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WSO2Con 2011: Open Source Adoption in a Mexican second-tier Bank - Nelson Raimond

  • By WSO2Con 2011
  • 31 Oct, 2011

Aligning Business with IT

Sociedad Hipotecaria Federal is a second-tier bank in Mexico that promotes the growth of the mortgage markets, which means its branches don't work directly to the public, Mr. Raimond said. Instead, the government-owned bank works through brokers to make SHF’s resources available to people, primarily in the lower-income bracket, to help them build, purchase and improve their homes.

Recently SHF began an initiative to align IT to the business, which has three main components, Mr. Raimond explained. First, achieve efficiency and decrease total cost of ownership (TCO). Second, increase levels of service, which can be translated as working faster and keeping the clients happy. Third, standardize processes using tools and methodologies based on open standards and best practices. In other words, don’t reinvent the wheel.

Because SHF processes cut across disparate software and hardware systems, both internally and externally with partners, any technology solutions the bank chose to support its initiative would need to address these heterogeneous systems.

Ruling Out Proprietary Options

As a government-owned bank, SHF would face a long public bidding process if it wanted to purchase proprietary software, Mr. Raimond said; “It’s not easy and takes too long, so it’s not a good option.”

However, cost was not the only decision factor, according to Mr. Raimond, who shared several “urban legends” about proprietary software along with the realities. From experience, he noted that using proprietary software had often led to underutilization of systems, obscure integrations that fostered worst practices, and a reliance on consultants that led to a loss of internal control over the implementation.

Therefore, a top priority for the new integration solution was to break the proprietary software paradigm, Mr. Raimond said. He and his team also sought to reduce application integration complexity, get rid of anti-patterns, do less coding and more configuration, and engage personnel in the whole application lifecycle.

Banking on Open Systems

SHF was attracted to the idea of adopting open source software (OSS). It would enable the bank to implement capabilities without paying upfront and then begin investing money only after SHF started realizing value from the software, Mr. Raimond said. SHF could therefore avoid the time-consuming bid process and begin implementing faster.

Based on the IT team’s research, SHF decided to evaluate five enterprise service bus (ESB) offerings: Fuse, JBoss, MuleSoft, OpenESB and WSO2. Two products required too much coding and therefore did not meet the bank’s goals to focus on configuration: Mule ESB and OpenESB. Two other products were ruled out due to a lack of response to SHF’s request for information: Fuse ESB and JBoss ESB.

“Software can have very nice features, but if the customer service isn't working well, nothing works," Mr. Raimond observed.

Based on the competitive review, SHF identified WSO2 ESB as its integration software of choice. Mr. Raimond noted that WSO2’s software is lean, quick to install, easy to learn, and backed by excellent customer service.

The initial decision was then followed by an analysis of WSO2 ESB. Mr. Raimond recalled, “We started playing with the ESB for simple proxy and service implementation and reviewed how the main mediators work.” He and his team also reviewed WSO2 Application Server and WSO2 Mashup Server.

Changing Attitudes

Despite the advantages of OSS, it initially took some work to win over the bank’s management. Many people still believe that because proprietary software costs a lot, it must be best-of-breed, Mr. Raimond said. They also want to pay more for proprietary as a means of insurance, he noted, adding “We are starting to change that.”

To learn more about the IT management and technology decisions that led SHF to choose WSO2 for its bank process integration, view Mr. Raimond’s full presentation here.

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  • WSO2Con 2011
  • Sri Lanka