CISS 210-Hudsonbanc Billing System Upgrade-Two regional banks with similar

Hudsonbanc Billing System Upgrade: Two regional banks with similar geographic territories merged to form HudsonBanc. Both banks
had credit card operations and operated billing systems that had been internally developed and
upgraded over three decades. The systems performed similar functions, and both operated
primarily in batch mode on mainframe computers. Merging the two billing systems was
identified as a high-priority cost-saving measure. HudsonBanc initiated a project to investigate
how to merge the two billing systems. upgrading either system was quickly ruled out because
the existing technology was considered old and the costs of upgrading the system
Hudsonbanc Billing System Upgrade Two regional banks with similar geographic territories
merged to form HudsonBanc. Both banks had credit card operations and operated billing
systems that had been internally developed and upgraded over three decades. The systems
performed similar functions, and both operated primarily in batch mode on mainframe
computers. Merging the two billing systems was identified as a high-priority cost-saving
measure. HudsonBanc initiated a project to investigate how to merge the two billing systems.
upgrading either system was quickly ruled out because the existing technology was considered
old and the costs of upgrading the system were estimated to be too high. HudsonBanc decided
that a new component-based, Web-oriented system should be built or purchased. Management
preferred the purchase option because it was assumed that a purchased system could be
brought online more quickly and cheaply. An RFP (request for proposal) was prepared, many
responses were received, and after months of business modeling and requirements activities, a
vendor was chosen
Hardware for the new system was installed in early January. Software was installed the
following week, and a random sample of 10 percent of the customer ac- counts was copied to
the new system. The new system was operated in parallel with the old systems for two months.
To save costs involved with complete duplication, the new system computed but didn’t actually
print billing statements. Payments were entered into both systems and used to update parallel
customer account databases. Duplicate account records were checked manually to ensure that
they were the same.
After the second test billing cycle, the new system was declared ready for operation. All
customer accounts were migrated to the new system in mid-April. The old systems were turned
off on May 1, and the new system took over operation. Problems occurred almost immediately.
The system was unable to handle the greatly increased volume of transactions. Data entry and
customer Web access slowed to a crawl, and payments were soon backed up by several weeks.
The system wasn’t handling certain types of transactions correctly (e.g., charge corrections and
credits for overpayment). Manual inspection of the recently migrated account records showed
errors in approximately 50,000 accounts.
It took almost six weeks to adjust the incorrect ac- counts and update functions to handle all
transaction types correctly. On June 20, the company attempted to print billing statements for
the 50,000 corrected customer ac- counts. The system refused to print any information for
transactions more than 30 days old. A panicked consultation with the vendor concluded that
fixing the 30-day restriction would require more than a month of work and testing. It was also concluded that manual entry of account adjustments followed by billing within 30 days was the
fastest and least risky way to solve the immediate problem.
Clearing the backlog took two months. During that time, many incorrect bills were mailed.
Customer support telephone lines were continually overloaded. Twenty-five people were
reassigned from other operational areas, and additional phone lines were added to provide
sufficient customer support capacity. System development personnel were reassigned to IS
operations for up to three months to assist in clearing the billing backlog. Federal and state
regulatory authorities stepped in to investigate the problems. HudsonBanc agreed to allow
customers to spread payments for late bills over three months without interest charges. Setting
up the payment arrangements further aggravated the backlog and staffing problems.
1. What type of installation did HudsonBanc use for its new system?
2. Was it an appropriate choice? How could the operational problems have been avoided?

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