What does it take for microfinance institutions to be good technology “consumers”?

by Carol Caruso : Tuesday, December 8, 2009

Carol Caruso is Managing Director of Triple Jump Advisory Services, a Dutch Foundation offering Grants and Capacity Building Services for MFIs.  Carol has 17 years of experience working both in commercial and non-profit sectors throughout the US, Europe, Middle East, China and Africa for Fortune 100 companies and MFIs managing business and technology services. Her background includes strategic planning and advising, product development, eMedia project management, MIS & mobile technology program development.

Imagine for a moment that you are the executive director of a growing MFI considering whether to adopt some type of client and portfolio management system or mobile banking solution. What is the potential value in such a system? What are the relative benefits of different solutions? What are their real costs? How will they serve your business goals? What are your technology needs likely to be in the future? How do current solutions and infrastructure support those needs? And most importantly, how can you optimize your business processes to take maximum advantage of any technology solution?

Consider the problem from the MFI’s point of view.  Where do you turn for help to answer these difficult questions?  MFI leaders don’t necessarily have a technical background and may not appreciate either the potential or the risks of technology investments. If they have an IT team, those staff members may not have the skills to translate business requirements into technical specifications. So what can be done to help MFI leaders and managers see technology as a strategic and essential asset and identify the right kinds of skills to guide their investments? And how do managers cultivate both the technical and business skills of their staff so they’re well equipped to take advantage of technology systems?

When talking about the need for robust back-office technology or front-end technology solutions for MFIs you often hear the lament that most MFIs don’t understand IT issues or have people with the technical skills to support these systems.  Well, true enough perhaps. But that’s not the only problem. MFIs do need staff that can provide technical support for particular applications like a portfolio management system, for example.  But they also need staff who understand the business, that are trained on and adhere to business processes, and know how to use computers, the internet and software programs. Given the importance of technology for the success of MFIs and the breadth of skills required at every level of the MFI, how should MFI leaders and funders approach capacity building programs?

CGAP and the Grameen Foundation, with support from the Mastercard Foundation, recently co-organized a workshop to discuss what needs to happen to make appropriate back-office systems (including people and processes as well as technology) more broadly adopted by MFIs.

Dec. 8 and 9 we’re convening a virtual conference here on the CGAP Technology Blog to discuss four themes which emerged from a recent workshop. Today and tomorrow we’ll be joined by several industry experts who will each introduce a theme and moderate a discussion. The objective is to discuss how the theme relates to the broader question at hand, and what each stakeholder group can do to support MFIs.The conference happens here on the blog, no registration is required. Just post your comments using the “Leave a reply” option at the bottom of the thread.

TAGS: Events, MIS

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  1. December 8th, 2009 at 10:03 am, Lauren Braniff ()

    Welcome to the discussion. Skills and staff capacity are commonly seen as a major obstacle to the effective use of technology at MFIs. Do you agree? Will improving staff skills help MFIs make better technology investments? What type of training is needed and for whom? What’s been your experience?

  • December 8th, 2009 at 10:38 am, Muhammad Junaid, Louis Berger Group (USAID-Tijara Iraq) ()

    The staff capacity is important for any new initiative to be introduced strategic or operational. More than anything, it manifests in information systems.

    In my experience of advising MFI institutional capacity building, I find that most of all the capacity is need at the at the Board and executive management level. People on top need to understand and conceptualize what are the informational needs of the MFI and how much investment is needed in the information systems. It’s also important to understand the lifecycle of the MFI and how long a particular solution would serve the MFI. A wrong decision at this level could sometimes be fatal for the MFIs in long-run.

    The process of training the staff should essentially be decided at the time of strategic planning I referred above, and it should be part of the package. Involving a staff champion at the time of the MIS procurement is the best time to train the staff.

    Fortunately the needs of most MFIs these days can be catered by off-the-shelf packages, and most of these come with training packages. In my opinion a new MIS should never be rolled out in an MFI unless the staff is fully trained to input data and produce reports. The role of MIS specialists within the organization should be advisory and not hands on.

    At Bai Tushum Financial Fund in Kyrgyzstan, in 2000-2002, we developed an in-house MIS for the organization. It had both time over-runs and cost over-runs, and at times was very frustrating process. At the end of this tunnel we saw the light, however: All our staff members engaged in the process were well trained in information systems and later when we decided to upgrade MIS, we had a knowledge powerhouse at each organizational level. Looking back, I would not repeat THAT experience, but in any case keeping the staff involved pays dividends.

  • December 8th, 2009 at 10:50 am, Eamon Scullin, Fern Software ()

    There are a number of factors affecting the uptake of training in a lot of MFIs:-

    1. Because technology is typically not the main focus of their business MFIs find it difficult to keep up to date with the different innovations.

