Having an accurate and up to date inventory of models (whether they are spreadsheet-based or other) is the foundation of any model governance program. Now that you’ve chosen to manage these model risks, what’s the best way to track them?
If you’ve ever tried to establish and maintain a model inventory, you know that inventories (including EUC Inventory) are simple in concept. However, they are much harder in practice. Establishing the initial inventory list of models is relatively easy. The trick is how do you ensure it stays accurate and up to date and thus can sustainably serve the intended purpose?
Semi-automated software solutions focused on EUC or Model Risk Management (which includes inventory) are commercially available from several companies. Traditionally these legacy systems required on-premises, server-based installation(s) and also some degree of consulting and IT support. Modern inventory systems are cloud-based services that require no IT resources and can be configured and utilized without expensive consulting services. CIMCON’s Model Inventory CloudTM is one such product.
One alternative to commercial, off-the-shelf software is to build your own inventory system powered by Microsoft SharePointTM. Whether it’s the traditional on-premises version or SharePoint OnlineTM in the cloud, there are important considerations in this “make or buy” decision. Even though SharePoint is often perceived as “free”, there are several dimensions to the total cost of ownership that should be considered.
Six considerations before you build a custom model inventory system in SharePoint
- Software License Fees: In large enterprises, the Nth SharePoint instance may, in fact, be free. In other organizations, there may be incremental license fees. You should determine the exact licensing situation in your company and understand whether you will be charged any type of fee, whether it’s from Microsoft or an internal company chargeback.
- Degree of off-the-shelf functionality: Some of the native, risk management capabilities of the SharePoint platform are a given i.e. they are an integral part of the product. Version and access controls are two simple examples. So if you build your own inventory system in SharePoint, you will have effective version/access controls. Other governance functionality will need to be configured and/or programmed. Remember, SharePoint is a content management platform that can theoretically do almost anything. It is not purpose-built for managing EUC or model inventory so some of your desired controls and tracking functionality will need to be developed. When considering advanced functionality like change approval workflow, SharePoint has good functionality but again, it will require an expert consultant to configure it. Those experts cost money.
- File Location: It is sometimes said that files are end-user controlled for a reason. For example, the line of business needs the speed/flexibility to manage their models directly. In a SharePoint-based inventory system, the files under control are stored within SharePoint. The users no longer control where their files are stored. Remote access and network latency could be an issue, but perhaps more daunting is the political challenge of getting the business to “let go” of their files. Modern Inventory-as-a-Service does not hold a copy of the file, it only stores the risk-related metadata. The actual model/file itself stays where it has always been stored and the user/owner will not perceive any change.
- Maintaining control of your own destiny: In addition to having to relocate numerous models (or critical spreadsheets), choosing to go with a custom solution built on SharePoint creates a deeper dependency on the IT group. This is a resource that is chronically understaffed and can’t always respond in a timely fashion. In addition, some fraction of a full-time administrator will now be required as the repository of models (and/or critical spreadsheets) will grow due to all of the incremental versions that will be stored.
- Domain Expertise: Commercially supported model inventory systems are purpose-built for these tasks and incorporate all of the best practices accumulated over 15+ years. Even if you personally don’t mind re-inventing the wheel, you should pause and ask; Does it make business sense to do so? Will you be up and running in less time with your own bespoke solution? Is this where senior management wants you to focus your energy? Will the IT staff supporting the project understand your work processes and how these controls impact them, or will you have to continually educate them on how you want to do your work? What is the total cost of several iterations of the design and build cycle until it’s right?
- Multiple cost considerations: Cost is always an important factor. When comparing the cost of building your own model inventory system using SharePoint, vs. utilizing a cloud-based inventory service, you must compare “apples to apples”. A hosted inventory service is one price, everything is included. If you choose to build yourself, you need to consider the following potential costs:
- Any incremental software licensing fees
- Any internal chargebacks for hardware (servers, storage, etc.)
- Consulting and other development costs
- On-going system maintenance costs, either your own time, internal IT chargebacks or external contractors
- On-going development costs for future changes/modifications
Whilst building your own inventory using SharePoint can appear to be a cost-effective option, there are a number of factors which make commercially available model inventory solutions a better fit. Whether it is the speed and convenience of utilizing a cloud service, or the desire to have predictable support and maintenance costs, you should undertake a proper “make vs. buy” analysis as part of your due diligence. CIMCON offers a model inventory service Model Inventory CloudTM. Unlike an internal effort where the inventory project starts as an idea, with CIMCON, what you can see and physically test is what you will get. At a bare minimum, go to CIMCON’s website to access and utilize a limited, but forever-free version to help better understand and define your requirements. Alternatively, you can subscribe and be effectively managing the risk of all of your models within an hour.