Published on 29-Mar-2011
Validated on 18 Jul 2013
"The IBM project team was very skilled in terms of both SAP expertise and banking industry experience, and we were impressed by their plans for how to structure the project." - Hendrik Pothof, Corporate Information Manager at ING Real Estate Finance
ING Real Estate Finance
Enterprise Resource Planning, Small & Medium Business, Transformational Account, Information Infrastructure, Optimizing IT, Information On Demand
IBM Business Partner:
ING Real Estate Finance is a subsidiary of the ING Group, which provides international commercial real estate lending services for real estate funds, property developers, and private clients. With its head office in the Netherlands, the company also operates in several other European countries, the United States, Hong Kong and Australia. It employs 320 people and manages a loan book of €36 billion, generating an annual turnover of €600 million and profits of €300 million.
With three different legacy systems supporting its European, American and Australian business units, ING Real Estate Finance was finding it difficult to consolidate data and gain an accurate overview of its global operations. Maintenance and development costs were high, as new capabilities (such as Basel II compliance) needed to be developed separately for each system. Moreover, functional gaps within and between the systems required users to learn work-arounds and use spreadsheets to manage important data on loans and collateral.
The ING team decided to replace its existing systems with a single SAP Core Banking and ERP Financials-based solution and worked with SAP to create a blueprint for the implementation. IBM Global Business Services was selected as implementation partner, and helped to structure and manage the project. IBM provided expert resources in the fields of finance and reporting and worked closely with in-house process experts to deliver the project on time and within budget.
Reduced reporting workload by 25 percent; eliminated the use of spreadsheets; completed collateral information for more than 99 percent of all loans.
ING Real Estate Finance is a subsidiary of the ING Group, which provides international commercial real estate lending services for real estate funds, property developers, and private clients.
With its head office in the Netherlands, the company also operates in several other European countries, the United States, Hong Kong and Australia. It employs 320 people and manages a loan book of €36 billion, generating an annual turnover of €600 million and profits of €300 million.
Recently, ING Real Estate Finance has been working with IBM Global Business Services on a major project to consolidate to a single, centralized set of business applications from SAP, and roll them out across several countries in Europe, North America and the Asia Pacific region. The consulting engagement with IBM has been a notable success, especially considering the scale of the project and the considerable difficulties of achieving multinational ERP implementations in the banking sector. The commitment and dedication of the combined team from ING Real Estate Finance and IBM Global Business Services has been vital in bringing this project to a successful conclusion.
Hendrik Pothof, Corporate Information Manager, ING Real Estate Finance, has been closely associated with the project from its earliest stages. He comments on the challenges that ING was facing, and the drivers for creating a centralized solution: “Over the years, our business has grown significantly. As our legacy system was mainly built for the Dutch domestic market, deploying this system to foreign offices was time-consuming.
“In the American and Australian businesses, we decided to use other ING systems, which were more geared towards general lending. As a result, each region had its own IT systems to manage its specific business processes.”
With three main systems to support, IT maintenance and development was inefficient. When a change occurred that affected all three regions (for example, the introduction of the Basel II regulations), the company needed to develop the required capabilities in all three systems separately, resulting in long lead times. Moreover, after a decade of continuous development, each system had become complicated for IT teams to maintain and difficult for business users to operate.
“As a business, we have a relatively small staff of very highly trained people, and we need them to be able to focus on core activities, instead of getting bogged down with admin,” comments Hendrik Pothof.
“Our existing systems had some functional gaps, so a lot of workarounds were required, and a significant amount of important data had to be managed by other methods. For example, the collateral information for approximately 15 percent of our loans was stored in separate spreadsheets, which was quite cumbersome.”
A further issue was reporting: with three separate systems, it was difficult for senior managers to gain visibility of global operations. Consolidating the data from all three systems was a laborious process, and management reports on the whole loan book were only created once a month – limiting the company’s ability to react quickly to emerging problems.
The company’s senior management decided that a new approach was needed. The in-house IT team was asked to perform a feasibility study to decide whether the existing systems could be converted into a single solution using a service-oriented architecture.
Meanwhile, external consultants provided an evaluation of alternative solutions from a number of major vendors – going from a list of 12 options to a shortlist of three, and then to a single solution: SAP.
“Our main worry about moving to a different solution was that it wouldn’t be able to offer the specific loan and collateral management features that our old systems were built for,” explains Hendrik Pothof. “For example, one of the important factors in commercial real estate finance is whether a property is tenanted or not. If it has long-term tenants this reduces the risk, which will affect the terms of the loan we offer. We didn’t think a standard ERP solution would support this level of detail, and we feared that a lot of custom development would be required.
