Banking functions, from the most basic to the more complex, are driven by software applications. Today, the IT industry is indispensible to the banking sector. The onus is on the IT vendors to tailor solutions in line with the bank’s requirements and within its budgetary allocations. An over-priced solution will hurt the bank’s financials while an underpriced, inefficient one can ruin the vendor’s reputation. Disclosing the budget upfront may sometimes prove detrimental to the bank, as the vendor may price the product to fit the budget when in fact it costs considerably less.
The bank’s requirements vary widely depending on its size, customer base, market, existing IT architecture etc. Absence of explicit rules or pricing benchmarks and multiple vendors with a host of solutions across a wide price range – all go on to further confound decision making with respect to budgeting.
Ultimately, banks have to fall back on the relationship and trust built over time with their vendors. It is therefore imperative that this symbiotic relationship be nurtured with utmost care. In this context, the importance of communication between the two parties cannot be overemphasized. It is extremely crucial for the bank to communicate its requirements, the budget allocated and the delivery timelines clearly. The vendor, in turn, should offer multiple viable options and help the bank make an informed decision. This will ensure that the right solution is delivered on time and within the resources earmarked for it.
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Original Post: http://www.infosysblogs.com/finacle/2013/02/cost_versus_solution.html
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