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Click here for "Part-I of the feature"



Budgeting for E-banking (concluding part)

[ R P Singh, the author is a specialist in Banking IT systems & is contributing a special series of features on Banking Technology]


Be a good customer

If you manage to achieve a professional services cost cap, you will need to show some discipline You will need to be a good customer.

The worst area where banks let vendors down and compel them to be dishonest is the decision making process. When a project is launched, manpower resources are committed to it. These resources are highly paid besides having huge overhead costs. The decision making process in most of the banks is such that in spite of the budget having been approved for the project, for every decision - be it for a business requirements specifications or be it for an item of expenditure- days and sometimes weeks are lost. This will throw any project plan and manpower budget out of gear. And a vendor who has calculated and committed the price quotation on a reasonably tight budget, will incur heavy losses. Hence, if you manage to get a fixed manpower budget in the contract, please have a foolproof decision making and expenditure sanction machinery in place for the project. A decision should not be delayed because someone in the bank is sick or is out on a honeymoon.

The essence here is that unless you find a way to control the professional services charge for your project, your entire financial estimates for the project is at the risk of going for a toss. At the same time if vendor commits you a fixed professional service charge, and you do not support him with an efficient decision making system for the project, the vendor will have no option but to abandon the project mid-way. Both the conditions have equally unpleasant consequences for you.

Some Hidden Costs

Rather these are unforeseen costs, some of which you normally fail to see at the beginning when you are planning your budget. I am listing some of the more obvious expenditure items that are left out at the time of initial budgeting. Individually, these appear to be small; together they become a substantial part of the total cost. And if you miss out on these, your wisdom in estimation is going to be questioned later on.

1. Hardware and Software for Backup System and Test System

2. Firewall System - Hardware, OS, Software

3. Firewall for back up system

4. Encryption mechanism

5. Web Server Certificates.

6. Leased line and backup connection costs

7. Security policy design, validation and auditing costs.

8. Disaster Recovery Centre ( DRC) costs

9. Risk Management and Contingency Plan

10. Costs of hiring / buying computers for project implementation and UAT.

11. Costs involved in hiring consultant(s) for techno-legal planning.

12. Process Change Management

13. Setting up new Data Centre or expanding the existing one

14. Leased line and encryption of data between Data Centre and DRC.

15. New support resources and their training.

16. Telephone bills, Transport and hotel charges for consultants.

17. Additional costs due to people working late, working on holidays and weekends.

The list is only indicative and not comprehensive. Besides each one of these items has its own detail workouts. My intention here is only to alert to you to minimise surprises. For, even after covering all the areas you can think of, you will have quite a few of them.








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