    2. Training is not prioritised when a new system is acquired

    3. Staff are busy and are not allocated time off for training

    4. The cost of training is always an issue

    5. Invariably training is treated as a one-off exercise never to be repeated even if staff leave or if the system is updated with new features and functions.

    6. Training may not be provided to new staff who are expected to learn “on the job”

    7. Vendors can strongly recommend training but cannot force new clients to take training.

  • December 8th, 2009 at 10:58 am, Carol ()

    Muhammad, thanks for sharing your experience – you hit on some good points. It’s indeed essential that MFIs engage staff in defining the business and operational requirements of an MIS. This involvement not only helps ensure creation of an applicable system but also a team interested and able to use the system. But in order to make this happen, senior management and BoD definitely must embrace the need for technology training for staff.

    Does anyone have any other examples they would like to share on how they educated BoD members or Sr management on the importance of building capacity around technology?

  • December 8th, 2009 at 11:08 am, Edward Cable, Grameen Foundation ()

    We strongly believe that effective technology management capacity at both the management and staff levels are essential to success. Some key people-driven factors to enabling successful technology investment include:

    1) A cohesive vision and strong strategic IT planning at the management level to prioritize investments and expand upon technology solutions that further growth and impact.

    2) Strong communication across the organization of the goals and benefits of technology and how it accomplishes the mission so that staff see the need and value in adopting and using technology on a day to day basis.

    3) Incentivizing and retaining key IT staff – far too often, once trained, IT staff up and leave once they’re given this skillset. MFIs must continue to provide valuable skills and motivate IT staff to remain on the team to help manage growth through technology.

    4) Vendors need to adopt more than a “consultant” approach. What is key is enabling open knowledge transfer by providing one on one mentorship, practical classroom training and most importantly hands-on learning and application of the skills required to manage technology effectively.

    5) Wholeheartedly agree with Eamon that training can’t be a one-off exercise and must be continued on an ongoing basis to keep IT knowledge fresh and continue to motivate staff.

    6) IT staff must view IT not merely as a technology issue but as a business solution as well – applying this perspective. will help to drive effective investment from the top down.

    7) Process Optimization: For field office staff to effectively adopt technology, the MFI must optimize their processes for technology and communicate these clearly and transparently in their policies

  • December 8th, 2009 at 11:14 am, Tiphaine Crenn ()

    This is a multifaceted issue and not just tied to capacity-building in the traditional sense of the term. First, it has to be recognized that everyone brings a different view to the IS picture based on their role in the institution and personal experience: hence the need, first and foremost, for open discussion among the different players and not just a top-down approach. It can be a formalized structure such as the MIS selection committee an MFI should put in place when it decides to look into acquiring a new MIS but it can also be an ongoing institutional discussion, part of standard staff meetings, for example, or informal chats in hallways.

    On training, besides the good points made by Muhammad in the comment above on the importance of training the board and executive management, it’s important to recognize that MIS administrators/officers don’t all receive the same type of training — many are very good at fixing hardware problems but have relatively little experience in programming or database management, and even less in organisational development. As much as possible, efforts should be made to send MIS administrators to technical courses to continually improve their knowledge and skills in what is an ever-evolving field. They gain too from keeping contact with other MIS administrators in other MFIs and exchanging ideas, questions and solutions.

  • December 8th, 2009 at 11:41 am, Nicole Pasricha ()

    These are great comments, thank you. For me, in working especially with smaller and growing MFIs, it seems that much of the time, IT and especially MIS topics are relegated to the “MIS staff”, and other managers and users of the information do not engage enough to learn how to use their software to the best of its ability. As a result they remain uninformed about key operational data and reports generated by the system that could be used for management and decision making purposes, and often blame shortcomings on the system or the MIS staff, which may not actually be the problem. So my question is: how to bring MIS functions out of the mysterious IT department domain and into the hands of junior and senior managers who could bring the data to life and work together with technical staff to design solutions to technology / data management needs?

  • December 8th, 2009 at 12:20 pm, Normand Arsenault, Consultant ()

    Great question Nicole. I think that buy-in and involvement from the junior and senior managers may be ensured mainly by having them participate fully in the needs assessment phase at the beginning of the MIS project. The Information/Work Flow Descriptions of the actual and desired system and the writing of the Key Functional Requirements will help the management lead the entire MIS project and will create a functional feedback loop so that the people who are using the system can relay issues/problems back to the MIS developers. Best.

