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This is also a case study taken from my book only on case studies. Kindly go through
this case study in the book, I am analyzing this case study for your benefit so that you
will get to know how to analyze this type of case study.
How do you go about introducing this form? This form Gartner defines a core banking
system, as a bank end system that processes daily banking transactions and posts updates
to accounts and other financial records. So, this I-flex as you can make out if in the
business of core banking system. It is a backend system, it processes daily banking
transactions this is updated to accounts and other financial records of the bank.
This I-flex has been constantly innovating new products for its global customer base.
And today it is considered the leading provider of each solutions for financial services
industry worldwide. Here is a form which started with a humble base and then has more
to be a global service provider ok. So, we will come to that a little later.
It has a CMM SEI CMM level 5 rating. This places them among the top two percent of
all the software organizations in the world. As of 2013 its customer base spread across
one 142 countries. It may be interesting for you to look at the customer base in the
present-day context, how is the how was the present customer base improved further.
Maybe 2018 19 you can try to get the data and make a comparison how it has improved
(Refer Slide Time: 04:05)
Started as a Citicorp in Information Technology Industries Limited back in 93 could not
sell products to Citi Bank’s competitors; because these were people who broke away
from Citi Bank started this company called Citicorp Information Technology Industries
Limited. So, Citi Bank put one rider before leaving them to start this venture that they
cannot sell products to Citi Bank’s competitors. In other words, this is a Citi Bank team’s
outfit, which started this company.
First as Citicorp Information Technology Industries Limited; then in the year 2000 it was
called I-flex first it was called Citi then in the year 2000 its name became to I-flex. Lot of
internet was used top line solution which was provided by this company was
FLEXCUBE that is the product which became highly popular by then only was
FLEXCUBE. So, one of the beneficiaries of this FLEXCUBE was also the Canara Bank.
Now, by 2005 this Oracle financial software solutions shortly known as Oracle bought I-
flex. Hence, I-flex ceased to exist as Oracle acquired I-flex by 2005 and it was bought by
Oracle for 909 million dollars. Just to see the type of capitalization this firm market
capitalization this firm has achieved in a very short time. Just in a matter of a decade it
has moved to 909 million dollars so, acquired by Oracle for 909 million dollars.
(Refer Slide Time: 06:57)
What are the types of product offerings which this company gives? One of the products
which is very well known given by this company is the FlexCube what is this FlexCube?
FlexCube is a universal banking solution which meets enterprise needs in retail,
corporate and investment banking. In other words, it is a back end tool for banking
It is reliable, possesses industry strength and is available with multi currency and multi
lingual support. This is one of the reasons why this I-flex this FlexCube has been able to
penetrate the global market. It was ranked as the number 1 selling banking solution for 4
consecutive years from 2002 to 2005. So, its a great achievement for a.
When it was started as Sital it was just a start up from this start up when it became I-flex
to come out with a product FlexCube and then to be ranked as number 1 selling banking
solution for 4 consecutive years; quite a significant achievement from 2002 to 2005.
Reveleus is the next product it is leading global provider of analytical applications for
financial services industry. In other words, this is one of the earliest forms to apply
analytics for providing solutions to the banking industry in particular. This is again a
great achievement considering that it was from 2000 only this form has delved into
analytics. In order to come out this with this product it must have done lot of research
even much before that.
The third product is what is called the DaybreakTM. What is this DaybreakTM? It is a
comprehensive consumer lending system that streamlines all aspects of automobile
financing. Initially if you saw the first two products, it was in the banking industry and
the financial services industry. Now, keeping the same core of finance this product
DaybreakTM moves into automobile financing.
The fourth product which this company was able to get was by acquiring a majority stake
in a company called Castek Software Inc - this is a Toronto based global insurance
system provider, again in the financial industry; I-flex acquired a major stake in this
company with the result it could move into this insurance systems also.
The last one is Mantas; it is a behaviour detection platform, what does this give? It is a
most comprehensive solution for detecting risk enhancing customer relationship and
addressing regulatory requirements and anti money laundering. So many cases listed
again a so many leading people in this money laundering act by the government.
