Evaluating your in-house system and how a vendor can make all the difference
There are two kinds of inertia: the inertia of an object in motion and the inertia of an object at rest. Both require an opposing force to overcome.
If you're a rocket scientist, and you're trying to put astronauts into space and return them safely to Earth, you have to deal with both types. If you're a CCO or CTO trying to effect change in your current compliance set-up, you're only going to have to deal with the latter. But while overcoming institutional inertia may not be rocket science, it's not necessarily easy. We're here to help.
THE STORY SO FAR
Your in-house system cost a bundle to get up and running. It also took a lot of effort. You poured money and time and focus into the people and physical resources necessary to build a software product from scratch. This is no small feat. Companies like Microsoft and Oracle exist for the sole purpose of software development. As an enterprise financial institution, software development had to be a sideline.
But maybe you felt your situation was different enough to warrant developing a bespoke system. That your particular compliance needs could only be met by something built and maintained on premises. Maybe you interviewed compliance platform vendors but came away unimpressed. Or maybe you felt the safest bet was doing it yourself, that you'd have more control.
But now you're many years into your legacy system and you're thinking it's time for a change. Cost is an issue, which is always more than just initial development. There's maintenance and upgrades. There's ongoing training for new hires and new platform releases. And have you ever really broken even with the yearly spend all this upkeep costs?
Other precious resources come into play, as well. You can see that running your own mini-software company is putting a strain on IT, in terms of both budget and required focus. The overall resources just aren't there to keep up with the never-ending changes in regulation, the marketplace, and technology.
And switching from legacy software systems of any sort can be a fraught proposition, but maybe a compliance system most of all. This application is what keeps you on the good side of regulators, after all, and earns you the ongoing trust of your clients by helping keep your business honest. But you know it's not being prioritized, and is more and more being pushed to the backburner. So a change is in order.
But what about all the money you've spent? What will upper management say if you suggest a change to a vendor? And while the IT team may not like dealing with the compliance system currently in place, how will they react to the idea of system migration and integration? This is the very formidable inertia you have to overcome, of things having been done a certain way for a long time.
Resistance to change is natural, of course. The good news is, this resistance and inertia can be overcome. The benefits of switching from an in-house compliance system to a vendor are many and fairly obvious once laid out. Properly armed with them you can make a strong case for change to anyone in your organization.
UNDENIABLE VENDOR BENEFITS
Crowd-powered solutions are all the rage, and for good reason. Whether you're trying to raise funds for a project or find a solution to a problem, there's no such thing as too much help. This help must be carefully managed and channeled, of course. And that's precisely what happens with a vendor-sourced compliance platform, or common platform.
A common-platform is a highly specialized compliance solution built with the input of dozens of companies and hundreds of compliance officers. Since a vendor's product-development model ensures enhancements are worked-up over time from a variety of sources, you'll get features a single organization might never have identified.
2. Delightfully Predictable CostsWe mentioned earlier the idea of breaking even with the yearly spend on upkeep. This isn't easily accomplished with an in-house compliance system.
As a rule of thumb, in-house solutions cost up to 70% of the initial outlay each year to maintain and upgrade, without new features or functionality. Further, industry research shows that the total cost of ownership for an in-house system will be more than double that of a cloud-based common platform.
Vendors charge a transparent annual licensing fee, and that's it. There won't be any surprises, so long as you thoroughly understand what's included and what's not included in your contract. All told, vendor charges are delightfully predictable and allow your organization easier budgeting and planning.
With the entire customer community sharing ongoing costs for product development—intrinsic to any common platform compliance solution—unmatchable economies of scale come free of charge.
When you buy a compliance platform from a vendor, you're buying a thoroughly peer-vetted and organically evolved product built off years of development, optimization, and enhancement. You're therefore simultaneously buying membership in an expert-user community. No single organization developing software as a sideline can match this vendor benefit.
Because vendors are software experts, they can typically install, configure, and get a common-platform compliance solution up and running in weeks. So your IT department's migration fears are put to rest with a good vendor.
Software migration and integration is something any experienced vendor takes as seriously as any other part of the business. First, because they're professionals. Second, because they know this fear can be a deeply ingrained one, the kind that can prevent an organization from taking the necessary step of going from in-house to vendor. It's good business either way.
Regulators are people, too. And when an agency team commences an audit they're as influenced as the next person by their experiences.
Since part of reducing regulatory risk is ensuring regulators have an increased level of confidence in an organization's compliance controls before, during, and after audits, a vendor solution other organizations are using is more likely to be recognized and understood by an audit team. This in turn provides an increased level of confidence in your organization.
Counterintuitively, a common platform is often more adaptable to your organization's needs than an in-house platform. This is because a vendor has to satisfy such a large cross section of requirements from such a wide range of users. As such, a common-platform application can often more easily tolerate changes of requirement and scope, allowing necessary changes via the user interface without the need for further, costly development.
But in addition to this inherent adaptability, a good vendor can also customize a client's compliance platform, even down to the individual user or group level. For organizations with employees across the globe, this means the ability to vary language, time zone, local currency, and more based on where individuals are based. For compliance teams, this means the ability to create groups with varying levels of authorization based on their role within the organization.
With in-house platforms, customizations like these are real wish list items. They take a lot of time and effort to build. But for a software vendor it's part of their business.
Vendors are software experts. Development isn't a sideline. A software vendor’s survival relies on maintaining the expertise of its team and the constant updating of its product. And the client-vendor relationship applies perfect pressure to ensure the common-platform product stays moving in the right direction: taking changes in the markets, regulations, and technology and synthesizing them seamlessly into the common-platform.
With the vendor shouldering all responsibility for requirements gathering, implementation, development, and product support—in other words, sweating all the details—you're left free to concentrate on your core business activities and higher-value compliance responsibilities. When you buy a compliance platform, you're buying freedom.
THE PHYSICS OF COMPLIANCE
This blog could just as easily have been called The Physics Of Compliance, because switching from a legacy in-house platform to a vendor common platform is a lot about overcoming institutional inertia. But persistence will pay off. The rewards are many. March into a meeting with these vendor benefits in hand and you're on the right trajectory for the change your organization needs.
Already made the switch from in-house to vendor, but thinking of making the switch to a different vendor? Read part two of our two-part blog series: "The Compliance Platform Challenge: Changing Vendors.