B.A.Sc. Thesis Abstracts - Year 2003

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DEA in Software Projects

Angie Chau

Software production systems have a significant role in the Canadian Banking Industry. Millions of dollars are spent on software maintenance every year. One of the biggest management challenges is to effectively measure the productive efficiency of the utilized processes and staff for performance improvement. The traditional ratio measurements used by the bank are incapable of clearly presenting the overall project performance: Data Envelopment Analysis is a non-parametric approach that compares the decision-making units (DMUs) to the best practice unit. DEA accesses the multi dimensionality of software maintenance processes and measures the relative efficiency of project teams.

The metrics data tracked by the bank was thoroughly interpreted. Input and output variables were defined to build DEA models. Two basic DEA models were constructed to analyze the performance of the software project teams. The efficiency of the teams was measured and ranked.

DEA analysis reveals the relative efficiency and projections for the inefficient units. These are valuable information for making constructive management decisions. The analysis successfully identifies the best performers. As a result, DEA is a powerful technique to evaluate overall performance.

Cost of Deposits Systems at a Major Canadian Bank

Christine Fazari

The Bank, a large Canadian institution, is structurally organised into departments that operate as independent cost centres and profit centres. As the Bank has a massive investment in information technology applications, equitable costing and chargeouts to the profit centres from the cost centres is an economic concern. Furthermore, a knowledge and understanding of the Bank's costing systems can be crucial in ensuring its competitiveness now and into the future. The Deposit Systems costing group (internal to the Bank's computer cost centre) currently does not have a complete view of the costs of running their computer systems that track deposits.

Therefore, the purpose of this study was to identify the costs of the deposit systems at the Bank, with their associated costing methods, as well as the methodology behind chargeouts to the profit centres. This study involved contacting a number of sources as well as a literature survey of material published on the Bank's intranet. Information and knowledge of the costs and costing methodologies existed, although in many different pieces. This study attempted to link the pieces together and provide a comprehensive end-to-end view of costing and chargeouts with respect to the Deposit Systems group. The applications selected for study were Business Demand Deposit Accounting (BDDA), Retail Demand Deposit Accounting (RDDA), Canadian On-Line Teller (COLT), and Project Vision - Term Investment System (TIS).

It was found that the costs associated with running the Deposit systems include information systems costs and product costs, both partly derived from business expenses (e.g. staffing and premises). The relevant costing methods were also uncovered. Application costs consist of information systems (i.e. CPU, disk, and tape) costs solely, which in turn are mostly made up of staff, premises, equipment, and data telecommunications expenses. For costing purposes, applications are then allocated to the services that consume them. For chargeout purposes, services are lumped into cost rollups based on the business, functional, and geographic units of the Bank, for the purpose of product chargeouts.

Application costs, via the services allocation, are mapped to product components or activities. Product costing thus entails taking services and mapping them to the deposit products that use them, based on an internal activity based costing model. All product costs are allocated to non-interest expenses (NIE), the costs of operating a business. The Systems group (TSG) charges out bundled charges at Plan cost to the main business units, which are typically a collection of sublevel level business units. The majority of the bundled chargeouts consist of information processing costs. Services are also allocated across the high level platforms. When 100% of a service belongs to one business unit, it is charged out as a lump sum. If many business units use a particular service, then the cost allocation is based on the number of transactions per transit and is distributed according to volume. The service utilization by a business unit is tracked on a service option basis.

The main business unit ultimately distributes the chargeouts to the sublevel transits. Due to the current costing methods employed, little latitude exists in the way of cost reduction by the profit centres. Chargeouts are based on costs and appear to be distributed fairly. It is recommended that the cost accounting of the COLT application be updated and that consistency in cost allocation be applied bank wide.

Cross Platform Benchmarking and Execution Cost Comparisons

Chetan Raina

Given the advent of platform-independent languages such as Java, managers now have a broad range of choices concerning where to execute a program. There is considerable understanding of the technical differences of execution on different platforms; however, the dollar cost of execution is not well established.

