The Headache: Outsourcing IT
The ABA/ABA Banking Journal Community Bank Competitiveness Survey: 2008 edition found that 36.6% of community banks outsource some functions traditionally performed by staff.
Among the functions outsourced were several dealing with information technology: item processing, 44.8% outsource; IT management, 24.9% outsource; and remote deposit capture, 48.4% outsource some elements.
Recently, a banker who was reviewing the survey sent us these questions as a result:
“My bank is looking at outsourcing our IT functions. Is anyone out there doing it currently? How did you go about it? And to whom did you outsource things?”
Remedy 1
Lynda Messick, president and CEO, Community Bank Delaware, Lewes, Del., $50.4 million-assets.
Our first post-Gramm-Leach-Bliley Act rules IT audit was a huge surprise, and we found that the focus on IT security has definitely intensified. Outsourcing IT functions alone will not allay any regulatory scrutiny—the policies, procedures, and oversight have to be airtight on the bank’s part in managing its vendors, and I don’t know of any vendors who specialize in the overall management of all IT areas.
If your bank is small and thinly staffed, you may want to outsource your periodic IT audits as well. There are lots of firms that do this.
Remedy 2
Mike Murphy, executive vice-president and CFO, First American Bank, $297.2 million-assets, Norman, Okla.
Our bank has a full-time IT staff of three that services our nine locations and our 170 employees.
However, we have outsourced some of our IT projects in the past year, such as implementing wireless connectivity for business continuity purposes and SANs disks for storage and virtualization of our servers. We did this to draw down on outside expertise and to learn from those experts. Doing so also provided an outside look into our network, to provide new ideas to us and to help us have greater comfort in our network’s strengths and in potential opportunities to improve it.
Remedy 3
Jeremy Callais, chief operating officer and cashier, M C Bank & Trust Co., Morgan City, La., $255.3 million-assets.
There are many things to consider when looking into outsourcing IT functions. Although we do not outsource our entire IT function, we do have an IT consultant whom we bring in for large projects, such as server upgrades, router work, and firewall programming.
If we were to look at outsourcing the entire IT function for the bank, my main concern would be the privacy of our customer’s information. Unfortunately, unless a company were to put a full-time employee at your bank, much of the work that would be completed by the IT company would be completed remotely. Thanks to advances in technology, there are currently ways to have IT firms work off of bank premises and yet do so in a safe and secure fashion.
I would also rely heavily on references provided by the company that you are looking to outsource your IT function to. It is extremely important that the company you are looking to use has serviced other banks in the size range of your bank, and that these references are happy with the service they are receiving.
The next step I would take is to have our bank’s legal counsel compose a privacy agreement to enter into with the IT firm. This is extremely important, to make sure that your bank is covered in the event of any mishap. I would also contact our insurance agent to discuss the matter. There are various types of insurance coverages today that were not available years ago, that assist with protecting the bank’s assets with regard to electronic information.
Once all of the research and paperwork is complete, the next step I would take is to physically interview the employees of the IT firm that would be dealing directly with your employees. If you are outsourcing your entire IT function, these employees will be dealing with your employees on a daily basis. You need to ensure that the IT firm has a philosophy similar to the philosophy of your bank when it comes to employee to employee communication.
Overall, if you do your homework, you should eliminate issues in the long run. Outsourcing IT does not have to be all or nothing; you could do a hybrid approach and only outsource a portion of your needs.
One recommendation I would have for you is to consider having a help desk technician on staff and an IT firm under contract for any issues your help desk personnel
could not handle. Many IT firms will serve this purpose for only a small monthly retainer. BJ
Got remedies? Join the ranks of our volunteer prescribers by e-mailing to
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
The electronic version of this article available at: http://lb.ec2.nxtbook.com/nxtbooks/sb/ababj0908/index.php?startid=20
Trackback(0)
|
TrackBack URI for this entry
Subscribe to this comment's feed
