Author: Kevin Phillips
We hear a lot from banks looking to satisfy a Best of Breed strategy, where they think that getting the very best components available on the market, and cobbling them together into a single solution, is going to be the right approach to delivering a digital engagement platform for their customers.
From a high level, this approach appears to be a good one. No one vendor seems to have built the best solution to everything, so why not pick and choose from the range of specialist providers and assemble the very best from across the market? But while this might seem like a good idea at the start of the process, it can quickly become a very difficult process to undertake, and even more difficult to sustain once something has been delivered at the end of it.
For a start, there are now literally hundreds of micro suppliers on the market offering innovative, exciting and desirable toolsets and niche solutions. Every one claims to have a USP, offering something that no one else can quite provide. Every one solves a small and specific business need, be it related to compliance, security, customer engagement or business process. Finding the right vendor for each of these is daunting enough, but then finding those that fit together, in the right place, that integrate into your existing operating model and for the right budget, becomes even harder.
Many banks who start out on this process do not budget enough for their own in house team effort. What at the beginning appears to be something that can be completed in a relatively short period of time soon elongates and grows, as the complexity of the undertaking surfaces and becomes a much bigger programme of work. Before long the stakeholders end up having to make a decision whether to plough in more money (if that is even an option), or accepting that their ambitions will have to be scaled back, reducing the intended benefits and diminishing the original business case.
The downsides of taking the multi-vendor approach does not end once something has gone live. It may be that a unique, and even market-leading solution has been delivered, but this can very quickly start to unravel in a number of different ways:
- Market dynamicity – technology and ideas are changing so fast that they become out of date very quickly as new thinking and solutions take shape
- Ownership and control – vendor management becomes an expensive headache
- Maintenance – expect constant change, with multiple updates, patches and fixes
- Conflict – vendor competition, issue and management becomes hard to stabilise, with any root-cause analysis becoming much harder to identify and resolve
- Latency – market reaction times is limited to the ‘speed of the slowest’
- Overhead – unaccounted for costs can spiral beyond the acceptable budget
- No longer fit for purpose – by the time a multi-vendor solution is up, running and is stable, it will be almost a legacy solution, and it will be time to go around the loop again.
The fact is that, while it is an exciting undertaking to build your own innovative digital banking solution by assembling best of breed components, the outcome is seldom a defining success, and often comes with more problems than it solves. So, what is the recommended solution? That’s a blog for another time!