NEDBANK posted outstanding financial results for the first half of 2022. It attributed much of its success to a massive digital transformation overseen by COO, Mfundo Nkuhlu. However, the risks of digital transformation cannot be ignored, and can cause dire consequences.
During the same period, Standard Bank suffered a 6 hour total business outage and Capitec experienced a 36 hour outagerelated to branches, the app, USSD service and point of sale. FNB and ABSA have found that they are not immune to the effects of technical glitches causing costly outages.
How an Active Escrow Agreement can Mitigate the Risks of Digital Transformation
As is the case with all Banks, most businesses depend on software over which they have limited or no control. And, without an escrow agreement they will very seldom have access to maintainable code for the software product. This is a major problem that otherwise could present itself only once it is too late to take action.
From an Operational Risk Management perspective, an Active Escrow arrangement is the only practical way whereby access to maintainable information systems, by the software end-user, can be assured.
Access to the system is guaranteed under these conditions:
- Whether or not the software owner or supplier is commercially stable or viable.
- If certain predefined commitments such as warranty, support and maintenance are discontinued and/or not honoured.
Today’s risk management and internal audit practitioners ask, “what are our annual revenue values, reputational credentials etc that are dependent on Information Technology Platforms over which we have little or no control?”
Gartner refers to the practice of source code escrow as follows:-
“Technology escrow is a smart and effective component of a business continuity strategy that software licensees can use to protect their mission critical applications in an ever-changing environment . . .”