Bladewatch.com

http://www.finextra.com/fullstory.asp?id=19848

Failed Dunfermline lost millions on IT project; Temenos role questioned

The collapsed Dunfermline Building Society was forced to write off a massive £9.5 million of its £11 million profit in 2007 on a failed technology subsidiary.

Yesterday the healthy parts of the failed building society were sold to the Nationwide, with the government taking on its toxic assets.

Scotland secretary Jim Murphy has accused the firm’s management of “really bad decisions on their technology”.

The company poured £31 million into the loss making Dunfermline Solutions unit, which was set up to develop a mortgage IT system that could then be sold to other financial institutions.

In its annual report for 2007, the firm reported a £9.5 million write-down “mainly in the area of mortgage processing where our requirements and the market overall in this area is changing”.

As our applications, our business become more interlinked and integrated with the technology, the decisions you take on your platform, on your technical or business partners can become equally significant.

In-housing a technical solution which you can then re-sell is an approach I’ve seen many businesses take, the concept we can spend time investing in a product that we will like, and then sell it on.  It can work, if you look at was it Credit Suisse that created their own technology division providing virtualization solutions? An excellent read, do check it out.

The challenges though can be numerous:

• Branding and trust – it can be difficult to disassociate a subsidiary from it’s parent company whilst maintaining the kudos – we use the product…
• Different needs – what works for one organization might not work for another, there are industry standards, industry ways of doing things, but there’s internal politics, internal processes and vested interests which can create barriers to success with your product.
• Keeping it generic without removing the value – for example a server/asset database, the needs between businesses can be quite specific – I might be tempted, but do I get development/adjustment rights to the application? Can I white label it to my subsidiaries or partners?
• It can be expensive because everything becomes declared – where as before the in-house tools might have been done by a team of people that were also doing other things and once a week or when they had time evolving the platform, you’re now a project a defined cost.
  • The prime example being an asset register – everyone wants it, it’s transversal and benefitial to all, but nobody wants to pay for it, and nobody typically wants to take their developer and say “fill your boots, here are the requirements”.
  • The moment you formalize it, the moment the true costs can be realized and at risk of being the ‘holder’ for everything else, we need that little bit of work done, “just put it under that project, it’s got loads of many days..”

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.