Why I have Decided to Leave ABN AMRO

I am a customer of ABN AMRO for more than 40 years. Last Friday I received a letter from ABN AMRO. They told me that the local branch office of ABN AMRO will be closed and integrated into a local branch office of Fortis.

 One day later negotiations started to save Fortis from bankruptcy. Today I read that ABN AMRO has to be sold to another bank. This will not solve the problem at all. It will speed up the Process of Desintegration of the Banking Industry that has started ten years ago.

 Just one year ago I wrote three blogs about the Merger of Fortis and ABN AMRO. Based on my own experience with the Merger of ABN and AMRO I predicted a possible failure of this merger. I predicted a possible failure because I did not believe the Technical Infrastructure and the Culture of both banks could be easily matched. I was Right. The Credit Crunch was the Cause of the Downfall but the Culture and the IT-Systems were the real reason. The Aim of Management was to make Big Deals (to get Big Bonusses) and the Systems were unable to provide the Right Data.

I have been working in the Money Market for a long time. In my opinion the biggest problem in the Banking Industry is the relationship between the Accountable, Bookkeeping, Systems and the Activities of Dealers. A small part of the Dealers are and were taking Enormous Risks by creating very complicated financial constructions (Derivatives). The Auditors (and the Management) of Banks have lost Oversight a very long time ago. This problem increases in severity when banks are merged.

Every time when a New Technology is implemented the Quality of the ICT-systems deteriorates. This has happened so many times that nobody really understands what the IT-Systems are really doing. Every time when a merger is accomplished the financial data of a bank (or other company) deteriorate. Two of more deteriorated systems are connected creating a bigger mess. Every time when a merger is accomplished the people who have an understanding of the ICT-systems know less about the Systems.

When a Merger takes place the motivated and skillful employees leave the “sinking ship”. The people that remain become “apathic”. They perform their duty in a “nine to five”-mode. Innovation stops. External advisory companies (or worse) outside outsourcing companies take over the maintenance and the development of the software. The quality of the software deteriorates again. The problem increases when packages or software layers are implemented. This happened in every bank around the world.

When I worked with ABN AMRO the biggest mess in IT was always created in the US. The main reason was the “opportunistic” attitude of the Management or the entrepeneurs attitude of the Management. They experimented with everything they could find but never finished anything. The US Financial System was far behind the Dutch Financial System in terms of Products and Supervision. Everybody believed the US was the most innovative in everything but they were certainly not the most advanced in Banking and IT.

 ABN AMRO was one of the bad performers in the Consumer Banking Industry in the Netherlands. The personnel of the Bank were not motivated for a long time. The main reason was the Management. Everything was decided at the top in big Staff Departments. The Branches were forced to implement what they had designed.

 The Management of the Bank loved to do Big Deals with Big Companies. ABN and AMRO were Deal-Making companies and were forced to move into the Consumer Market when the employees of all the companies in the Netherlands were forced to open bank-accounts. The Customer was never priority number one.

The decision structure of the Bank was highly complex and changed all the time. Employees at the branches were not allowed to take initiative. When they had taken initiative it took a long time before the decision was made. Most of the time the answer was negative.

The forced merger with Fortis decreased the motivation of the employees. It increased the complexity of the IT-Systems and the decision structure.

Fortis needed money and many parts were sold to other banks. Every time the Organization and the ICT-systems of the bank had to be divided in many parts. Before this process was even settled a new split was announced. This process was repeated until today.

The Consumer Banking Division of ABN AMRO, the “beautiful pearl” Fortis was after, was carefully protected. The integration of this part with Fortis proceeded. Many people moved to Brussels to create and implement a plan. Many outside advisors earned a lot of money again. Nobody had any oversight. A few weeks ago somebody finally decided to merge the branch-offices. They created new organization structures, appointed new managers, talked with the employees and send an announcement to their customers. This announcement was received last Friday! Two days later all the projects have been stopped and the employees of Fortis are leaving ABN AMRO. Nobody knows what to do!

The financial people were constantly trying to understand what the Risks were. Everytime a new problem arose and the Board had to take action. The message to the outside world changed all the time and the investors lost their faith in Fortis. The End of the (Credit) Line was reached last Friday!

A few days ago somebody decided ABN AMRO had to be sold to another bank to create enough cash to pay the current debts. The process of integration has to be reversed and a new process of integration has to be started with another Bank.You don’t have to be an expert to understand what will happen. The end of this process will be Total Chaos.

I am not afraid I will lose my Savings. The Government will take care.

I am not afraid to lose my shares. I have sold them a long time ago.

I am not afraid the bookkeeping systems of the Bank will finally break down and ABN AMRO will deny I am a Customer or present completely different data about my savings-account.

I am sure many things will go wrong. During my time as a customer of ABN AMRO the amount of mistakes that were made increased. Most of the mistakes were small but some of them really cost me a lot of time and money.

