IT: Core (In)Competence?

This morning we heard the news that the Dunfermline Building Society will not be supported by HM Treasury. Is this just another financial services disaster?

Maybe, but as commercial lawyers we were drawn to the reports that the reported loss of £26m for 2008 at DBS was less than the claimed £31m invested in a failed IT venture. On closer inspection, thanks to an informative article in The Herald, it is clear that the IT venture did not sink DBS, but it cannot have helped.

Why did the building society not consider outsourcing? One of the reasons often quoted for choosing to outsource, is that it leaves the outsourcing customer able to focus on its core competence. In addition, engaging an outsourcing service provider expert in the relevant back office or other IT support services often enables the customer to obtain a more efficient and effective service than was possible when the services were provided in-house.

This is familiar territory for our IT lawyers – our outsourcing agreements for customers are designed to facilitate these outcomes.