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[email protected] Outsoursing in Banks
| Date post: | 27-Dec-2015 |
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In order to run the licence, the client will require a server based hardware installation that typically comprises the servers, storage, network, scheme access points, HSMs, DR, professional services, scheme certification costs, and the staff costs relating to the installation project itself. There will also be recurring hardware costs associated with this
SoftwareSoftware
MigrationMigration
Ongoing DevelopmentOngoing Development
Staff CostsStaff Costs
Additional Overhead CostsAdditional Overhead Costs
Licence
Hardware
Typical licence charge plus annual service fees
The client will require additional licences for surround components in order to run (a) the core engine and (b) any other software that forms part of their solution design.
The client will incur a large one off cost associated with migration and implementation
The staffing model for a licence / in-house operation is different (larger) – e.g. compliance, platform maintenance / development / testing, data centre.
The client will have compliance (PCI, payment scheme) costs, vendor management costs, contract costs, capacity planning costs, occupancy and utility costs etc
Any comparison needs to take an holistic view of the cost of processing. The License Fee is just one element
of the total cost of running a solution in-house
There will be a considerable annual spend on ongoing platform development, new country roll out and response to regulatory requirements. In the processing model these are largely included, however in the license model additional spend is required
Breakdown of Present Value Cost Over 6 Years
In-house vs Outsourcing – A Cost Comparison
Cost* $m
Licen
se
Hardwar
e
Softwar
e
Mig
ratio
n
Ongoing D
evSta
ff
Overh
ead
Total L
icen
sing
Proce
ssin
g Adv.
Proce
ssin
g
Additional Value Of Outsourced Processing“Outsource anything that is not core to your business.”-------Peter Drucker
Processing Benefits Over In-House
FinancialTechnical
Strategic
Operational
• Access to world-class technology
• Continuous hardware upgrades• Industry-specific improvements
to application software• Lower development and
regulatory change cost• Freedom from maintenance
concerns
• Focus attention on strategic issues
• Concentrate financial resources on strategic opportunities
• Leverage provider capabilities
• Improve “speed to market”
• Improve customer service
• Reduce risk
• Economies of scale• Make decisions with real
costs versus in-house “variable” costs
• Lock in long-term costs• Improve product profitability
• Operational task in the hands of industry-specific experts
• Operates to measurable standards• Eliminate internal contention for
programming resources• Gain access to industry-specific
programming skills • Reduce staffing levels• Gain access to in-depth industry
knowledge
Revenue Uplift