I am afraid  nobody will be able to help me when things go wrong. I just want a little bit of Service. Nothing More. I have decided to leave ABN AMRO. I am moving to RABO-bank.

I hope they will not buy ABN AMRO or merge with another bank. If this happens I have to find another Bank but I really don’t know where to go. At that time I probably have to buy Gold or another Object that keeps its value a long time ago. I really don’t know what will be valuable in the future.

Perhaps I have to start a farm and grow my own food at a place that will not be affected by the rising of the sea-level or big tornado’s or big earthquakes or heavy rain or intense drought or intense cold when the Ice-Age starts.

LINKS

 About the Merger of Fortis and ABN AMRO (Culture)

About the Merger of Fortis and ABN AMRO (Software)

About the Merger of Fortis and ABN AMRO (The Bank of the Heart)

About the Crisis in IT (About Software Layers)

About the Crisis in IT (About Outsourcing)

 About the Crisis in IT (About ERP Packages)

About the Crisis in the Banking Industry (Avalanches)

About the Crisis in the Banking Industry (Fraud)

 

 

 

 

 

 

How to Destroy your Company by Building Software

I have worked for a long time as a Chief Program Manager and Corporate Architect/Strategist for a very big bank. I was responsible for a cluster of projects with a very big budget (>500 000.000 Euro).

I managed >120 managers and >10.000 specialists in these programs. To manage all the projects a special Program Office was used. It registered and monitored all the data and most important of all, it managed all the Risks.

Later I was part of a smal Strategic Unit of the bank that was responsible for Strategy, Architecture, Alliances and Research. One of our tasks was to do a Risk Analysis of important projects.

One day when I worked at the strategic unit of the bank a huge project was announced. The budget (>500 mio) was very very big. We advised to abandon the whole idea. The Complexity of this project was too big. It would fail for sure. Many years later we proved to be right.

What we adviced was to upgrade the existing infrastructure. Many years later this was the solution that solved the big problem “how to show that not all the money was wasted for nothing“. This example shows a very important and simple rule. Big projects always Fail.

The last ten years when I was a Meta Group Analyst and Consultant I have evaluated many failed projects. All the time I found the same cause. People don’t apply “the lesson that are learned“. Sadly enough we want to “re-invent the wheel” until eternity.

I am still in contact with many highly experienced and talented people in my profession all over the world. All of us have the feeling that the world has turned completely mad.

Big advisory bureaus and important analysts are telling stories that are proven to be wrong for decades. This is not strange. It happens all the time. They have to attract attention, sell the software they have been building and keep the people they employ working.

What is really strange is that people who are working at `the other side`, called Business Believe Them. We did not believe them at that time. We used our experience. What is “going wrong in big projects” is already known for 30 years.

Managers believe packages like SAP will solve every problem. The implementation of a package that is “doing everything” has never been successful. It is a well known disaster. This is also a very important and simple rule.

A Government Agency in the Netherlands is now on a colliding course because of a SAP implementation. The loss is very big (Tax Money). It proves the simple rule.

Managers believe Outsourcing will lower the costs and increase the quality. At this moment the time-to-market in a big bank is more than 3 years, the quality of the software is decreasing and the costs are rising.

The reason is outsourcing. Outsourcing fails when the relationship between the users and the IT-department that is servicing the users is disturbed. When you don’t understand what the other is really doing you are not able to help him. This is also a simple rule everybody will understand.

I will tell you a Worst Case Scenario. The worst case scenario is a combination of all my experiences.

The first step of the scenario is the Selling of the Package. This takes place at the inter-company-network. The inter-company-network consists of executives that are part of many advisory-boards of big companies.

When IBM was in his most powerfull phase it could influence high level executives in Government (even Ministers) and Industry. The executives are trading opportunities. If you buy my packages I will buy your cars. There is nothing wrong with that.

The strange thing is that all of the high-level executives know about the big problems related to packages and outsourcing. They are adviced by low level executives that promise them that this time it will be different.

A new miracle approach is invented that will solve every problem. The current Miracle is called Service Oriented Architectures (SOA).

When the low level executives have reached the top they will be adviced by the same people telling the same stories. The funny thing is that almost nobody remembers that he is hearing the same story he was telling his boss.

The main reason is that the same approaches are given different names and different stories. This is called Marketing.

SAP is a huge software program. It has been build to do `everything`.

To customize this huge software program a software program is developed. A customer has to program this program. This is a very complex activity. The language of the programming program is very special.

Because programming the program is special the specialists are hired from a specialized company. To hire them you have to pay a “special price” (very expensive).

Most of the time the specialists are trained to become a specialist in a few weeks. They learn the trade at the expense of the customer. Hiring young not experienced people is cheap.

Highly experienced people are expensive. Most of them leave the company because they don’t like the culture of “hit and run” anymore. Big companies don’t hire people that are working “on their own“. They believe (for some reason) that big companies are providing quality.