This is a product coming out by this farm I-flex Mantas which can help detect risk
enhance customer relationship and address regulatory requirements and anti money
laundering. When you look at these products you will feel very happy that have formed
which started as a small form a breakaway from Citi Bank. A group of people breaking
away from Citi Bank were able to come out with a start up then changed the name then
came out with such wonderful products.
And one of their products was rated as number 1 selling banking solution for 4
consecutive years from 2002 to 2005 which is a remarkable achievement. And bought by
Oracle in 2005 for a staggering 909 million dollars.
All these information is available to you in the case study itself which is given here. This
is also a wonderful way of studying an actual industry a realistic industry whether it is in
software or whether it is in services that we discussed earlier that is the cafe coffee day
You will be able to appreciate how these firms though they have operated in highly
competitive environment are able to make a mark; create a niche for themselves in the
marketplace and also able to have a wonderful market capitalization within a short
This is apart from these offerings’; I-flex also steps in service sector through its domain
and technology centres of excellence and provides customized solutions in BFS banking
and financial services. These product offerings of I-flex have made a great mark; start
looking at the way tracing its history within a very short period in a market place its
product. Its product base also very good, one of its products used almost in a number of
countries in the world that is a FlexCube.
(Refer Slide Time: 15:43)
When we look at all this we proceed to the next how do we do a SWOT analysis for this
type of a firm. What is the strength of this firm, what are the weaknesses, what are the
opportunities that are available to a form like this? If you look at the types of strengths its
presence is in 142 countries that is 2013 data. It might have increased much further by
Very strong financials, it has a very good financial base in the core banking system can
give good financial solutions. It has unique and beneficial strategic relationship with
oracle. Oracle was keenly looking at I-flex right from the beginning its offerings and all
that ultimately bought over I-flex.
High value products like FLEXCUBE 100 percent focused on banks and financial
services it is not into any other field. It is concentrating on BFS totally into BFS. These
are the strengths of this form. And when you start looking at this form, you will only
admire the courage of this group which started this Sital, then became I-flex came out
with such wonderful products again.
Then what are the weaknesses of this form? One of the strong weakness of this form is as
a 2013, 14 it was not having great presence in the United States. Any global form
especially a software firm, to make its global presence felt it must and should have a
presence in US. Because US is the number one leading country in all these types of
services in the world.
Here, I-flex was having minimum presence possibly by now due to its getting taken over
by Oracle, its presence in US might have improved substantially. The other aspect of I-
flex if you want to call it a weakness, sometimes you may try to say why it should be
termed as weakness. But you are depending on one aspect very much that is I-flex was
dependent on exports only, 96 of percent of its revenues were coming from exports. It
was basically a financial services product industry making its revenue through experts.
To that extent you can call it a weakness.
Then what are the types of opportunities that you can have for a form of this nature? One
of the great opportunities which it can have is to insurance, the area of insurance for
which this company tried to get has tried to get in already. The second one is this fast-
growing data warehousing business, this is the place to be; this was at to be tapped by
this company at that point of time.
It would be interesting for you to look at this S W O and T whether they remain the same
or whether they have there are some changes in 2018-19. This was in 2013-14 this was
the way you could do a SWOT analysis for this form. And it would be interesting for you
if you attempt this same analysis in 2018-19 to find out how is this where the whether all
this S W O and T remain the same or have they changed.
The next one was spent driven by key trends-what is this spend driven by key trends
what is this? This is your big data, mobility, cloud, all these contribute to these key
trends. These are the ones which are providing the opportunities. You are getting into big
data; you are getting into big data itself is a big opportunity which the company can tap
Then what are the types of threats? Any form which puts out a product into the market
which I have discussed so many times, lends itself vulnerable to imitation. The product
becomes vulnerable to imitation. When it becomes vulnerable to imitation, the threat is
that of substitute products being offered in a market at a lower cost to capture the market;
that is capture the market share. Whether it is IT services or whether it is a product in any
other type of industry manufacturing or whatever. If you put a new product into the
market, you are always exposed to the threat of getting imitative or getting the products
getting imitated by your competitors.
When they imitate these products and are able to come out with substitute products at a
lower cost; you are market share that is the company original companies market share
gets affected substantially. In fact, just to give you an instance back in the 80’s IBM was
the leading computer manufacturer.
