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Microfinance Technology Challenges
Technology is nothing without change management. This is a theme one can pick up from any article aimed at the information technology space. How does it apply to Microfinance?
The basic argument to be made is that MFIs lack flexibility in terms of the processes that they have identified after many years of working with clients. This however, can overlook the fact that MFIs are ultimately very flexible, if the person working on the implementation can find a way to work within the Customer Methodology and key principles espoused by the MFI.
The key aspects of a successful implementation is not the gap analysis - although that is very important, nor is it the implementation plan - although again very important. Rather, it is the ability to understand the priorities of the organization and work directly with senior management to have them understand how those priorities get reflected in the software implementation.
If the priorities of the management are:
1.* Make sure we can continue to raise money by presenting highly professional financial reports
2.* Develop new products to meet the changing needs of our customers
3.* Create better customer experience by having a quick turnaround on loan approvals and short meetings (or in the branches, short lines)
Then, the software implementation priorities should align with these. This may appear obvious, but often times we see priorities that seem to match but don't:
1. Develop functionality to show managers the current realtime cash position of each branch;
2. Create loan approval process functionality supporting multiple levels and exception handling for pre-qualified borrowers;
3. Develop lots of flexible loan terms for product setup.
In each of these three trivial (?) examples, the functionality sought seems to match with what is needed. In the first, the requirement may meet the first priority, but could this also not be done with a more manual or less realtime process? In the second, the functionality may or may not speed up processing time for the borrower. In the third, the flexibility of the setup may be utterly unimportant if there are really only one or two times a year that the products get changed.
The change management challenge is in working backwards from the result. What is the change you need to have in place? Who needs to support that change? Is that change reasonable from certain perspectives? Are there champions for such changes that could help get this across to your customer?
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The basic argument to be made is that MFIs lack flexibility in terms of the processes that they have identified after many years of working with clients. This however, can overlook the fact that MFIs are ultimately very flexible, if the person working on the implementation can find a way to work within the Customer Methodology and key principles espoused by the MFI.
The key aspects of a successful implementation is not the gap analysis - although that is very important, nor is it the implementation plan - although again very important. Rather, it is the ability to understand the priorities of the organization and work directly with senior management to have them understand how those priorities get reflected in the software implementation.
If the priorities of the management are:
1.* Make sure we can continue to raise money by presenting highly professional financial reports
2.* Develop new products to meet the changing needs of our customers
3.* Create better customer experience by having a quick turnaround on loan approvals and short meetings (or in the branches, short lines)
Then, the software implementation priorities should align with these. This may appear obvious, but often times we see priorities that seem to match but don't:
1. Develop functionality to show managers the current realtime cash position of each branch;
2. Create loan approval process functionality supporting multiple levels and exception handling for pre-qualified borrowers;
3. Develop lots of flexible loan terms for product setup.
In each of these three trivial (?) examples, the functionality sought seems to match with what is needed. In the first, the requirement may meet the first priority, but could this also not be done with a more manual or less realtime process? In the second, the functionality may or may not speed up processing time for the borrower. In the third, the flexibility of the setup may be utterly unimportant if there are really only one or two times a year that the products get changed.
The change management challenge is in working backwards from the result. What is the change you need to have in place? Who needs to support that change? Is that change reasonable from certain perspectives? Are there champions for such changes that could help get this across to your customer?
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