Big companies have to use big companies because of liability. So many projects fail that they need a way of “getting back the money” when “things go wrong“.

When “things go wrong” the problem is so complex that a court is unable to solve the conflict. To “solve the conflict” specialist are hired (mediators). They are also provided by the big companies.

Implementing SAP is big business. The advisors don’t understand anything of the business of their client. This is not needed. The Business People have to tell them “What to do“.

The business people don’t understand the language of the programmers. They are afraid to show they don’t understand the specialists. They never ask questions.

When they ask questions the specialists talk a language they don’t understand. The specialists don’t understand why the customer is not understanding them. The main reason is that they don’t listen at all. They love to talk with the computer.

The most important people called users are never involved in the project. To convince the users communication experts are hired from the specialized companies.

At a certain point in time the managers become very nervous. They feel something is going wrong. They are afraid to admit that. They start to intimidate the people of the big advisory company.

Now another specialist, called an account manager, is used to manage the managers. He is telling a well known fairy tale. The project is almost finished. They need a little bit more time and of course they need more money. The managers agree. The account managers are trained to tell specialized fairy tales.

This starts a new phase. The fairy tale story is coming back all the time and the reaction of the managers is the same. The budget of the project is increasing all the time and the moment of delivery is also moving with the same speed.

At a certain moment in time the manager is replaced or better he leaves the sinking ship just in time. A new manager arrives.

He is not able to stop the project because he is not informed. After some time he knows the terrible truth. The process of telling fairy tales, the increase of budget and the movement of the date of implementation is restored. I was once a witness of a project that staid in this state for almost ten years.

The company is really in trouble when the next phase starts. This phase is `Let’s implement what we have build` because `we have to show we have build something`.

At that moment the users (the victims) are confronted with something they feared for a long time. When they are talking with friends or relatives they hear the same sad story all the time. Because there is no alternative the victims learn to cope with the situation.

When they finally have learned to use the software a new release of the package is created by the vendor and the whole process starts all over again.

Outsourcing is a brilliant trick of the managers. The responsibility for the failing project is moved to an outside vendor. They are now the object of aggression.

The managers wants to manage the Outsourcers. To do this many new managers, Vendor Managers, are created. Bureaucracy is increasing.

What the Vendor Managers don’t see is the different Culture of the Outsourcer. A highly decentralized company starts to work with a highly hierarchical company. This creates confusion.

A comparable problem is the culture of the programmers. So called cheap programmers in India are not accustomed to think for them selves. They just do what they are told to do without questioning anything. The customers expects creative programmers and the programmers expect programmed customers.

The situation is getting worse when the programmers know they are able to earn more money at a different company. They move and disturb the continuity of the project-team.

This is happening in India all the time now. Introducing a new programmer in a project takes a lot of time and disturbs the project. When the amount of changes reaches a certain level the project will always fail. This is also applicable to software-changes.

The real customers don’t talk with the programmers. They talk with the managers that are talking to managers that are talking to managers.

Somewhere in the Chain of Communication all the meaning is lost. The result is something they don’t want, the users don’t want and the customers don’t want.

Last but not least the process took so long that the market has changed. Everything starts all over again.

Do you now understand why there is such a shortage in IT specialist? About 30% of IT-projects is succesfull. This means that 70% of the IT-specialists are working for nothing.

If we add the amount of “succesfull” projects that were delivered too late or the amount of projects were the implementation phase took so long because the software was “not-usable” the percentage is even lower.

I have the strange feeling that about 1% of the projects are really succesfull. These projects are projects were a small amount of programmers (max 15) worked in close cooperation with the users. The project was given a Fixed Budget and a Fixed Time-Frame.

The target was to develop a small “package” that Could be Adapted by the Users Themselves.

My Advice

Get rid of Bureaucracy.

Calculate how many people are really programming in your company and how many people are doing other things. Plot this ratio in history and you will see the “Bureaucracy-index”. This will give you some idea about what you are doing.

Adapt what is working as long as possible.

Keep it Simple.

A team of 15 talented IT-people is capable of doing more than a group of 1000 not-talented IT-People.

Never trust a Hype. Always look what is behind the Marketing Language. If you don’t understand the technological language, ask questions and don’t stop until you understand everything. You are not stupid!

Never believe Everything is Possible with One Package.

Never create software that is able to solve many possible problems. Solve the problems that are known. Nothing more.

Never create a program that needs a program to program the program. This is a trap.

Read About Mapping when you want to know more about a simple way to solve complex problems.

Read Why good programmers have to be Good Listeners when you want to know more about the relation between “meaning” and software.

Have a Look at the Law of Parkinson:  “A manager wants to multiply subordinates, not rivals“. “Managers make work for each other“.

Have a Look at the Peter Principle : “In a hierarchy every employee tends to rise to his level of incompetence

Have a Look at the Law of Murphy: Anything that works will be used in progressively more challenging applications until it causes a disaster“.