Achieving the Outsourcing/Insourcing Balance
Retail Banks, like all organisations, need the best possible IT operating model to succeed in increasingly competitive markets.
In Peru Consulting's survey – Retail IT Banking: Turn to face the Change – senior technologists highlighted a number of hurdles to achieving the right balance with outsourcing partners.
A coordinated approach to engaging the most appropriate stakeholders is a strong platform from which to launch your operating model crusade, followed by understanding the current model. During this process, it’s critical to include third parties and relevant customers – internal and external – in the analysis.
The current Total Cost of Ownership should also become clearer and reveal what works well and where organisational change is needed.
New operating model designs should clearly define roles, responsibilities and functional interaction. While finding the perfect outsource versus insource blend will always be a challenge, retaining in-house resource to manage outsourced relationships is critical. Equally, an holistic IT Outsourcing programme to help navigate what is likely to be a complex and emotive change programme.
Operating models are the living ecosystem which change and evolve. This is due to both people and business changes: new teams, new acquisitions, revised structures, or new regulatory threats. So, a continual update of the operating model design is essential to absorb these changes.
Active IT operating models need care and attention to avoid the risk of compliance and governance-related failure in outsourced supply chains. These failures can have a significant impact on both operational business and brand. Keeping outsourced relationships fresh and relevant is also a challenge, but a Relationship Health Check can maintain performance for both your business and the supplier.
Not all outsourced relationships work, not matter how much care and attention you pay them. Whilst bringing systems or processes back in-house may not be the preferred model at the end of an outsourced contract, it should always be factored into your design, especially if supply market options are limited.
People are the foundation of all businesses - whether your own or a supplier’s. Peru’s advice is to work closely with your HR team and your suppliers to gain buy-in and support for any new operating model.
And finally: if you don’t understand it, don’t outsource and expect this to always be managed better and cheaper. Research, ask questions of experts, seek referrals from trusted peers and be realistic about the cost of ‘the right people for the job’.
Peru Principal Consultant, Ashley Pick, worked for 15 years in commercial and procurement leadership roles for the IT and Telecoms sectors, with responsibility of budgets £1bn per annum.
Later moving to the Media, FM and the Public sectors, Ashely has broadened his cross-sector experience with Peru Consulting to include a number of transformational programmes in the Financial Services and FMCG sectors.
You can download the Peru Retail Banking Report ‘Turn to Face the Change’ at no cost.