The surveyed literature indicates that there is resurgence in mainframe usage. Indeed, the shift to decentralized computing was done without regard for the increased cost of such an architecture. Because one mainframe is able to handle the same amount of work as several UNIX or NT servers, personnel costs are reduced enough to offset the more expensive mainframe hardware and software.

Using Java, it is possible to develop benchmark programs that document the resources used by each platform in executing code. These benchmarks were developed to address the weakness inherent in the current industry cross-platform benchmarks, such as MIPS. By establishing the dollar cost of those resources, a direct comparison can be made between the platforms. The tests were designed to simulate typical computing functions, while maintaining simplicity.

Several Java-based microbenchmarks were developed and run on various platforms throughout a large financial services organization. The resources used during the execution of the microbenchmarks were detailed. Unfortunately, at the time of writing, only the mainframe's usage-based cost was available. This meant that a direct comparison of costs of execution with other platforms was not possible.

Executing a program on a desktop computer was found to have zero incremental cost. Therefore, in the absence of any technical limitation, the desktop should be used for as much program execution as possible.

Strategy Development for the ABM Network

Amy Leung and Gina C. Lin

About thirty years ago, Automated Banking Machines (ABMs) entered the Canadian market to provide better banking customer service and, from an economic standpoint, a cheaper alternative to perform banking transactions than with the bank tellers in bank branch locations. Currently the Canadian ABM network includes over 8,000 in-branch ABMs and around 17,000 remote ABMs. In recent years, factors such as the penetration of White Label ABMs, the introduction of Cash Back, and the decline of the use of cash, that all threaten the profitability and customer value of Canadian ABM networks. Consequential, banks need to analyze these factors and understand the best methods to react to them.

This thesis analyzes the current trends and factors impacting the Canadian ABM network at a Canadian Financial Institution (FI), and develops strategies to generate more ABM profit and strengthen their brand name and customer base. This report includes a literature review of the Canadian and the Bank's ABM sector, which indeed concludes that the above-mentioned factors are threatening ABM networks. Next, the Bank's ABM network's profitability was examined and revealed that the remote network generates slightly more revenue than the branch network per transaction, particularly when non-Bank customers withdraw cash from one of their machines. Also, deposits are the most costly transaction for the Bank to provide however, from a customer's point of view, it is a necessary service that must be offered. Following this analysis, a demographic study was done on the Bank's customer activities for the 16-month period of September 2001 - January 2003 to determine trends and customer profiles. These findings revealed that 60% of the customers make Interac Direct Payment (IDP) with their debit cards and the second most frequent activity was withdrawing money from ABMs representing 25% of customer activity market. Customer profiles were also defined highlighting the ABM activity differences between genders and age groups.

The last chapter of this thesis platforms off of the research and analytical work from previous chapters and consists of strategy development, evaluation and recommendations. In it, the ABM Group's strengths, weaknesses, opportunities and threats are summarized and the key problems facing the ABM network were identified to be: steady revenues are matched with rising ABM costs; a relatively small ABM network; and a lack of methodologies to identify successful ABMs and customer profiles. To address these issues, 15 strategy alternatives were developed and upon evaluation, four strategies were recommended for the Bank's consideration. They are:

  • Outsource the ABM network to a third party vendor
  • Cost differentiate from other ABM competitors by decreasing the surcharge fee
  • Partner with cash back merchants and other banks to introduce fee for service
  • Decrease the size of ABM network
The final decision of whether or not to implement any of the strategies or recommendations ultimately rests with the decision makers at the Bank.

An e-Commerce Integration Strategy

Natalie Hirsch

E-Commerce is a strongly emerging trend in the global marketplace as businesses are bringing their products & services to the Internet for purchase. Any business is defined therefore by their capacity to succeed in this e-Commerce market. The competitive nature of e-Commerce is two-fold. From one perspective, the merchant aims to offer services online and from the second perspective the web services and online payment solutions strive to offer the most effective and robust services for clients.

