as other international vendors did: when the automation system of the toughly regulated banking was introduced to the local market for the first time, the tight schedule was given to finalization of the basic functional modules of the system, the so-called localization, alongside the first line was given to the working out of the specific requirements of the local accounting regulations.

At the final stage of the first attempt to localize, the Central Bank of the Russian Federation approved the Provision № 302, containing a large number of new and modified requirements to account the bank transactions. The would have to make a lot of changes on its own into the product modules of SAP for implementation into the product operation, under the then current program architecture of SAP solution. There would be so many finalizations that in the result it would be rather a system based on SAP technologies than a system from SAP company, so the operation risks of the bank would be higher, and the development of the system's development would have been too complicated and extremely expensive - as the transfer to new versions and support of system by SAP company would have become impossible through reasonable tools. Such an approach to localization could not be accepted as the success, and the bank froze up the implementation of systems with the bank functionalities from SAP company.

NBJ: The theoretical conclusions on misleading nature of that chosen way have caused the practical conclusions, haven't they?

Y. BOGDANOV: Yes, they have. In 2012 SAP company revised the concept of introduction of its key solution for the banking sector (SAP Banking Services) to the Russian market. SAP company presented, to its customers, in the first line to Center-Invest Bank, the new ideology of building the solution for transaction and accounting objectives, and adapting thereof to the requirements of regulating bodies. The SAP's transaction solution (compo­nents on accounts and deposits control) remains the same with adaptation, because as shown by the implementation experience, it is mainly acceptable for the business users. And the new, being developed and supportable by SAP company, module of accounting in the SAP Bank Analyzer product is in charge for resolution of issues as related to automation of bank transactions according to the various standards (RSA, IFRS). With that architectural approach, the major functionalities of the product system do not suffer from frequent changes of the regulatory requirements, as the necessary amendments are as a rule made into the recording part. After solution of the matter with the architecture and approach towards the localization of the solution, SAP company involved the banks into the specification and coordination of the localized requirements, then into testing of the already localized functionalities.

NBJ: What is the attitude of Center-Invest Bank towards that new ideology?

Y. BOGDANOV: The attitude is positive. We have resumed the cooperation with SAP company in the area of banking functionalities: the bank took an active and direct part in adaptation of the solution to the Russian market, in formation of demands to the payment and deposit functionalities, in coordination of the SAP Banking Services 8.0. system's testing scenarios. By the date of release (August 30, 2013), the bank had already tested the localized functionalities of the offered solution.

NBJ: What are the findings of the said testing?

Y. BOGDANOV: The key conclusion that we have arrived at is that the solution is suitable for the bank in terms of ideology and architecture, which fact has been declared by the bank in the official testing report. Of course, the comments and suggetions have been set forth as well, subject to which SAP company is modifying the release and prepares the new supplies. The bank is getting ready for integration of the solution into the existing soft- and hardware architecture of the information system. Speaking about our experience of prior cooperation with SAP company and about the new stage of cooperation, I would like to point out the following principally important thing: if earlier the liability for the localization's quality was distributed among the offices of SAP company in various countries and was shared with the subcontractors, now this liability was taken by the Head Office of SAP AG company. It means that the project is being coordinated directly from the Head Office of SAP AG in Germany. Employees of SAP AG have many times visited the bank for holding test sessions and coordinating of finalizations, we are sure of their highest competence. It is important to note that a majority of technical work is carried out by the Russian team, and it is good as the key competence is being formed for a further development of the system. At that approach the sense of quite different level of cooperation arises with the bank-customer, when it acquires the understanding of liability of SAP AG company for a successful arrival of the localized product.

NBJ: Do you believe that the solution as offered will be of interest for other Russian banks, and if so, which particular financial-lending institutions, by amount of assets and business profile?

Y. BOGDANOV: Our cooperation with SAP company wrecks down the myth that SAP services are affordable only to the Russian bank market titans: entities that control huge assets and take the top ranks in the business amount ratings. Center-Invest Bank is a case story of the bank with medium-sized assets in Russia, alongside we are rapidly and dynamically developing, continuously implementing new products and services.

NBJ: In the meantime, SAP solutions are quite expensive a priori, and the medium-sized banks have not so much free avail­able funds as the leaders of our banking market do.

Y. BOGDANOV: If we take into account all the payments as required by ABS suppliers, SAP company's offers are currently in the same price segment with the offers of the leading Russian developers. Besides, when it comes to a new solution, it is always a question of price against quality ratio for the offered product. In other words, when we presented the offers from vendor-companies and integrators to the board of directors, we kept in mind not only the amount of funds to be spent on acquisition, implementation and operation of this or that solution, but also the potential economic effect from implementation. And I must admit that in this view, SAP's offer looks very attractive for the universal lending entity of any level: SAP Banking Services system is capable of becoming the platform for development of a wide range of the bank's services. Probably one may create the fool's paradise and it will be cheaper to buy an inbox system of basic version, but later one will have to buy additional modules as necessary for extra functionalities, integration, etc. On the other hand, it is possible to purchase an initially efficient, stable and localized solution, which can be in the simplest terms integrated in IT-land­scape of the contemporary bank.