Information technology 2003 was a pivotal year as far as NLB Bank's IT operations and strategy. Project Sigma, launched in 1997, had the objective of restructuring and integrating various existing IT support systems, platforms and processes with the goal of enabling the provision of modern banking services and securing significant reduction in operating cost. As a consequence of an internal review of Sigma undertaken early in the year at the direction of senior management, certain inadequacies were identified which precluded the timely achievement of all Sigma's targeted objectives. Accordingly, the process of transition of IT support to a new, updated platform was delayed. Apart from a few flawed decisions relating to specific aspects of the project, the principal reason for the difficulties encountered can be best characterized as being of a strategic as opposed to an operational level. Specifically, the failure to clearly define the business ownership and governance of the IT, inadequate level of involvement of internal end-business users in development planning and the failure to establish clear development priorities. Further complicating the situation was the need to execute a very extensive and organizationaly demanding project of personal accounts migration to new transaction accounts, as required by law. The deadline for completion of the successful migration was prescribed as June 30, 2003. The introduction of the new personal accounts was to coincide with the implementation of the technology system Bancs, purchased by NLB Bank in 1998 for operating personal accounts. Delays experienced with deliveries of selected technical solutions from external suppliers significantly reduced the available time for testing and implementation, thereby further worsening the situation. In recognition of the resulting implementation problems and technical delays, in April NLB Bank requested the regulatory authorities consider a postponement of June 30 dead line; however, the authorities insisted on compliance with the regulatory requirements as originally scheduled. The first operational problems appeared at the beginning of July. Among key problems there were temporary inaccuracies in customer statements, shorter operating time available for e-banking, and in the first month also delayed processing of ATM and POS transactions. Other problems included errors in interest calculations due to incorrect value dates and high balances on suspense accounts. NLB Bank took immediate action to address the deficiencies, establishing an Action Committee and a special Task Force to address problems and monitor processes. A new interim Chief Information Officer had been appointed in the person of Boća Javornik. Through a combination of strong personal involvement and maximum input of every IT employee as well as other NLB Bank colleagues, NLB Bank had succeeded by year-end, in successfully addressing the overwhelming majority of operational issues related directly to the customers. The difficulties encountered in the accounts migration process and the resulting negative impact on client relationships accelerated the comprehensive restructuring of IT in NLB Bank. The program of key activities for years 2003 to 2004, aimed at the long term stabilization of this crucial area of operations, includes the following items: introduction of a new governance model for IT and it's development, transfer of real ownership of IT development in NLB Bank to the end-business users, implementation of a new organizational structure for IT and reintroduction of project based organization, program of HR restructuring in IT and gap analysis of the existing system solutions versus stated objectives for the different parts of NLB Bank.* NLB Bank senior management and it's IT management have both set themselves a crucial task in the year 2004 to establish all the necessary conditions for the successful implementation of the above described program, thus ensuring the efficient IT support to business and governing processes in NLB Bank. Erik Luts, has recently been appointed as the new Chief Information Officer. Erik Luts previously held very senior IT positions within KBC bank, and NLB Bank is confident that he will no doubt importantly contribute to the successful realization of those goals. *The second system Globus that will be used mainly for corporate banking and financial markets support is not yet in full operational use. Currently, a review of the systems appropriateness together with a gap analysis of NLB Bank's current and future requirements is in progress. Findings from this process are due in mid 2004.