“The IBM project team was very skilled in terms of both SAP expertise and banking industry experience, and we were impressed by their plans for how to structure the project.”
“However, when we looked at SAP Loans Management and Collateral Management for Banking solutions, we found that they could actually provide about a 95 percent fit with our requirements. Moreover, since the SAP solution has been proven in other implementations, we recognized that it would be less of a risk than trying to build our own system.”
Choosing the ideal implementation partner
ING Real Estate Finance worked with SAP to design a blueprint for the implementation, which would involve SAP Loans Management and Collateral Management for Banking, SAP ERP Financials and SAP NetWeaver Business Warehouse. The combination of these applications and components would provide a single, centralized solution capable of managing all business processes around loans, collateral, finance and reporting.
“The next step was to choose an implementation partner. We looked at proposals from Capgemini, Accenture and IBM Global Business Services, and we chose IBM,” says Hendrik Pothof.
“The IBM project team was very skilled in terms of both SAP expertise and banking industry experience, and we were impressed by the plans for how to structure the project. Our in-house project manager had previously worked on a major SAP implementation for another large international bank, and he was convinced that the methods IBM proposed would work well.”
The approach adopted by ING Real Estate Finance and IBM was to create a combined project team of around 60 people: 35 IBM consultants and 25 process experts from the three main business areas of loans, finance and reporting. The ING process experts were seconded to the project on a full-time basis, and their day-to-day roles were backfilled by other resources for the duration of the project.
“The approach that IBM recommended meant that the ING team members were able to focus 100 percent on the project, and were given the authority to make all the key decisions,” explains Hendrik Pothof. “This was a very effective way of managing the project because it allowed us to fully utilize the IBM consultants’ expertise to drive the project forward quickly, instead of waiting for decisions to be made by other stakeholders.”
The main task for IBM was to realize the blueprint by building a global SAP template that could be rolled out to all the different countries. This involved customization of the business logic, and specification and development of the interfaces.
The next step was to define strategies and processes for data migration from the existing systems, testing, infrastructure specification, final preparation and rollout.
An added challenge was the need to meet country-specific requirements (such as currency, language and legal requirements) in nine countries (Spain, Italy, France, Germany, UK, USA, the Netherlands, Hong Kong and Australia).
The team deliberately concentrated on the essential functionalities of the solution, avoiding the kind of ‘nice to have’ features that would have complicated the project by requiring extra development work. IBM helped to ensure the success of this ‘vanilla’ approach to implementation by getting the maximum advantage out of SAP’s standard features.
Combined with strong support from the senior management team, this approach made it possible to deliver the project in line with scheduling and budget targets. Once the project was finished, the ING team members returned to their normal roles within the business and became the key users of the new solution, helping to train their colleagues and share knowledge.
Benefiting from integrated information
With the new solution in place, the company now has a single, centralized system that manages all major aspects of its business across all regions. Because the SAP solution provides comprehensive coverage of loans and collateral-related data, ING has been able to eliminate all spreadsheets from its loan management processes. More than 99 percent of all loans registered in the SAP system are now accompanied by full collateral information – including all the details about tenancy and other important real estate-related factors.
“The SAP solution is particularly strong for the kind of complex loan agreements that our foreign offices and our Dutch corporate client operations specialize in,” comments Pothof. “The ability to handle all the relevant information in one system, instead of having to manage separate spreadsheets and other documents, is a major advantage for those teams.”
Having a single source for all business information is also a significant advantage for the company’s reporting team and senior management. Instead of laboriously collecting, checking and consolidating data from each business unit, analysts can simply query the data held in SAP NetWeaver Business Warehouse and create reports in a faster, more dynamic way. As a result, many reports can be generated daily instead of monthly, which enables senior management to react more quickly to emerging situations.
Taking advantage of IBM expertise
Finally, by consolidating three separate legacy systems into a single, industry-standard solution, ING Real Estate Finance will potentially be able to reduce its IT maintenance and development costs.
Instead of developing the same functionality from scratch in three different systems, the company will be able to make a single change to the central SAP instance, and roll the new feature out worldwide.
“The skills and experience of IBM Global Business Services have helped us build an SAP solution that has significantly enhanced our process and control framework within the business,” concludes Hendrik Pothof. “Above all, IBM has helped to ensure that the system works to meet the needs of users, instead of the other way round. We’ve streamlined our workflows, eliminated workarounds, and improved control of processes across the business – giving us a more robust operational model when economic times are tough, and providing a platform for growth when things improve.”
Products and services used
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