  • December 8th, 2009 at 12:24 pm, jiten patel ()

    Regrettably one cannot force the “horse to drink at the trough” if it choose not to; however that does not mean we must not try. In fact it is incumbent on the IT Manager to engage the business and to be interested in the business then to be holed up in the data center, i.e. the point being the IT Manager must show interest to learn about and understand the business challenges and needs; this means he/she must spend time at the branch to first-hand learn how it operates, what the issues are, etc … and similarly at the HQ location to understand how the operational side operates, including how credit, risk management functions, and how accounting operates. Such interest builds credibility, respect and trust that it is a collective “we” and not them and us, which then generates interest and involvement from the business side because they are engaging with the IT Manager and his team on a regular basis, and not just to solve a technical problem.

    Point being that such involvement and engagement by IT and such regular interaction and communication is fostering and nurturing awareness on the business side about all things IT … which then makes it relatively easier to force the business to engage with such critical projects as the replacement of the “core” lending platform or the “core ” MIS platform.

    IT must engage and not sit back in the depths of the data center room.

  • December 8th, 2009 at 1:26 pm, Camille Striffling ()

    Right. On a MIS project, it’s key to involve as much as possible functional management (from the Head Office) and operational staff (small group of users from the branches).

    They should work with IT staff as partners : functional team describes his needs and manage the project ; technical team describes the technical needs and constraints ; together they identify and implement the solution adapted.

    A MIS project is a good opportunity to train the staff on MIS topics ; different levels of training are necessary. If the MFI asked the assistance on the project to a consultant, the MFI should take this opportunity to push the consultant to share his knowledge and experience with the staff.

  • December 8th, 2009 at 2:07 pm, Carol ()

    Thanks for all the interesting contributions on how best to demystify IT for non-IT MFI staff. Indeed it is best practice to involve key staff members from all departments in the development of IT projects to ensure business needs and requirements are met. As Normand and Tiphaine point out, we have seen this achieved when staff committees are created to define technology projects from the start safeguarding against having an IT team work in isolation. But this should be driven by executive management to ensure time commitments are made by all staffers. Even if/when IT managers make efforts to organise input from other departments, they can meet resistance (often due to time or knowledge limitations) if not supported from executive management.

    Basically, the sustainable success to IT projects requires support from several stakeholders, not just the IT team. And hence an IT committee should be deployed not just for the kick-off of a project, such as an MIS selection, but as a basic management tool for success. Ongoing involvement of staff members in the development of IT projects, not only stimulates interest on how they could perform their role better/easier, but helps to ensure the correct system requirements are continuously being defined.

  • December 8th, 2009 at 5:39 pm, Roland J. MBELLA - Consultant ()

    In certain markets, the acquiring of IT doesn’t represent any more difficulties. In a lot of other countries, however, MFIs don’t have adequate IT or (IS) to control for risks, particularly as they change in size and become more complex to manage. It is in part due to the diversity of the MFI and types of products that they offer in particular contexts, that it is more difficult to implement systems, whether simple or sophisticated.

    MFIs don’t prioritize the IS so they don’t want to pay the relatively high cost to implement and maintain a system, a price that it is necessary to get the most effective systems. It results in MFIs having inefficient systems that create more problems than they solve.

    Some MFIs find it impossible to invest in adequate systems, even if they want to, because of lack of funds. This is mostly a problem for small MFIs so the lack of management systems effective and technologies are a constraint of size.

    Perhaps, in the next decade, the cost of basic information systems will be reduced appreciably, and the smallest MFI will be able to have access to these systems at reasonable prices. Of the more advanced institutions if they want to offer ATMs, they should acquire interoperable systems that can be connected to several systems of payment.

  • December 9th, 2009 at 7:58 am, Peter Magnaye ()

    I am using this discussion to promote the idea that the use of Enterprise Architecture principles allow MFIs to be good technology consumers.

    This concept is not new. Since the late 90′s, the US Federal Government has mandated that all agencies use Enterprise Architecture practices to be good technology consumers.

    At a high-level, Enterprise Architecture is the practice of ensuring that business and technology is properly aligned. Specifically, technology is implemented in a manner that meets that needs of the business efficiently and effectively.

  • December 9th, 2009 at 2:00 pm, Eamon Scullin ()

    Terrific bunch of comments – just highlights the problems facing us all. However I think that the adoption of standards is the way forward to reduce costs of training – which is the biggest obstacle for vendors trying to promote ongoing training in order that the users get maximum benefit from the system. The standard system gains its value from being the standard not necessarily the best!

  • December 9th, 2009 at 2:54 pm, Carol ()

    Lot’s of useful ideas here on how to bring the right folks together to help launch and successfully manage IT projects and the need for standards to reduce costs and unnecessary duplication. But still a lot of concern that MFIs don’t place a high enough priority on IT and the required training. What are some ideas on how to convince (business case or other wise) executive management of the importance of IT and the need to invest both financial and human commitments? How best to support small growing MFIs on perhaps finding Grant partners or investing in the right system and capacity building around it? And how to convince larger MFIs to invest appropriately?

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