Building a Strategic MIS for a Commercial Bank

Building a Strategic MIS for a Commercial Bank

In this blog we're looking at building a Strategic Management Information System (SMIS) to support strategy implementation in a commercial bank. We're assuming a starting point where we have a well defined Business Plan which describes a rich set of measures and targets which underpin strategic success. This blog is going to focus on how we might organise these measures and targets in a dashboard format, use the SMIS to cascade objectives throughout the bank, and also to structure and capture our data logically. Along the way we'll be covering many tips and pitfalls which I have experienced in strategic data and information management, and I hope to get lots more in terms of comments and suggestions from readers.

BSC, KRIs, and KSIs: Why the three Strategic Reporting Aspects?

While it is important to have a consolidated strategic dashboard, where a user can get an instant visualisation of the overall scenario, there are some compelling reasons to consolidate this information from a number of related but discrete aspects. Again, there are no hard and fast rules for this, and I welcome critiques of my proposed approach, but let me explain the rationale in the first place.

1) Purpose: strategic reporting covers a number of slightly different purposes. It should track what we are trying to achieve - i.e. our progress towards strategic objectives, measures and targets (in this case we have used the Balanced Scorecard or BSC methodology).  I should also track 'the rules of the road', or the key risk parameters within which we must operate in achieving strategic success (the Key Risk Indicators or KRIs). Finally - I think it should also track the changes to the business and operating model (i.e. change projects) we need to implement in order to achieve this strategic success. Our approach uses KSIs or Key Strategic Initiatives to catalyse and implement strategic change. Personally I see some merit in proving a separate reporting mechanism for each of these aspects, so let me elaborate why.

2) Flexibility: we may find in due course that we wish to slightly customise the dashboard template for these three aspects. For example - as a dashboard aligned to the change or project management process within the bank - the Key Strategic Initiatives template may begin to align itself with an in-house or industry standard Project Management methodology and the related reporting framework. Not a high priority at this stage for our work in progress, but certainly a matter for discussing and thought at some point in the future. We'll probably be discussing Change Management in banking in another blog series in due course - at which point the two series may become inter-woven at some points.

3) Audience: to some extent the audiences for these different aspects will be slightly different. For example, general management in Strategic Business Units (SBUs) will probably have a bias towards the BSC dashboard - i.e. to track their progress towards meeting business goals. Whereas Risk Management (including the Risk Committee) will be keeping a particularly close eye on the Key Risk Indicators, to ensure that the risk covenants agreed upon in the Strategic Plan are not breached in the push for strategic success. Finally, the Key Strategic Initiatives will be of most relevance to the various Change Management or Project Teams throughout the bank, as their main goal is the implementation of strategic change.

4) Timeliness and Urgency: in some respects, there is quite stark division between the timeliness and urgency of reporting required from the Key Risk Indicators dashboard which argues for differentiation (this may require different treatment in terms of data integrity and availability). For example, a slight delay in feedback or a temporary error in terms of BSC or KSI reporting is not likely to be an issue of grave concern. In relation to KRIs, it is vital that highly reliable data is available as soon as possible, and should be monitored on a daily (if not constant basis through the automation of risk alerts by email or SMS for example).

So I hope this clarifies why I have adopted the approach I have, in separating the SMIS into three distinct but inter-related aspects. To reiterate I like to think of it as follows:

1) BSC: What are we trying to do? What does success mean?

2) KRIs: What are the rules we need to play by?

3) KSIs: What do we need to change in order to win?

We'll be going into much greater detail about these different aspects in due course. And also explaining these particular tools (i.e. BSC, KRIs, KSIs) and why we selected them in the first place. However - that's a post for another day. Until next time. Take care.