Thoughtful outcomes through experience

Supply Chain: Performance, innovation & cost

With many retail banking IT teams relying on supplier relationships to help deliver business objectives, it’s often surprising how many of the associated contracts aren’t managed effectively, or are underperforming in key areas.

In a recent survey by Peru Consulting – Retail IT Banking: Turn to face the Change – some 40% of senior technology leaders stated that outsourced suppliers were failing to deliver on their KPIs, while 31% claimed their IT contracts weren’t reviewed regularly enough. Whilst the problems can be complex, the Banks can start to resolve them through a series of initiatives.

Failing to thrive

With many opportunities created through outsourcing, the Peru research highlighted failures in many areas, with performance (40.38%), innovation (31.73%), and flexibility (30.77%) being cited by IT leaders.

A co-ordinated approach to Contract and Vendor Management is one potential solution, also supporting resolution of the other issues highlighted. A health check on a supplier relationship during the course of the contract term can help both the organisation and the supplier to reinvigorate ‘tired’ relationships, but more importantly, strengthen good ones.

Juggling the contracts

Retail bank IT teams are often managing a large number of historic and disparate contracts. Best practice IT teams generally have a clear view of all of their contracts, the renewal dates, notice periods and pricing. With the right information from a Contract Management System, or through reviewing payment histories, a co-ordinated programme can manage renewals and lead to material savings and improved performance through:

  • A realistic review of support requirements – e.g. is that 24/7 support desk really needed?
  • Updating support agreements with the correct licences or assets that match you current applications, hardware or networks
  • Aligning strategies for additional spend with the supplier (capex and opex) to optimise buying power
  • Reviewing alternative market options for the product or service through in-house or independent benchmarking.

Performance improvement

The banking sector is now heavily regulated in general and good governance is very much part of that.  Regular contract reviews will undoubtedly highlight opportunities to improve supplier performance and a co-ordinated contract and vendor management programme, with some relatively straight-forward measures, will maximise the efficiency of supplier relationships and in turn help to deliver on the wider business objectives.

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As one of Peru’s Principal Consultants, Ashley Pick has

You can download the Peru Retail IT Banking Report here.

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