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About your Profit and Loss

Dear Bank IT Manager,

I am aware that you would like to build a new Profit and Loss (P&L) platform from scratch. Perhaps you have dozens of redundant and sometimes inconsistent P&L applications across your bank? Altogether they might mean millions of Euros or Dollars every year, in terms of running costs and operational risk coverage?

You would like to build a single-unique-therefore-consistent P&L platform. Yes, it should be really strategic and should avoid repeating past tactical mistakes. Current times also force you to be really careful with building costs. But in Spanish there is a very common expression “bueno, bonito, barato”, which loosely translated would mean “good, nice and cheap”. Any Spaniard that hears this expression will immediately become defensive, as everybody knows that these 3 concepts are difficult to find simultaneously.

I am not pretending to be considered a P&L guru, I am sure that there are many super-consultants in the world that would provide 1 thousand-page analysis on how things have to be done. But after more than 10 years managing projects somehow related to P&L, I would like to humbly mention a few dos and don’ts for your new challenging P&L programme.

Let’s start with a first thought, more to come as soon as my daily work allows me some free moments of inspiration.

A P&L platform is not straight-forward.

P&L is a functionality that might seem simple when considered at a high level: “At the end of the day, P&L is just a question of adding and subtracting numbers”. But devil is in the detail, and things might start to get more complex when we drill down into the requirements. So the first risk to be considered is that the stakeholders embrace too much the simple high-level view and minimize the complex detailed view.

If this risk ever materializes, IT managers might even find many vendors that agree with this simplified view of reality. Usually this could happen due to 2 reasons:

  • The vendor also believes that a P&L platform is simple. That’s OK, at some point the bank and the vendor will be able to weep together.
  • The vendor is more than happy to sign a cheap contract with the bank, knowing that eventually they will charge three times more thanks to “a few” change requests. In this case the bank will weep more than the vendor.

Please do not fall into this trap: It will not be easy. Just use common sense, how many hours have been spent in the current tactical P&L tools? Is it statistically possible that all team members of all existing tools have got it wrong? Yes, I do believe in progress and things can be always done more efficiently and we can learn by experience. But let’s be realistic too.

Best regards,

Miquel Febrer, Director, GFT Iberia



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