Equity analysts and financial industry experts alike are in increasing agreement that information technology will be a critical variable for the viability and profitability of financial institutions in the coming years. In this context, a great deal of discussion has focused on the implementation of client/server systems for back office operations in an industry that is still highly invested in largely inflexible mainframe systems.
Unfortunately, a substantial amount of hype has been associated with the cost-cutting benefits of client/server computing. This has partly served to obscure the real benefits these systems can provide in terms of greater flexibility, ease of development, improved customer service and satisfaction, decreased training and support costs, and the generating of new sources of income.
"Clearly, the continued use of client/server PC technology in the back room is strategic," says Jeffrey S. Griffie, Executive Vice President, Midlantic Corp., "and will bring benefits in terms of cost reductions, efficiencies, and most important, improved customer service." Many of the traditionally rote functions associated with the back office are being reexamined. In addition to looking for ways to cut out inefficiencies and decrease costs in specific processes, we are starting to see that traditional back office functions provide the financial institutions with a wealth of valuable information about their customers and what their customers are looking to do. The availability of this information in a client-server environment has already led to important new revenue-generating activities.
At Microsoft, we have taken some of the advances in personal productivity and workgroup technologies and applied them to a client/server infrastructure that can meet the needs of financial institutions looking to reap more from their existing systems. We have invested more than $500 million over the past five years to develop this infrastructure. The recent announcement of the Microsoft BackOffice is where much of our efforts begin to bear fruit for our customers. This sophisticated, integrated set of server software enables enterprises to take full advantage of their legacy capabilities, while providing the flexibility, functionality, and scalability required for success in the financial industry's increasingly competitive environment.
The underpinning of Microsoft BackOffice, which combines five "best-of-breed" components, is the Microsoft Windows NT Server. This versatile, highly reliable operating system, first introduced in 1993, is already in use in eleven of the nation's fifteen largest banks. In addition, in excess of 60 financial institutions worldwide have committed to utilize Windows NT Server as their next generation distributed branch server. Finally, according to the 1994 information Technology in Banking Survey by The Tower Group, nearly one-quarter of all microcomputer-based systems in the U.S. commercial banking industry will run on Windows NT by 1997.
Windows NT Server provides traditional file and print services while supporting mission-critical databases, host connectivity, electronic messaging, and systems management across a distributed network of computers.
The other components of Microsoft Backoffice include: Microsoft SNA Server, which connects desktops to legacy mainframes--a critical product for banks, because so many of their applications reside on legacy systems; Microsoft SQL Server, a robust database platform that delivers line-of-business solutions on the corporate network, offers server-enforced data integrity, remote stored procedures, high availability, distributed transactions, and extremely powerful systems management tools; Microsoft Management Server, which helps reduce support costs by centralizing common desktop tasks that typically cost organizations significant amounts of time and money; and Microsoft Mail Server, an advanced messaging system. Later in 1995, Microsoft will introduce its client/server version of Microsoft Mail, known as Microsoft Exchange Server.
These last two components, the most recent additions to the BackOffice suite of applications, offer financial institution unique capabilities that are unavailable with competing client/server systems such as UNIX, OS/2, and Netware.
Microsoft Management Server, for example, enables administrators to remotely manage IT resources and services from one central site, increasing control of the environment, decreasing the support burden of the system, and lowering the overall cost of implementing client/server computing. Management Server functions include hardware and software inventory, automated software distribution and installation, and remote systems troubleshooting. A system's manager can even take remote control over the mouse, screen, or keyboard of any system PC running on MS-DOS or Windows operating system for greater detail or to help a user learn a new program.
Microsoft Mail and Exchange Server also significantly differentiate Microsoft BackOffice from other client/server systems. Many electronic mail systems provide for only rudimentary communication between individuals. Microsoft Mail, however, provides a solid messaging foundation on which automatic workflow capabilities, fully integrated with e-mail, can be built into solutions so that functional processes can be routed to the appropriate people to allow them to take action as required.
Microsoft BackOffice's horizontal applications--SNA Server, SQL Server, Systems Management Server, and Mail Server--are seamlessly integrated with NT Server, as well as with one another This provides a level of integration unprecedented in the client/server world and previously available only in a mainframe environment where everything was bundled together.
In addition, with Microsoft BackOffice you get a very flexible client/server platform with access to literally thousands of Windows applications, as well as ease of tool development--so you're getting the best of integration in bundle functionality with the best distributed computing and client/server capabilities available. Microsoft's business model is very much oriented towards choice, openness, and competition, all of which breeds lower costs of doing business.
In recognition of these competitive advantages, an increasing number of financial-industry solution providers are linking their newest products to the Microsoft BackOffice client/server system. This section will highlight three--Microbank's document management system, Fundtech's wholesale funds transfer system, and Broadway & Seymour's VisualImpact, an item/check processing system.
