For many bank chief information officers, there is a frightening prospect lurking beneath the good news about the rebound in bank technology spending. Celent forecasts a 3.7% increase over last year. For retail banking alone Ovum predicts a jump of nearly a quarter over the next five years. The worry? How to find and manage all the technology talent it takes to make a success of all those billions invested.
For most banks, the IT spend represents a vast variety of projects — fast-track compliance implementations, core system changes, customer-facing innovations like mobile and online, platform consolidations, postmerger conversions. Every project requires specific expertise in that technology for the duration — and then it doesn’t. Every project requires deeply capable project management — and then it doesn’t. Just onboarding and training takes tremendous time and skill, and then it’s time to offboard trained resources, or work them into other projects, or whatever makes the most sense from a talent and investment standpoint.
It’s impossible not to sympathize with bank executives who find themselves basically doing two full-time jobs — the one in their job description plus project manager to a deluge of tech projects.
Little wonder that some are finding parallels between how they have successfully offloaded other responsibilities to dedicated providers under the as-a-service model. Software-as-a-service relieved them of the burden of installing and maintaining software when the software vendors demonstrated that they could meet banks’ service levels. Data-as-a-service saved them the trouble of building their own vast data centers when data providers could manage the activity to their quality expectations.
So why not people-as-a-service? Specifically project managers-as-a-service, to save bank executives precious management time and money at the same time.
It’s not as though project management is easy to get right, even if bank executives weren’t double-tasked. Even after sizeable investments in training and certification, seven in 10 traditional projects still fail. Execution is still hampered by varying levels of competencies, use of disparate methodologies, and poorly integrated tools. This when banks are under pressure to deploy more and more IT-enabled applications in shorter and shorter time frames.
Nor is the situation likely to improve, based on trends noted by researchers. Demand is growing for project managers who can skillfully execute already-defined projects (as distinct from consultants who identify and scope business challenges and make recommendations for solving them.) After a slight dip in the early part of the recession, project managers are being hired in pre-recession numbers.
Project management activities consume an increasing amount of internal management time and attention. Turnover is high. Half of current project managers will leave their current role. Replacing them costs between 50% and 200% of annual salary. Little wonder that banks are ready for a better model. They are turning to outsourcers to manage five critical stages of project management:
Demand and capacity management: Anticipating how many resources of what kind are required to keep projects meeting their goals.
Searching, selecting and sourcing: Finding the right people with the right skills from a deep bench of trained project management experts already onboarded and familiar with the bank’s portfolio and needs.
Onboarding: Taking care of all aspects of hiring and training.
Project, issue and change oversight: The traditional project management responsibilities, plus issue and change management.
Offboarding: The vendor reabsorbs the resources, relieving the bank of those costs.
On paper, these stages follow each other in discrete, carefully managed sequence. In the real world, where banks are forced to make changes with little notice, these stages often expand and contract, overlapping one another and generally resisting the best efforts of overworked managers. Changes in project scope, the complexity of using multiple staff providers, new training needs, turnover — all these variables test the management capacity of the bank and create vulnerable points in project execution.
When the bank gets to offload these efforts, and their associated risk, to a provider who specializes in precisely those activities, with mature processes, frameworks and state-of-the-art tools, the value to the bank can be substantial in terms of the following factors:
Time: Most heads of projects also have day jobs, and their day jobs are suffering. These managers, typically well-paid individuals skilled in the business of the bank, devote 30-50% more time to managing projects than they expected. They might manage 15 project managers, and often interface with them daily. They can reduce this time considerably, especially during the sourcing, oversight and offboarding stages.
Accountability: The provider takes accountability for the qualifying, onboarding, training and day-to-day management of the project managers. This removes a considerable risk from the bank. The costs of any mistakes are borne by the provider.
Cost-effectiveness: The provider has the specialist’s advantage in finding economies of scale throughout the process, whether building a database, recruiting, training, and managing service agreements.
The provider can also find efficiencies in detailed resource capacity management across multiple projects.
Quality/consistency: Since project management is not a core business for banks, they typically have not focused on process efficiency, automation and roles, and may have quality and consistency issues. The opposite holds for the provider, which invests in process, automation, roles and responsibilities, measurements and integration as core aspects of its business. The provider can also bring banks best practices learned in other engagements.
Predictability: Today it is hard for companies to predict their fees to outsourcers, which are typically paid on a time and materials basis. Under this arrangement, the bank can establish a fixed fee relationship, providing predictability of timing and size of fees.
