Distracted by Technology and Software Management?

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April 30, 2013

What are you good at? What is your business good at?

Too often in business, as in life, spending our valuable time and resources in areas where we have a relatively lower competence and less focus can be frustrating. Doing so also means we are taking our eye off the ball that matters most, growing the business.

This applies to the finance industry. Playing to your strengths, whether they are in loan servicing, loan purchasing, loan origination or a combination thereof, can be a game changer. The fewer distractions a business has, the more time and energy gets devoted to growth. In this vein, there are a significant number of servicing companies that have chosen to outsource their technology needs and use loan servicing software as a “hosted application.” Most have never looked back.

It makes a lot of sense. Finance companies, regardless of size, use IT to enhance efficiency and productivity, reduce cost and improve customer satisfaction. But do you need to own and actively manage your own technology in order to get the benefits?

There are some pretty big hurdles to taking the do-it-yourself approach to data centers and application management. It requires keeping up with the latest software (including software patch management and new versions), licensing issues, recruiting and training a viable IT staff, a state-of-the-art infrastructure equipped with adequate cooling and fire protection, backup and recovery capabilities in addition to high-throughput, redundant bandwidth. If your business competes in a space that’s consistently under siege by new regulatory requirements or is cyclical by nature, the above-mentioned hurdles may loom larger as the costs escalate.

Outsourcing technology to a data center and using applications as hosted products can ameliorate these challenges. The hosted software model provides users access to software 24x7 without the licensing costs, Information Technology (IT) management headaches, and associated technology hardware support costs. It reduces capital expenditure costs, as the monthly subscription is far less than having to purchase all of the hardware and software. Businesses using the hosted model also mitigate the risk of data loss because, in all likelihood, their reputable data partner has made large-scale investments in data backup and disaster recovery processes.

There is also an opportunity cost to implementing large-scale technology. The money that is spent on that infrastructure could be used to grow the business, whether it is additional marketing, headcount or new offerings to the market. Unless technology is at the core of your business competency, spending money on IT is not always the best decision.

Always search for a technology partner that has a fully redundant hardware platform, high-security physical access points, UPS power, HVAC, fire detection and suppression and 24/7 onsite technical staff. Their telecom network should be highly resilient, redundant and secure.

Once we understand and embrace our respective strengths while acknowledging areas of lower competence, it’s easier to set the table for organizational success. Smarter use of IT easily lends itself to a competitive advantage. If data center management isn’t your core competency, shouldn’t you consider moving this off your already-busy plate?

Let me know if I can help you with your decision. Please feel free to contact me at: jpossehl@nortridge.com