7. Outsourcing in TIBO a. Issues i. No Governance and CEO lack of interest ii. N

Question

7. Outsourcing in TIBO
a. Issues
i. No Governance and CEO lack of interest
ii. No Testing
iii. The Service Level Agreement is weak
1. Response Time is slow
2. System not Available all the time is unacceptable
3. Security is nonexistent
4. Lack of Training
5. Help Desk charges more when workload increases
iv. Customer Complaints not handled correctly
v. No Reports
b. Solutions
i. CEO and Management should be more involved. The third party should not have been solely in charge of anything
ii. Auditing
iii. Business Management should have been involved in the solutions, not just the IT department
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and works used in completing this exercise:
1. Textbook: IT Governance Institute. IT Governance Using COBIT and ValIT: Student Book, 2nd Edition. 2007.
2. Case Study: IT Governance Institute. IT Governance Using COBIT and ValIT: TIBO Case Study, 2nd Edition. 2007.

Explanation / Answer

OUTSOURCING IN TIBO

The article on outsourcing in TIBO highlights on the outsourcing policies of TIBO(Trusted Imperial Banking Organisation), the issues associated with outsourcing and what are the potential solutions that can bring the company up from facing these issues. The article throws a light on IT governance and outsourcing.

IT governance is the responsibility of executives and the board of directors and consists of the leadership, organizational structures and processes that ensure that the enterprises’s IT sustains and extends the organisation’s strategies and objectives.

Considering the case of TIBO which is a medium size financial organization. Its core business competencies include retail banking—saving accounts, chequing accounts, loans, credit cards and personal banking— as well as performing clearing and settlement services for the other banks in the region. One of its strengths has been the personal attention provided to customers by account managers in the personal banking group.   Recently TIBO has started downsizing its physical branch network while aggressively pursuing e-banking business. • It is starting to acquire outside IT services (outsource or joint venture). • It has gone through several local mergers and, as a result, has a complex environment with shared IT services that are difficult to integrate. • It is process-oriented with an emerging culture of stakeholder inclusion, but with no formal strategy and a tendency to shift priorities after long debates between stakeholders. • It is competing in a market in which a number of changes have taken place, including an increased presence of building societies (savings and loans) and international banks. New products being introduced by competitors—including higher savings interest rates— are attractive to customers. In addition, electronic financial services with 24/7 access are becoming ubiquitous. • It possesses a steady customer base and revenues, and increasing acquisitions to this point, but the effects of increased competition are being felt ever more strongly. There is concern over the loss of market share and compressed profit margins. • It is aware of indicators that the regulators are getting concerned about systemic risk, as TIBO provides payment and settlement services to other banking institutions.

Looking into the short profile of TIBO that has recently gone into mergers and outsourcing the company has to face lot of issues that needs to be settled down for the company to operate safely and hence it needs appropriate IT governance and corporate governance for the same. Few of the issues that are currently faced by TIBO after going for outsourcing includes lack of corporate and IT governance due to the lack of interest shown by the CEO Mr.John Mitchell the has led to the major instability in the financial institutions operations. Other factors that has added up to this problem includes the implementation of IT solutions that faces many technical issues like slow response time, system not available and the reliability of the system is not good, no security and there is a possibility of security breach, lack of training to employees makes the processing time waste, more payment to customer service units outsourced where they charge heavily due to large number of responses and customer complaints and customers not satisfied with the functioning of the system.

The other factor that also adds up to the problem is weak service level agreement between the stake holders and mergers. Due to the above reasons the stability of the financial institution has become a big question mark between all the stake holders and a better option to come out of such situation initially sprouts with the basic understanding and agreement between the stakeholders of the system. The other solutions that can be adopted by TIBO include the complete involvement of the CEO and the management in all the activities of the institution than depending completely on other outsourced agents and mergers.   Similarly auditing should be an ongoing process to keep the companies stability on track. It is also necessary to involve some business intelligence in addition to IT infrastructure and appropriate training can be given to the employee’ s to make use of the system effectively. When TIBO can do this then their stability due to IT and Corporate Governance can be improved much better and they can last long in the financial market.

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