In-house vs. Third Party: The Implications of Upgrading Your Tech
- Keywords:
- technology
- strategy
- growth
When integrated properly into your organization, technology can be a competitive advantage as well as an essential part of your business’ growth strategy. But incorporating new technology doesn’t come without certain financial and operational implications.
We spoke with Claudette McGowan, BMO Financial Group’s head of Technology Service Engagement, to discuss those implications. She explains why minimizing those risks involves understanding what you’re trying to accomplish, incorporating the tools you need to accomplish those goals and the best practices for making technology a part of your growth plan.
SUSAN WITTEVEEN: People tend to get excited about bringing new technology to their business, but they don’t always think about what that really means. What’s the first thing you should think about?
CLAUDETTE MCGOWAN: The choice basically comes down to whether to build your own systems or access what you need from a third-party provider. That’s true whether you’re introducing new technology or upgrading your current systems to keep pace with your company’s growth.
How do you make that determination?
First, you need to understand what skills are readily available within your organization, and what skills are not. Also understanding where you are today from a technology perspective. Are there manual tasks that can be automated? Are there systems in place that you’ve outgrown? Once you work out those issues, you can start to determine the best way to incorporate technology into your business.
What are some of the considerations you need to keep in mind if you decide to build out your technology in-house?
On the plus side, you have complete control over your systems, including where your data resides and who has access to what information. But that’s only effective if you have the appropriate security and access policies in place to begin with. Also, depending on your situation, the financial burden could impact your ability to act on other opportunities that may arise.
And what about using external technology partners? What should you keep in mind?
The main advantage is speed. Not having to build your own internal systems may speed up the upgrade process, so your organization can be ready to capitalize on new opportunities.
But also realize that you may no longer have control over where your data resides, which can be a huge security risk if you’re not careful. Also, if any technical issues arise, you may have to wait for your technology provider to resolve it. And any delays can negatively impact your efficiency, which can in turn impact your relationships with your customers. That’s why performing due diligence up front is so important.
So what kind of due diligence should you undertake before making a decision?
Before partnering with an outside provider, many companies include an RFP that details certain non-negotiable requirements, such as a security and vulnerability assessment to make sure your priorities are aligned.
Also, you need to know your partners aren’t doing anything that would put your business in jeopardy. If your tech vendor is working with 20 other companies, you need to make sure your information isn’t going to end up in the hands of one of those other companies.
So that goes back to the principle of knowing your customers’ customers.
Exactly. Which is why you regularly evaluating your technology partners is so important. That could be weekly, monthly, quarterly -- whatever is most appropriate for you.
What’s the one issue that you find comes up the most when a company looks to incorporate technology?
Sometimes you’ll discover a particular technology is great for one part of your organization but not for the organization as a whole. But it’s critical that you implement solutions that work for the majority of users and are aligned with the goals of the organization.
Leslie Anderson, Senior Vice President and U.S. Head of Business Banking Treasury and Payment Solutions for BMO Commercial Bank, contributed to this article.
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Susan Witteveen
Senior Vice President & Head, Treasury & Payment Solutions
Susan Witteveen is an accomplished executive within the financial industry across North America, having spent over 20 years in a variety of leadership roles. …(..)
View Full Profile >When integrated properly into your organization, technology can be a competitive advantage as well as an essential part of your business’ growth strategy. But incorporating new technology doesn’t come without certain financial and operational implications.
We spoke with Claudette McGowan, BMO Financial Group’s head of Technology Service Engagement, to discuss those implications. She explains why minimizing those risks involves understanding what you’re trying to accomplish, incorporating the tools you need to accomplish those goals and the best practices for making technology a part of your growth plan.
SUSAN WITTEVEEN: People tend to get excited about bringing new technology to their business, but they don’t always think about what that really means. What’s the first thing you should think about?
CLAUDETTE MCGOWAN: The choice basically comes down to whether to build your own systems or access what you need from a third-party provider. That’s true whether you’re introducing new technology or upgrading your current systems to keep pace with your company’s growth.
How do you make that determination?
First, you need to understand what skills are readily available within your organization, and what skills are not. Also understanding where you are today from a technology perspective. Are there manual tasks that can be automated? Are there systems in place that you’ve outgrown? Once you work out those issues, you can start to determine the best way to incorporate technology into your business.
What are some of the considerations you need to keep in mind if you decide to build out your technology in-house?
On the plus side, you have complete control over your systems, including where your data resides and who has access to what information. But that’s only effective if you have the appropriate security and access policies in place to begin with. Also, depending on your situation, the financial burden could impact your ability to act on other opportunities that may arise.
And what about using external technology partners? What should you keep in mind?
The main advantage is speed. Not having to build your own internal systems may speed up the upgrade process, so your organization can be ready to capitalize on new opportunities.
But also realize that you may no longer have control over where your data resides, which can be a huge security risk if you’re not careful. Also, if any technical issues arise, you may have to wait for your technology provider to resolve it. And any delays can negatively impact your efficiency, which can in turn impact your relationships with your customers. That’s why performing due diligence up front is so important.
So what kind of due diligence should you undertake before making a decision?
Before partnering with an outside provider, many companies include an RFP that details certain non-negotiable requirements, such as a security and vulnerability assessment to make sure your priorities are aligned.
Also, you need to know your partners aren’t doing anything that would put your business in jeopardy. If your tech vendor is working with 20 other companies, you need to make sure your information isn’t going to end up in the hands of one of those other companies.
So that goes back to the principle of knowing your customers’ customers.
Exactly. Which is why you regularly evaluating your technology partners is so important. That could be weekly, monthly, quarterly -- whatever is most appropriate for you.
What’s the one issue that you find comes up the most when a company looks to incorporate technology?
Sometimes you’ll discover a particular technology is great for one part of your organization but not for the organization as a whole. But it’s critical that you implement solutions that work for the majority of users and are aligned with the goals of the organization.
Leslie Anderson, Senior Vice President and U.S. Head of Business Banking Treasury and Payment Solutions for BMO Commercial Bank, contributed to this article.
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