Choosing a long term strategic technology partner to supply, deliver and support your core business systems is undoubtedly one of the most critical decisions a lender can make, one which requires considerable skill and judgement to navigate safely, particularly with stakeholders representing different areas of the business, each with its own agenda and each pulling in its own preferred direction.
Marketing, operations, finance, compliance and IT all have an important contribution to make, and capturing and sifting through the innumerable requirements and ’nice to haves’ can be a daunting task. Given the effort, it is perhaps not surprising that so many large organisations are still dependent on older mainframe-technology and inefficient manual systems – the prospect of replacing even part of these complex beasts can be daunting to contemplate in terms of the cost and disruption.
For any major IT procurement project there is a multitude of factors to take into consideration, not just in terms of the features offered by the system and its cost, but also in how the supplier’s experience will be applied to manage and derisk the transition from the current solution to the new environment. What will be the impact on business-as-usual if key staff get involved in the project? What happens to existing data? What will the customer’s experience be as you switch from one system to another? Who will be responsible for testing and signing off the new system across the different divisions and rolling out training? What about third parties with whom you do business?
The difference between a software supplier and a strategic partner is that the latter will have the capability and the track record of helping clients manage and mitigate these and other potential risk areas by proactively driving and monitoring progress, and will look to leverage that expertise as a core part of their solution proposition.
We have been on the receiving end of countless tendering projects over the years, and in that time we have learned a much about vendor selection, and about some of the pitfalls that can trip up the unwary traveller.
More often than not, the process includes a long questionnaire containing hundreds of questions that span the functional and technical aspects of the system. The answers to these questions are then used to build a weighted score for each supplier, the theory being that the shortlist of suppliers should be drawn from those with the highest scores.
Although on the surface this seems like a sound idea, there are several potential weaknesses with the approach which risk undermining the approach. Firstly, there is the risk that the lender is missing out on novel solutions because they are considering the requirements in the context of what the current system can or cannot do, rather than looking at the wider picture. The second, and in my view most serious concern is that evaluating a system based purely on a list of ’Does it do X?’ type questions misses the most important aspect of working with a third party, which is understanding what kind of people they are, how they will approach the partnership and what they can bring to the table in terms of acumen and experience needed to ensure that the relationship is a long and successful one. A key question for any prospective partner must be “How will you make the partnership work?”
At the end of the day, modern technology can be made to do just about anything that can be imagined. But achieving success in IT projects is not about bits and bytes or even about system features and functions – it is about the people and how they operate, individually, internally within their teams and most importantly in their interactions with the client and with third suppliers. Modern, connected systems need to be able to move information between different applications freely and without manual re-keying, and in recent years the widespread adoption of XML as a universal data exchange format has certainly lowered the technical barriers to making that happen. Whether processing a payment, instructing a property valuation or carrying out an online identity check, XML is the common language that allows these systems to exchange data with relative ease.
Modern technology can be made to do just about anything imagined. But achieving success in IT projects is not about bits and bytes or even about system features and functions – it is about the people and how they operate
Like all modern technology companies, we have embraced XML in our own systems due to its immense potential for simplifying data exchange and shortening development lifecycles. But in itself XML does not solve any of the really difficult problems that determine overall success, things like managing changing requirements, resources and schedules while still ensuring that the project is ultimately delivered to the business on time and as smoothly and painlessly as possible. Getting these things right requires exceptional nontechnical skills which typical vendor selection processes often overlook.
When it comes to integrating with third party system operating outside the lender, the risk of mis-communication of requirements and the potential for conflicting schedules and priorities to derail the project become super-critical.
One crucial approach might be to adopt a hub-and-spoke model, in which the lender’s IT department or project office manages its engagement with all technology partners centrally, arbitrating over any issues and resolving scheduling conflicts.
But this is not ideal as it creates an extra layer of relaying technical information through an intermediary.
Technology partners must have the maturity and experience needed to understand the vast complexity of the lending market at all levels, a strong and compelling vision for future innovation that puts the business before the technology, and a proven approach that mitigates risk and provides clear visibility of the project at all times – it is a recipe for ensuring a mutually rewarding partnership.