Case Study

INF80014

CONTEMPORARY ISSUES IN BUSINESS ANALYSIS

Assignment 3

         Easy Credit Australia Case Study

EASY CREDIT AUSTRALIA

Easy Credit is Australia’s largest credit finance company. Its head office is in Melbourne and it has branches throughout Australia. Typically, the customers of Easy Credit are a diverse group and comprise young people just beginning their professional life and who have no established credit history, people in the low to middle salary brackets, and people who have either casual permanent employment, and also university students. Easy Credit’s products include credit cards, personal finance (e.g. car finance, travel finance, education, etc.), consumer finance (e.g. finance for home goods, electrical goods, etc.), mortgages, and insurance (e.g. home, contents, life insurance, health insurance). The risk profile of Easy Credit’s customers is moderate to high, as many customers of Easy Credit are unable to find credit at one of Australia’s Banks because of either their liquidity, credit history, or employment history. The number of Easy Credit’s customers who default on their loans is higher than the default rates of the Australian Banks. Consequently, Easy Credit has variable pricing for their products and for some products, the percentage rate ranges from 13% to 43%. The lower rate is for customers who are considered a low risk and the high rate is for customers who are considered very high risk. Currently, Easy Credit has approximately 15% of the credit card market, 18% of the personal finance, 20% of the consumer finance, and 13% of the mortgage markets. Annual growth expectations are at 7‐10% per annum.

 Despite the risk profile of its customers, Easy Credit’s is a very  conservative company. The Risk Management function of Easy Credit is responsible for ensuring that at any one time, the majority of loans on Easy Credit’s books are with moderate risk customers. The company operates on a tolerance of about 20% high risk, 30% moderate risk and 50% low risk customers. That is to say, when the distribution of the high and moderate risk loan portfolios gets close to (within 5%) of the accepted tolerance, the Risk Management function advises the Heads of the different product lines. An email marked urgent is sent and the CEO is also included in the distribution of the email. The CEO convenes a meeting with the Head of Credit Cards, Mortgages, Personal Finance and Consumer Finance and together they develop a strategy to re‐adjust the risk profile of the loan portfolio. Once this strategy is developed, a high priority memo (email) is sent to the Branch managers throughout Australia advising them to not provide credit finance to high and moderate risk customers for some products.

The Risk Management Function is the decision‐ mak ing engine of Easy Credit. It provides data for credit and catastrophic risk management, as well as marketing campaign strategies and response analysis, new product analysis, etc. The personnel of the Risk Management function include mathematicians, statisticians, and risk analysts. In addition to monitoring the risk profile of the Easy Credit loan portfolio, these analysts provide performance, profit, account, balance, risk, delinquency and other forms of reporting to the various Product heads. Analysts work in teams associated with a product such as credit cards, of mortgages and are encouraged to share knowledge and skills. Easy Credit is aware that the Risk team is an important function to the overall success of the company and so personnel in this function have access to specialist training, are given bonus incentives if they meet specified performance targets (e.g. no. of reports delivered to an expected schedule), and also have especially off‐site days where they go on team building training. The recent good growth of the company has seen an expansion of the Risk team from 20 to 50 analysts.

Presently, Risk management analysts source the data required for their various reports from the different product systems themselves. Each night the different production systems load their daily, activity, account and balance files to a shared file server, known as the D drive. Analysts upload these files to their desktop and using Excel, they prepare, manipulate and analyze data for the reports they must produce. As the Easy Credit has grown the size of the nightly batch files has grown from 500 Gb to 1.5 Tb and the performance of the file share system has deteriorated markedly. In some cases, nightly batch files have been unable to load because of availability of disk space on the file server, and analysts have been unable to upload files because of poor performance associated with resource contention (i.e. multiple users uploading at any one time). Significantly, all Easy Credit’s employees have access to the file server and so privacy and the security of customer data is also an issue. Significantly, there is anecdotal evidence to suggest that staff are storing personal files like photos, music and other files. In total, it is thought that personal data on the shared file server is about 500 GB.

A decision has been made to upgrade the file management system and to install a data warehouse. All nightly batch files will be uploaded to the warehouse and Risk analysts will be able to access their data from the warehouse. The warehouse will also allow analysts to store the output from their analysis, whereas previously they had to use allocated space on the D drive. Below are some responses from the key stakeholders.

Head of Risk Management

“In general, the performance of the file server is very poor. I’m continually having to defend the performance of my team. The complaints from the Product Executives about the slow delivery of reports and missing reports are unfair. Look, if it were a problem I caused, well I’d put my hand up and be accountable. But I don’t own the file server, belongs to IT and they should fix it. My team are supportive of one another and they are highly skilled, they would not deliberately do this. It’s not our fault that the Product Executives aren’t able to get some of their reports, or that data is missing, or that sometimes reports are delayed. What can I do when the file server has crashed or is running slowly because of the number of users trying to access and upload their data? Let’s face facts and remove the file server and deploy the data warehouse, just as we have discussed. The CEO agrees and is committed, but has not yet worked out how it is to be funded. I don’t care which vendor it is, it can be Oracle, IBM or Teradata – I just want a system that is reliable. But it shouldn’t be me who has to pay for the warehouse. We use the warehouse to produce reports and other data for the Product executives. They can pay. With the current growth of the company, Mortgages could pay the data warehouse by itself. The Product executives should pay. The data warehouse is a business enabler.”

