Thursday, 30 October 2014

What's the deal with Finacle?

Infosys swimming pool, Bangalore.
I ask the question just after news that its erstwhile head, Haragopal Mangipudi, left Infosys to be replaced by SAP veteran Michael Reh. This was the first senior change carried out by Infosys' new CEO, Vishal Sikka, who joined the company in August.

After a few disappointing years, Infosys seems to have turned a corner. With Sikka in place, it managed to post a higher than expected profit for Q2 this year plus an interim dividend and bonus share issue.

The one fly in the ointment was Finacle, the core banking solution. It has consistently lagged the rest of the company for many months now. In April this year, the CFO of Infosys, Rajiv Bansal, said 'Finacle will continue to under-perform the company to a large extent, even into next year because that will be a year of investment.' The sentiment earlier this month was similar, with Sikka stating 'our Finacle business did not have such a great quarter,' having posted a 5.4 per cent decline in quarter-on-quarter revenue.

Infosys has given no explanations in recent conference calls, and has so far been unwilling to give an interview.

So, what do the big software consulting firms think of Finacle? Turns out they are entirely positive.

I had a quick look at the latest Magic Quadrant for core banking suppliers, which is just about a year old now (the new one will presumably be out soon). Does Infosys want for ability to execute? Absolutely not: according to Gartner, Infosys has more ability to execute than any other supplier. How about Gartner's other metric, completeness of vision? If you think completeness of vision is a problem for Infosys, you're barking up the wrong tree, because the Magic Quadrant shows that Infosys has more completeness of vision than you can shake a stick at  and certainly more than any other core banking supplier.

How about the Forrester Wave? The conclusion is the same. Measuring two axes, current offering and strategy, also saw Infosys out ahead of its competitors, and closest to the bullseye on Forrester's diagram. Forrester awarded it a higher score for current offering than any of its competitors, which were in this case SAP, Temenos, Sopra, TCS, Oracle, Polaris and FIS. As for strategy, only Temenos narrowly beat it.

Anyone looking for problems with Finacle would also fail to detect them if they consulted Celent's Big Leagues 2013: Core Banking Sales Ranking. Finacle was the comfortable winner here, apparently outselling every supplier, including Temenos three times over.

So, Finacle is obviously a star performer in these types of competitions but there is a disconnect with real world performance*.

It looks like if you want an understanding of what's going right and wrong with Finacle, you'll have to look elsewhere. I'll give this issue more coverage in a future issue of our journal.

*A resource with a more obvious correlation to reality is our own Sales League Table, which showed that the number of new name wins for Finacle dropped off in 2013 compared to 2012.

By Lawrence Freeborn

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