20 February 2018
Visit www.avoka.com

Banks failing to perform due diligence on IT outsourcing deals

11 July 2006  |  6270 views  |  0 keyboard

Only 43% of financial institutions have undertaken any form of due diligence before outsourcing IT operations, according to research conducted by PA Consulting Group.

A survey of 38 financial institutions found that almost half recognise IT outsourcing as a way to achieve business transformation, but banks are not treating IT outsourcing deals like other areas of the business, such as mergers and acquisitions, and are failing to perform adequate due diligence.

The majority - 72% - of clients wished they had increased focus on ability to deliver on promises at the outset.

PA Consulting says a piecemeal approach and a lack of responsibility taken for deliverables means results are below what could be expected. The consultant calls for banks to apply accepted rules from elsewhere in the business to IT outsourcing projects. Effective groundwork must be carried out at initial stages to ensure both the contract and relationship are right.

Commenting on the research, Fons Kuijpers, head of IT sourcing, PA Consulting Group, says: "There is no excuse for IT outsourcing deals to go wrong in a mature market. Yet, even now, many IT outsourcing deals are doomed before they start because of poor business cases where key items such as costs for the retained organisation have been omitted.

"Equally worrying, suppliers and clients have different expectations of the desired outcome. This is largely due to the clients’ inability to articulate clearly what they seek to achieve from the deal, and partly due to suppliers pursuing their own agenda."

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

US spending on payments outsourcing to hit $4bn by 2010

US spending on payments outsourcing to hit $4bn by 2010

08 May 2006  |  4899 views  |  0 comments
Data security top risk concern in outsourcing

Data security top risk concern in outsourcing

24 March 2006  |  9213 views  |  0 comments
Union warns of new wave of offshoring

Union warns of new wave of offshoring

06 March 2006  |  7982 views  |  0 comments
Getronics wins largest-ever financial services IT outsourcing deal

Getronics wins largest-ever financial services IT outsourcing deal

03 February 2006  |  8534 views  |  0 comments
Outsourcing has negative impact on bank share prices - LogicaCMG

Outsourcing has negative impact on bank share prices - LogicaCMG

29 June 2005  |  7848 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.ebaday.comVisit https://www.capgemini.comvisit www.nextgenbanking.co.uk

Top topics

Most viewed Most shared
Saudi central bank provides sandbox for banks to try out Ripple techSaudi central bank provides sandbox for ba...
11671 views comments | 16 tweets | 12 linkedin
ABN Amro moves escrow accounts to the blockchainABN Amro moves escrow accounts to the bloc...
9281 views comments | 15 tweets | 13 linkedin
ECB launches staunch defence of cashECB launches staunch defence of cash
9116 views 10 comments | 22 tweets | 26 linkedin
Coinbase and Visa at loggerheads over erroneous charges on customer crypto accountsCoinbase and Visa at loggerheads over erro...
7764 views comments | 13 tweets | 11 linkedin
FCA explores creation of global sandboxFCA explores creation of global sandbox
7187 views comments | 19 tweets | 18 linkedin

Featured job

Competitive base + commission + benefits
London, UK

Find your next job