IBM 360 was considered to be one of the top and processing machines in the world. At
that time the Soviet Union; now Soviet Union has got split; USSR it wanted to break this
dominance of IBM. Hence, came out with its own computers in the market.
What did they do? They took this IBM 360 and did what we call the reverse engineering.
They ripped open the whole system, came out with a substitute which was very similar to
the IBM 360. As USSR was a powerful country next only to the US, then it started
exerting pressure on other countries to buy this product to try at least this product.
One of the countries on which it exerted pressure to try this product was India too. What
is the type of incentive? It gave to a country like India and said-why do you want to buy
from IBM? We will supply a similar product like what you are looking for from IBM at
no cost that is you do not have to pay anything. The only thing that we want from your
side is that you were programmers will be assisting in solutions for problems in USSR.
At one point of time there were 80 computer professionals solving problems of USSR in
return for this type of computers. Now, the most important point, this is a computer
which is based on the lines of this well-known IBM product; developed by this rival
country but when developing this product one error happened, what is that?
The processing time in this computer developed by IA USSR was at least 10 times more
than that of the IBM. If you could solve in 1 minute a problem in IBM. Here you would
require ten times that is ten minutes to solve the same problem.
The second aspect which computer professionals noted was; it was they took lot of
painstaking efforts to develop programs; then run on this computer. Sometimes it used to
give wrong results and these results had drastic implications for the end user.
For example, for one of the states, when it was asked to computerize the matriculation
exam results at that point of time in the late 70’s. Due to some error in this processing
what happened was good students got low marks; thanks to this imitated computer from
USSR and students who had not done so well got very good marks.
A reversal act taken place and this was a great heart burn for many of these merited
students from a particular state in India and many of them committed suicide also. This
is the type of drastic implications you can have when you try to imitate the product of a
leading producer just by this method of reverse engineering that is ripping open the
product and trying to come with an imitated product.
Somewhere you are likely to make some errors which can prove very costly. This was a
real instance which happened and its effects were felt in our country only. What is the;
what is the implication? Those substitute products for FLEXCUBE; you can still find
them. The banking system should be very wary of using such products; because one
small error can be can prove to be very costly.
The second threat is you have some well-established forms like Infosys, TCS, SAP they
can give a very strong competition to in I-flex. In fact, at that point of time, Infosys had
come out with Finacle - its financial offering to the market. And Finacle is also used by a
number of banks and very successfully in the Indian market. One of the common banks
which is using it on a day to day basis on an extraordinary scale and where it has made a
very good mark is the ICICI Bank itself which uses the Infosys offering.
The other threat which I just mentioned, easy imitation of product you can see how this
product is functioning whether you can imitate this product all these types of things. The
fourth threat is low growth due to global economic conditions; that is suppose the
economy the global economy is not growing well. Let us say that is what is happening in
the present day, then it is going to affect the growth of these types of companies also that
is the revenues of these companies also. It is also likely to come down.
This is what we are seeing in the present day due to this economic slowdown globally. If
you saw some newspaper media announcements that in the next year there is likely to be
a cut in jobs IT jobs, why the cut in IT jobs? This is because of this global economic
slowdown. This is the type of analysis that you should be doing for a form of this nature.
This gives you a wonderful base to analyze the from. We move further.
(Refer Slide Time: 33:05)
What are the types of key performance indicators that you can have? If you look at it the
share of Europe, Middle East and Africa by revenue operating revenue its 34 percent;
these are 2013 14 figures. Kindly note that and North America was 36 percent by that
yardstick almost if you look at the competitors like Infosys more than seventy percent of
its revenues was coming from North America during that time only.
Asia in fact, even much more maybe 80 percent only. Asia pacific was contributing to 30
percent. You have Europe, Middle East and Africa contributing to 34, North America
contributing to 36, Asia pacific contributing to 30. This was the this was a type of
performance which this form was able to craft by 2013 14. And what are the types by
portfolio revenues by portfolio?
The product revenue was contributing to 77 percent maximum by this FlexCube only.
And services was contributing the financial services base essentially to 20 percent, the
BPO services was contributing to 3 percent.
