Archive for November 27th, 2007

HSBC IT takes wind out of vendors sails.

Tuesday, November 27th, 2007

Friend or foe?  Ask any enterprise software vendor where HSBC sits on the Buy vs Build spectrum and the answer will be as firmly towards build as any enterprise you might encounter.  In that sense, if they are never going to buy your product, I guess they are a foe.  On the other hand, if you work in the business in HSBC, I suspect you may hold a different view, at least according to a case study published in UK journal, Computer Weekly of today’s date.  The study tells how HSBC has restructured its IT division and its relationship with the business.

Richard Dunlop, chief operating officer of HSBC’s technology services group in Europe is the architect behind the changes which started in 2004 and were clearly driven by the “competitive threat posed by external service providers such as outsourcing suppliers”.  Dunlop said “we were not getting the economies of scale that we should have from employing 2,000 developers in the UK”.

But before the cynics amongst you leap to the conclusion that this was just some artifice aimed at simply reducing costs at any cost, it seems there is more to the story.  The threat of external service providers also alerted HSBC IT to the need to service their own business colleagues.  They appointed relationship managers as single points of contact so their sole focus was on managing “the account”.  That put them in a position to “work in partnership with the business by proactively providing it with information that it can use to drive costs down and improve the bottom line”.

Hang on a minute, isn’t this the sort of language and behaviour normally adopted by the very external vendors HSBC IT are competing against?  To win business, external suppliers need to offer more than an in-house IT function can offer – better price, better product, better service, better relationship and you bet they need to look after their own costs too.

So it seems that HSBC are successfully competing against external suppliers by playing them at their own game.  This appears to be good practice and judging by the number of technology driven customer service innovations launched recently, I can only assume that the business is happy too.

If you followed the hyperlinks above, the alert amongst you will have picked up that some of the announcements were actually HSBC in partnership with an external vendor which only goes to show that there is no such thing as black and white when it comes to Buy vs Build.  But if, as an internal IT department, you want to maintain control over your own destiny, acting like an external supplier is probably a good weapon.