Banking group Nedcor is to cut its number of IT systems by almost a half, from 307 to 157, by the end of 2004 as part of measures to bed down its R7.5 billion merger with BoE.
The bank will also drastically reduce its IT spend, as it had spent R2.2 billion on systems in the past five years in an effort to make itself one of the most technologically advanced among its peers.
Speaking at a presentation to the media and analysts in Cape Town yesterday, Nedcor CE Richard Laubscher said: "Our investment in new IT systems has peaked and we are now in a phase where we will reduce the number of licences and upgrades we have to manage."
The cost of the merger with BoE has increased by about 22% to R868 million after Nedcor bought its smaller, ailing rival last year and created the country`s second biggest bank in terms of assets.
Analysts have described Nedcor`s interim results as a disappointment as the group`s headline earnings fell to 244c per share from a previous 630c. However, the introduction of new accounting standards do make this year`s results not strictly comparable with last year`s.
Challenges that Nedcor has to face on the integration of the various IT systems include bridging the divide between BoE`s federated systems with that of the group`s shared services model.
According to the results document: "This means that typically the migration projects are not simple one-to-one migrations, but many to one, such as five home loan platforms to one."
The Nedcor document says the migration needs to be as invisible to the client base as possible to ensure maximum client retention, particularly in the key volume migrations of the NBS and BoE Business Bank client base to Nedbank and People`s Bank brands.
The hangover from Nedcor`s foray into investing in technology companies is still with it in the form of the 103 million Dimension Data shares it owns. The shares are still up for sale.
"We have previously said we will sell our stake in DiData because it is a non-core investment. This decision has nothing to do with our confidence in DiData`s management," said Laubscher.
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