IBM has launched a bundled offering of hardware, software and services for banks to become compliant with the Basel II Capital Accord.
Basel II comprises a series of guidelines drawn up by the Bank for International Settlements, a.k.a. the central banks' central bank, on how to standardise credit, market and operational risk. Banks will need to be compliant by the end of 2006.
IBM's Basel II Information Management Offering therefore aims to help banks sort out what they need to save, how they're going to save it and how they can retrieve it in a timely fashion. The benefits of being able to say they are compliant are a higher credit rating and a lower capital requirement, releasing funds for lending and other investments. At stake for IBM, is a share in IT spend estimated by one analyst firm (Datamonitor) at $4 billion (£2.2bn) over the next two years in Europe alone, and much more worldwide.
The bundle is something of a pick-and-mix offering. The key is the DB2 database software but if a bank is already running it, it can simply layer on the other packages, such as DB2 Data Warehouse Edition, which contains the management tools and a number of basic data models already preloaded for Basel II compliance.
Also in the bundle are the DB2 Information Integrator, which enables data from other databases, file systems and even live transaction feeds to be used in the data warehouse for querying. For that purpose, the DB2 OLAP tool can also be in the package, though the company is aware that other querying tools, such as Business Objects or Cognos will be preferred, acknowledged Angus Falconer, IBM's marketing manager for DB2.
Equally, the Information Integrator is optional, depending on whether a bank decides to keep all its data in its current locations and query across them all, or go through a process of consolidation into a single huge database. "In the latter scenario," Falconer went on, "the bundle can ship instead with ETL tools from Ascential and/or Informatica."
On the hardware side, the bundle can include, if required, a pSeries box to run the database server and the ESS high-end storage array, otherwise known as the Shark, to hold the data. Beyond that come the services of the IBM Information Management lab for proof of concept and, perhaps most importantly, of the Business Consulting Solutions (BCS) side of IBM Global Services.
This last part is the consulting arm of PricewaterhouseCoopers, acquired by IBM for $3.5 billion (£1.93bn) in mid-2002, bringing it an army of business consultants. "The primary driver here is fear," commented James Governor, a director of the analyst firm Redmonk. "A lot of banks expected to get an extension on the initial deadline for compliance, but the regulators have said they want it now, giving them just a couple of years to get it."
As a result, he went on, "they're scared. So they want someone to come in and hold their hand, preferably with a broad range of expertise." As such, he argued, "Basel II plays to IBM's strengths." Governor said no other vendors had so far offered anything as broad as the offering, though SAP's recent teaming with NCR suggests something, in this direction, is in the pipeline from them.
Given the optional nature of most of its components, IBM said it is hard to talk about pricing for the offering. "On the low end, a customer might only spend $350,000 (£193,000) - a relative bargain for the return on investment that it can bring," said a spokesperson. "On the high end, we have customers who spend tens of millions of dollars on solutions for this area."