For e-Commerce products to stay competitive, it is important that they are continually improved technically to offer more diverse and robust features. An important characteristic of any e-Commerce product is multi-functionality with features that support enhanced performance and security. The introduction of new features into an existing product requires careful integration between an existing platform and a new platform. The integration must be organised carefully with project stages divided into business analysis, product development and project execution. This particular investigation looks at two different types of integration. The first one is the integration of e-Select Plus with a Shopping Cart software package, Miva Merchant. This integration benefits the merchant mostly, by enabling direct connection to the e-Select Payment Gateway, from which transactions are processed online. Unfortunately, this integration is also directly related to those consumers who purchase the Miva Merchant shopping cart software. For this reason, the success of this integration is limited.

The second integration studied looks at a Security Integration initiated by Visa under the Verified by Visa process. This integration into the Visa networks enables enhanced security features that require a cardholder to input a personal password upon verifying their transactions. This process, although required by Visa, is beneficial to implement since it offers the merchants a heightened liability shift to the card issuer to minimise their own incurred costs from fraudulent transactions. This integration was made more beneficial by developing the appropriate integration layer, which was a merchant plug-in, to be portable. This plug-in is available for current e-Select Plus users off the current payment system and is also available for selling as a 3rd party software solution. This solution will benefit Moneris both technically and economically.

Through the study of e-Select Plus, some more general conclusions were made about integration in e-Commerce. Integration projects are important as they diversify the functionality of an existing tool thereby making it more robust and marketable. It is important in this process to ensure that only the integration that will benefit both Moneris and the merchant are worthwhile and should be pursued appropriately.

A Weighted Security Risk Assessment

Tammy Cheng

Many businesses, disregarding their respective industries, are becoming increasingly reliant on computer systems and other information resources to conduct business. However, this increasing dependence on technology has also increased the awareness and desire to protect those information resources. The most common way of protecting those resources is to identify the security risks and threats associated with each resource and implement the appropriate security controls or countermeasures. As a result, many businesses are implementing information security risk assessment and management models. However, many of these models are too cumbersome and comprehensive to integrate with businesses.

The collaborating bank's (one of Canada's large banks) Information Security group currently utilizes a qualitative security risk assessment. Although it can serve its purpose sufficiently, this assessment cannot prioritize projects according to the severities of their security risks, is believed to be too subjective, and cannot be adapted to all the business units within the Bank.

Therefore, the main objective of this project was to develop an adaptable, Weighted Security Risk Assessment (WSRA) that would enable Information Security staff to obtain a quick and accurate snapshot of a given project's security status. A secondary objective of this project was to suggest possible improvements to the Bank's current risk management process with the intention of improving the accuracy of the Bank's risk assessment process. The WSRA was developed to integrate two elements: 1) the essential components included in the Bank's current initial risk assessment and 2) the different types and severities of threats that are inherent to every project.

In order to attain the highest degree of accuracy of risk assessment using the WSRA, a monitoring process must be implemented into the Bank's security risk management process. Monitoring factors such as security incidents and project security rating levels permits IS staff to adjust the weighting factors and scoring ranges to obtain the highest level of accuracy in the ranking of projects. The constant cycle of risk assessment, policy and control implementation, promotion of awareness, and the monitoring and evaluation of controls and policies is essential in ensuring the most effective protection against undesired and costly security incidents.

Process Improvements in Banking: The Re-Organization of a Retail Bank

Amy Gamsby

The hypothesis for this study is that in order to implement and sustain a retail banking redesign of people, process, and technology there needs to be an organizational design that breaks down the traditional silos of product, distribution, and infrastructure.

The research for this project was done through extensive literature reviews on the topics of Process Management, Organizational Change, Industrial Management, Corporate Reorganizations, and Process Improvement, as well as by examining best practices within financial services and other industries in North America, Europe, and Australia. The findings of these literature reviews and best practices will be applied to a retail bank design.

The results of this research have shown eight reoccurring themes and ideas that became apparent as the crucial requirements to implement process-centered management. It is also recommended that the process-centered management be implemented only after the redesign initiative is under way to ease the transition for the organization as well as the employees. Some type of process performance measurement also needs to be in place to allow employees to have an understanding of how the process reorganization is currently performing along with problems that need to be overcome, and any changes that need to be made. Therefore, the outcome of this research demonstrated that a process centered organizational design would break down the traditional silos of product, distribution, and infrastructure and sustain their people, process, and technology redesign initiative.