(Refer Slide Time: 34:53)
If you look at the types of customers serviced in countries by in 13, 14 the number of
customers was something like 1132 and the country serviced was 142. 142 countries
were serviced by this company I-flex. Quite a remarkable achievement for a firm which
was more or less a start up to get this.
(Refer Slide Time: 35:33)
If you look at the achievements, its revenue increased by 8 percent over the previous
years in 13-14 to 34739 million rupees. The net income increase to 1353 million again
rupees; an increase of 26 percent company gained a profit of 11483 million in 2013-14
which was an increase of 12 percent over previous year.
In March 2001 FLEXCUBE bagged Banking Software 2000 Award from the chartered
institute of marketing of Nigeria. December 2006 this forester research a very big name
it plays I-flex in the leaders wave. In 2011 by which time I-flex had become OFSS that is
the Oracle Financial Service Solutions; it was ranked 253 in fortune India 500 list so, a
great achievement by this form.
(Refer Slide Time: 37:11)
The next ones are giving you some more details. These details are essentially coming
from the types of ratios I have discussed when we do a case analysis. I said we will look
at profitability ratios, we will look at activity ratios, we will look at liquidity ratios; we
will look at current ratios and we will also look at other ratios. When you look at the of
profitability ratios look at we are just at cash margin if you see, it is around 32.07 percent
in 32.07 percent in March 14.
If you look at the return on long term funds, very steady it is at 20.47 percent. From 2010
to 2014 return is around 20 percent which is very steady. If you looked at the current
ratios, again a very health healthy one standing at 6.6 to a quick ratio taking your
inventory also into account. It also is at 6.55 in 2014 again very healthy for a form.
(Refer Slide Time: 39:07)
Now, these were the questions which were asked or which are being asked in this case. I
am giving you some points here later on we will discuss them in more detail. The first
question that was asked was should OFSS sustain FLEXCUBE for its brand value or
think of cannibalizing it in the next two years? This was the first question that was asked.
The answer for this shortly is you should cannibalize it by versioning that is come out
with versions of the products.
This was also the method which windows used kindly note that. Windows cannibalized
its very good product Windows 95 came out with a new version Windows 98. Now, what
is the present day situation; you are having you are 2010 upwards all these versions. If
the present day boy who is using the IT may not even remember Windows 95.
Apply software product strategy. This is the one which is these are two points which we
will discuss these points in more in slightly more detail. I have all I am likely I have
produced a word document where we give discuss this in further detail. These are points
which I am giving as answers to this question.
The second question that is asked was this discuss company’s possible strategy to tackle
the emergence of new entrants in the financial service products and solutions market.
What are the types of strategies that you could adopt? These are points which I am
giving you we will discuss this in more detail in the word document which I am going to
present to you in the next class.
A few points or you can look at a low base product pricing strategy, then piggybacking
on the Oracle brand; Oracle is a well established brand. And I-flex taken over by Oracle
can always Piggyback on that brand then mergers and acquisitions have taken Daybreak;
have taken Castek i.e. acquired these two forms international certifications that is the
CMMI. These are the points which are being given kindly note we will expand on this in
the next class.
(Refer Slide Time: 42:29)
The third question that was asked was should the company have an explicit TQM policy?
Justify. Although Oracle FLEXCUBE is appreciated for its rich features it is often
criticized for low quality and high occurrence of software bugs. This is where a TQM
policy can be useful in improving the product quality.
The fourth question that is asked is how can you draw a strategy canvas for OFSS for the
international positioning of its product and services? How can you draw a strategic
canvas? These are points kindly note you have to elaborate on all these points that we
will I will do it in the word document which I am presenting to you.
One is you can tap new technological frontiers, second is you can do the forecasting of
the trend and pre emptive product development. You can look at what is a trend come
out with the product developments pre emptive also before somebody you are competing
comes out with a new version when you are there.
Then country specific strategies, diversification of product offerings, then international
campaigns tie ups and partnerships. These are the things which you should look at can
look at in a strategy canvas for OFSS for the international positioning of its product and
services. We will stop here in the next class we will discuss all these points through the
world document which I am going to present to you.
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