PESTLE, Risk Management and Outsourcing | TSB's Botched IT Project Costs Shareholders another £49m

Botching major IT projects can be costly in both in financial terms and also repuationally. Just ask the TSB.

As the Guardian reports here, following a five-year investigation, financial regulators have fined TSB £49m for “widespread and serious” failings related to a failure of IT systems in 2018 that left millions of banking TSB customers locked out of their accounts for weeks.

The regulator fine can be added to other costs associated with the failed project, bringing the total to around £450m including amounts paid as compensation to customers impacted.

It's a grest example of hour regulation is a key part of the external environment faced by many businesses, particularly in industries such as financial services.

TSB's use of outsourcing also came in for criticism by the financial industry regulators. They said TSB "failed to manage risks linked to its outsourcing deals with third parties" involved in the migration of IT systems from TSB's previous owner, Lloyds Bank.

The introduction of new IT systems ranks right at the top of the most high-risk internal activities that a business can undertake. Get it wrong, and the results can be disastrous.