Strategies for Information Retrieval

Gwynneth Edamura

This thesis explores strategies for information search, retrieval, and clustering, and determines suitable commercial vendors who meet the information retrieval requirements of Bell Canada. To gain Scientific Research and Experimental Development (SR&ED) credits from the Government of Canada, Bell Canada must present evidence of eligibility for these credits. Information retrieval strategies in this thesis are investigated to determine the most suitable solution to the categorization of content of Bell Canada's extensive document repository. Bell Canada's document collection must be indexed for keywords so that a retrieval system automatically gathers documents for a given keyword query. The retrieved results are then presented in a hierarchic clustering tree such that documents relevant to the query are nested within larger clusters of less relevant documents. This method of search results display allows the user to view possible relationships between documents due to the tree-like structure of the presentation. Thus a search and retrieval system coupled with document clustering is recommended for the purposes of Bell Canada. Mondosoft A/S, Verity Inc., and Vivisimo Inc. are commercial companies who provide search and retrieval or clustering programmes that are sufficient for the needs of Bell Canada, and include additional features such as security level authorization and operations support.

A Case Study of Database Migration and Relational Database Design

Daniel Wen-Cheng Chen

The process of database migration is both time and resource consuming. There is no software to achieve complete automation for the process due to the fact that every database has unique software and hardware configuration. However the benefits are enormous and they justify the cost. A database on new hardware runs faster and is less vulnerable to machine failures. The new database built with new software provides more features that a growing company needs. Data security is protected better using new hardware and software. The new system increases efficiency and productivity of the company.

The hardware and software used by the client for the database are very outdated. To export the old database content to the new system, several options were devised. The decision was made to print out database entries on paper and then to use the commercial optical character recognition software package, ScanSoft OmniPage Pro 11, to convert them back to electronic form. This solution proved to be the most practical and economic one compared to other solutions.

A relational database was designed to hold tables that could be cross-referenced. The new database was created in MS Access format. The reason for this decision was that MS Access is one of the most popular database software used by small to medium size companies, and it has extensive customer support and affordable price.

A custom program called Database was written in MS Visual Studio to automate the rest of the necessary steps. The text files generated by OmniPage are read in and analyzed. The program constructs database entries compatible with the new database. It then connects to the new database and stores the entries in the new database. This program saves a lot of time and effort that would be required otherwise.

A satisfactory solution to migrate the old database to the new system was found. Some future works include the implementation of a complete information management system customized for the client.

A Business Plan for a home computer service company. College Tech Professionals

William C. (Leif) Hickling IV

The average fast paced Torontonian lifestyle does not allow one to lug their computer across town every time it breaks down. The SOHO small business market is left to fend for itself when it comes to computer network servicing. These are factors that have fuelled the computer services market to triple their revenues between 1998-2001. This 2.18 billion dollar industry is growing at unprecedented rates. Canadians are becoming more technologically inclined and this provides a new and fast growing market. Home computer use in Canada is growing at approximately 5% per year and it is expected that 70% of Canadian homes will have at least one computer by 2004. SOHO/small businesses and home computer users will provide College Tech Professionals with a computer service market where the growth potential is essentially unlimited.

The four founders of CTP all have computer skills and service management experience that will provide them with the basis to succeed in the computer services market. The Computer Tech Professionals ideal was created to combine the wealth of knowledge that computer students have with the publics need for these services.

The market potential for home computer services and SOHO/small businesses network management has just begun to be explored by the industry. This service will provide a much needed outsourcing option for SOHO/small businesses and a convenient affordable way for home computer owners to have their computers repaired at their convenience. The service will also employ students to keep the cost of the service at an affordable level to the typical client.

The money required to finance this project will be used to develop a system that works to efficiently service SOHO/small business networks and the home computer user. The money will also be used to let the public know that a service like this is available because as of yet the public is unaware that a certified service exist. The financial projections show that the initial loan to start CTP can be fully paid back within three years of operations. As can also be seen in the financial projections CTP will be quite profitable in the second and third years of operation.

CTP will be a fast growing company that will have the edge on its competitors because of its collegiate image and recognised name. If CTP can get its message to the public it will have enormous growth potential.