Kiwibank in Transformation: Startup to EnterpriseDr Bohdan Szymanik

http://bohdanszymanik.blogspot.com

Enterprise Architecture Manager, Kiwibank

Kiwibank: Road to Success

2002

Launch

•Project team

•No customers

•Guess requirements

•Not sure what we would become!

2003-2007

@ Launch

•Strong growth

•Acquisitions

•Brand developed

•Building market knowledge

2008

•Success!

•Many customers

•Many products

•Know what customers expect

Kiwibank IT

Service Delivery

Payments Delivery

Infrastructure Delivery

Application Delivery

Business Delivery

Market Facing Delivery Teams

The banking business model

Banks =payment facilitators

risk managers

Ronald Coase‘The Nature of the Firm’, 1937

Perfect market + $0 transaction cost + complete symmetrically

information => no banks !

Fortunately(!) markets are inefficient:

• Transaction cost is significant.

• Borrower credit risk is not clear.

• Lenders not fully advertised

Four lessons

Internal marketingConflicts of interestProblem solving & DesignBusiness casing the platform

Sell Yourself

Are you considered Part of value creation? Or a cost centre?

Is the EA consideredAn enabler? Or a constraint?

Language“The business must make the decision” versus“This must be a commercial decision”

Sell The Idea

Demonstrat

e

Gain attent

ion

Reinforce

“No rational argument will have a rational effect on a man who does not want to adopt a rational

attitude.”

Our CEO, Sam Knowles, Keynote: Leadership in Banking, Sydney Oct 07

Typical Enterprise Architect!

Governance

Application Designer

Innovator

Conflict: Order Disorder Enabler

Driving Change

Enforcing Order

Conflict: Right Product Built Right

Do It Right Advocate

Customer Advocate

The Innovator’s Dilemma

Clayton Christensen, 1997

Successful companies rarely stay successful

Sustaining innovation treads waterDisruptive innovation creates new

marketsDisruptive innovation forces company

change“Marketing and financial

managers, because of their managerial and financial

incentives, will rarely support a disruptive technology.”

Bucyrus-ErieCaterpillar

Digital Equipment Corp MicroVAX II Dell Latitude D830

ALCo GM - EMD

“It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to

them.”

Steve Jobs, Apple

Allowing Innovation To Occur

Avoid projects

• How can you define a project when outcome is unknown?• Agree R&D opex up front (20%)

Avoid conforming influences

• Sell your people and ideas

Little Guidance to do Design

How do you make logical architectural decisions?Do you have group think sessions?How do you define your set of choices?Do you place emphasis on authority?Do you need to get it right first time?

Measuring Complexity

If Complexity = (program states)

Complexity = SV , where S = # of states, V = # of variables Variables Complexity (as

states)

1 6

2 36

3 216

4 1,296

5 7,776

6 46,656

7 279,936

8 1,679,616

Example,6 states per variable

The Power of ComponentisationImagine a 12 variable system6 states per variable

One single system allowing full interaction2,176,782,336 program states

Two separate systems each 6 variables(program states) = 66 + 66

= 46,656 + 46,656 = 93,312 (= 1/23,000th of original)

Kiwibank Example

GUI

Logic

Data

GUI

Logic

Data

GUI

Logic

Data

GUI

Logic

Data

Core Banking

Credit Origination

Credit Cards

CRM

Started with discrete apps

Progressive Change to SOA

Logic

Data

Logic

Data

Logic

Data

Logic

Data

Service Layer

GUI GUI GUI GUI

Output

2002 Kiwibank launched

2003 first web services; Phone banking

2004 TXT Banking

2005 Back office apps 2006 Mobile

banking; Mobile top up;Customer facing tool;International

Kiwibank Internal Development Team2 4 6 8 14

Partners:

Observe Orient Decide Act – and do it faster!

Colonel John Boyd

“40 Second Boyd”“Genghis John”

Complexity

You want to remove itBut only so far…Beware of those proclaiming number 8 wire and KISSOne persons complexity is anothers simplicityYou can minimise complexity only so far

And then you start moving it around

Complexity Depends Upon

Thomas Dreps, http://en.wikipedia.org/wiki/Image:Chloroplasten.jpg

and perspective

scale

Complexity is Regionalised

In order to win, we should operate at a faster tempo or rhythm than our adversaries… or,

better yet, get inside [the] adversary's OODA time cycle ... Such activity will make us appear ambiguous (unpredictable) thereby generate

confusion and disorder among our adversaries…"

John Boyd, "Patterns of Conflict“,http://www.d-n-i.net/boyd/pdf/poc.pdf

“The Devil's in the Details

I really got over the "get into details right away" attitude after I took some drawing classes...If you begin to draw the details right away you can be sure that the drawing is going to suck. In fact, you are completely missing the point.

...

Work from large to small. Always.”

Patrick Lafleur, Creation Objet Inc. (from Signal vs. Noise)

On Getting Creative Ideas

SaturationIncubationIlluminationVerification

Helmholtz, late 19th century

Henri Poincoiré, 1908

Edward de Bono

Murray Gell-Mann

Graham Wallas, 1926

www.youtube.com/watch?v=KXoHXc0ErBI

Platform Components

Communications

Workflow

Decisioning

Data

Pre

senta

tion

Busi

ness

Serv

ices

Data

Serv

ices

Pro

duct

Engin

es

Business Metrics Reporting

Security

Microsoft As A Platform Vendor

Windows OS

Data Management

Programmable Runtime

Workflow + Decisioning

Office Worker Interfaces

Conclusion

1. Commercial not business2. Sell3. Do OODA (quickly)4. Work on the complexity5. Give yourself time to think!