Head of Credit Cards

“The profitability, risk, account, delinquency, and risk reports that I get from Risk management are critical. I need to understand on a daily basis if I have too many high and moderate risk customers. Recently, the credit cards function exceeded the tolerance allowed for high and moderate risk customers and we had 22% high risk and 35% moderate risk. The CEO was angry and accused me of letting him down. I explained that we exceeded the allowed tolerances because I couldn’t get a risk report for nearly two weeks. I complain to the Head of Risk Management and he just shrugs his shoulders and says what can he do. He blames the file server and said that his team could not do any risk reports for credit cards, mortgages, personal finance, and consumer finance for almost two weeks. This is unacceptable. Let’s get the warehouse, but I also have lost faith in the CIO. His team can’t be relied upon to deliver this project; they can’t even maintain a file server. We need to get external consultants, they’ll deliver the warehouse.”

CIO

“Each year my budget is reduced and I have to do more with less. It’s impossible to maintain, support and upgrade this IT environment when you don’t have enough money. Naturally, some systems will fall through the cracks and there will be operational problems. The fileserver has been difficult to maintain for 18 months now. I raised it as an issue with the Product Executives, but none of them would pay to replace it. I don’t have the budget to replace it. Anyway, why should I pay for the fileserver, it’s a business resource. The system is nearly 5 years old. It runs on Windows XP, an operating system that we have had lots of problems with. The business has grown dramatically, nearly 10% in the last 12 months. The size of the overnight batch files is huge not to mention the lack of control over the resource and that staff are using it for personal files. Originally, the file server was only designed to support 500 GB, but now it supports 1.5 Tb. Furthermore, when the fileserver was first deployed, we had 20 users and now we have 50 users. Plus, any person in the business can access the file server and store their work files as well as their personal photos, favorite recipes, etc. There is no control over who can access the fileserver and what they can store. Who knows how many people are accessing the fileserver at any one time, possibly up to 100 users. The warehouse is a good solution since it will support the current usage profile and can be scaled up with additional CPU if the file volumes and user concurrency increases. However, we need to have control over its use and who can access the system, otherwise the same performance problems will recur.

IT could implement the warehouse, but there are some Product executives who say we can’t. Fine, I say. Let them do it. They can fund the warehouse and they can implement and support it. However, the CEO will no doubt want IT to do this project because he hates spending the money that consultants are now paid. My problem then is, how can I get the support and confidence of the Product executives and Risk Management?”

Considering the case study described above, please answer all questions given below.

Question 1

The performance of the file server is a major source of concern. You meet with the CEO of Easy Credit Australia and he asks you to help him understand what the problems with the file server actually are. There are multiple stakeholders with different views, objectives and assumptions about what the warehouse is used for. Based on your training in Soft Systems methodology, you decide to first identify the problem clearly and then conceptualize the proposed solution by employing Softs Systems Methodologies. Capturing the information provided in the case study about key stakeholders and the relationship between them, please address the following phases of Soft Systems Methodologies for Easy Credit, Australia:

1.    The Problem situation: unstructured

2.    The problem situation: Expressed

3.    Root Definition of Relevant Systems

4.    Developing conceptual Model(s) for the proposed system

5.    Compare conceptual problem with the problem situation

Question 2

The CEO wants to know more about ETHICs (he hasn’t heard of this approach before), you explain that ETHICs is a socio‐technical approach to information systems analysis. He’s not sure of what you mean. Explain what is a socio‐technical approach to information systems analysis and design.

Question 3

Considering ETHICS methodology, address the following eight phases of the methodology for the upgradation of file management system for Easy Credit Australia Case study.

1.    Why change?

2.    Systems boundaries

3.    Description of existing system

4.    Description of key objectives, tasks, outputs

5.    Diagnosis of efficiency needs

6.    Diagnosis of job satisfaction needs

7.    Future Analysis

8.    Specifying & weighting of efficiency & job satisfaction needs & objectives

Question 4 – Presentation

Your team’s answers for the above 3 questions will form the basis of a substantial report of 3000 words. However, the CEO also wants a 15‐ minute presentation based on the above three questions and giving the summary points and examples.

Guidelines for your Report Layout & Presentation

The evaluation criteria for this assignment are as follows:

A)   Project Report (70% of Assignment)

a.     Report format (15% of Project Report Marks)

b.    Evidence and Arguments (75% of Project Report Marks)

c.    Reference and Citation (10% of Project Report Marks)

B)    Presentation (30% of Assignment)

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