Kwangju bank case study
Introduction One important factor to consider during an organizational change is the information technology (IT) component. Regardless of the business or organization, IT can be quite important and have high impact on achievement of organizational goals. “Since information technologies have become critical to business success as a tool for organizational innovation, successful implementation of information technology (IT) innovation is viewed as one of the most crucial tasks for many organizations”(Lee and Kim, 1998, p.287). In this paper, we will explore some of the aspects of IT change that took place in Kwangju bank in Korea, and how this has impacted their business.
The goal of competing in the global market In 1989, Kwangju bank had been losing money, partly due to foreign exchange fraud, possibly partly due to computer problems (Kang, para.1). As a response to the problems that the bank was experiencing, the board of directors brought in a new chairman, Mr. Song Byungsoon. One of his objectives for the new business of the bank was to be able to compete in the global market. In order to do this, they would need to provide services whenever and wherever the bank’s customers needed. The IT system would need to help the bank to reach this goal, so it was imperative that the changes made would allow more flexibility from the customer’s perspective.
Downsizing the OLTP System Initially, Kwangju bank upgraded their online transaction processing (OLTP) system. They spent significant money to do this, only to be informed afterward that maintenance services would be discontinued by the vendor after 1993. Mr. Song decided to downsize the OLTP system. This had never been successfully done yet at that point by another bank, so that made it a bold endeavor to undertake. The credibility of the bank was on the line if any problems arose, as “the OLTP system is the bank’s most critical system because it is directly linked to the customer’s financial
The goal of competing in the global market In 1989, Kwangju bank had been losing money, partly due to foreign exchange fraud, possibly partly due to computer problems (Kang, para.1). As a response to the problems that the bank was experiencing, the board of directors brought in a new chairman, Mr. Song Byungsoon. One of his objectives for the new business of the bank was to be able to compete in the global market. In order to do this, they would need to provide services whenever and wherever the bank’s customers needed. The IT system would need to help the bank to reach this goal, so it was imperative that the changes made would allow more flexibility from the customer’s perspective.
Downsizing the OLTP System Initially, Kwangju bank upgraded their online transaction processing (OLTP) system. They spent significant money to do this, only to be informed afterward that maintenance services would be discontinued by the vendor after 1993. Mr. Song decided to downsize the OLTP system. This had never been successfully done yet at that point by another bank, so that made it a bold endeavor to undertake. The credibility of the bank was on the line if any problems arose, as “the OLTP system is the bank’s most critical system because it is directly linked to the customer’s financial
References: • Duchessi, P., Chengalur-Smith,I. (1998). Client/Server benefits, problems, best practices. Communication of the ACM,41(5),87-94. • Kang, Y.M. From a Dinosaur to a Chameleon: Transformation of a Korean Bank. Accessed November 11, 2012 from http://higheredbcs.wiley.com/legacy/college/rainer/0470889195/appw3_1/dino/dino.html • Lee, G. H., & Kim, Y. G. (1998). Implementing a client/server system in Korean organizations: interrelated IT innovation perspective. Engineering Management, IEEE Transactions on, 45(3), 287-295. • Rainer, K. & Watson, H. (2012). Management information systems: Moving business forward. New York: John Wiley & Sons, Inc.