Outsourcing of IT Services: A Case Study from the
Financial Services Industry (FSI)
by Patrick THNG

Abstract

The effective CIO of today is no longer a single dimensional authority on information technology. He or she is required to transcend beyond IT into the realm of critical business issues faced by the organization such as the effective use of resources, both human as well as financial; alignment of IT strategy to the business strategy; compliance with legal and statutory requirements such as the Sarbane-Oxley (SOX) legislation and Basle (BASLE) Agreements.

In the last decade, the banking industry has experienced great transformational changes forced mainly by competition (e.g. mergers and acquisitions such as BNP & Paribas etc.) and the complex regulatory environment (e.g. Enron; Barings etc). Hence effective risks management and cost controls' challenges are continuously faced by CIOs.

Given the above, it is no longer surprising that in the more progressive banks, CIOs today are not just responsible for technology but are increasing mandated to drive banking operations as well as shared services (e.g. sourcing and corporate real estate).

Arising from the above transformational changes, outsourcing is increasingly used by many banks as part of the arsenal of competitive tools to manage risks and leverage heavy investments such as IT.

Whilst outsourcing is not a newcomer to the manufacturing industry, it is relatively greenfield in the services industry such as banking. This talk will present a case study of the preparation before an organization outsources its IT function as well as the challenges that IT management has to address and mitigate. The talk will also briefly explore how a case study such as this can be incorporated into the curriculum of the Master of Business Technology (Financial Services), specifically the Vendor Management and Global Sourcing Management courses, given the many real life multi-disciplinary facets that the case study has highlighted eg change management; risk management; vendor management, operations risk; impact of SOX; technology leadership and intellectual property protection etc.

If time permits, the talk will explore the impact of emerging technologies and standards (eg SOX; BASEL 2) on products, processes, enterprise architecture and solutions. Specifically, we will be looking at the evolving security access technology of authentication and its impact on banking processes (such as outsourcing) and products (e-commerce banking transactions), and its implications for the post graduate course design and delivery.

In so doing, this case study will hopefully instigate future research where the findings can illuminate the IT practioners' understanding of the complexities and risks involved in outsourcing.

About the speaker

Patrick has more than 23 years of working experience ranging from an academic to a senior practioner of IT and shared services.

He spent his early years at the University of New South Wales in Sydney, Australia and was awarded a Bachelor of Commerce(1st Class Honours in Accounting & Information Systems) followed by a Master of Commerce (Honours in Information Systems). Whilst in his final year in his Bachelor's program, he was appointed full time university tutor in information systems and was subsequently offered a lectureship position in the School of Information Systems. Professionally, he qualified as a Chartered Accountant (Institute of Chartered Accountants in Australia) and a Certified Information Systems Auditor (ISACA USA).

He spent 6 years in IT management consulting with Touche Ross Management Consultants (Sydney, Australia) and Ernst & Young Consultants (Singapore) including a consulting stint for the World Bank in Sudan (where he experienced a coup de tat).

He spent the remaining 17 years working in the banking industry in both IT and shared services' functions for the major banks including DBS Bank, BNP Paribas, ABN AMRO Bank NV and UBS AG. His core competences include corporate sourcing (outsourcing & offshoring of IT & non IT goods & Services), IS strategic planning; reengineering, computer Security, vendor management (e.g. IBM, Jones Lang Lasalle, Infosys, WIPRO, Singapore Airlines etc.), program management, applications design and development and global systems rollouts.

As Managing Director of DBS Bank, he headed the Business Management Office which was part of the Technology & Operations Group where he was responsible for Corporate Sourcing & Outsourcing; Security Administration; Finance Controllership; T&O HR; Corporate Administration Services and Corporate Real Estate. At UBS AG, he was Country IT Head & Regional Vendor Management Head for APAC for Investment Banking.

He has extensive experience in Outsourcing and Vendor Management and was one of the key members in the 10 year IT outsourcing contract with IBM as well as Jones Lang Lasalle real estate outsourcing. He has played key country (e.g. CIO) as well as APAC regional roles (e.g. Deputy Regional CIO & Regional Vendor Management) at the Managing Director level for the global banks.

He has presented in several public seminars such as the MOF-IDA Conference on Outsourcing in 2005 where he was a panel member as well as presenting in several industry conferences as a speaker on IT outsourcing; vendor management and cost allocations related to banking and IT.