The Financial Conduct Authority, the UK financial services authority, last month published a review of outsourcing and its concerns in the asset management industry – http://www.fca.org.uk/static/documents/thematic-reviews/tr13-10.pdf.
The sentiment expressed in the paper probably applies to any company that is considering outsourcing or already has outsourced aspects of their business, primarily that there has to be a plan B in place in case things go wrong and the outsourcer fails. Essential can play a crucial role here, by underpinning the relationship between the client and the outsourcer effectively and by mitigating some of the risks around loss of knowledge internally. This is something EAS, the sponsors and developers of Essential, are currently working on with some clients and where Essential has become a key component.
The drivers behind using Essential have been to ensure that clients are not tied tightly into an outsource relationship which cannot quickly be reversed out of. The key objectives are to:
- Ensure there is an exit strategy should it be required (in line with the recent FCA demands)
- Mitigate against the loss of knowledge in the event of a failure in the relationship
- Reduce the dependency on the outsourcer for knowledge retention – they may have their own knowledge tools but they may not be willing to share them
- Retain the organisation’s intellectual capital (IC) – the outsourcer will create IC as part of the relationship, but it is important for the customer to retain that IC – ultimately it is still the customer’s architecture
If you are considering outsourcing, then Essential may be an answer for you. In line with the FCA requirement, Essential acts as a knowledge base, ensuring that you retain control of your own information, in an accessible, controlled structure, and so reducing reliance on a third party.
If you have any questions on this then discuss it on the forum or get in touch.