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Investing in technology is becoming a more critical management process
for every credit union. The total dollars being committed to LANS,
WANS, automated call centers, kiosks, Internet solutions, not to
mention data process capabilities, are rising every year.
The critical issue, however, is more than dollars. For the promise
of technology is what lures credit unions: faster cycle times, automated
decision tools, more efficient processes and the nirvana of the
self-serviced virtual member. Credit unions want technology to make
them more competitive, not merely efficient.
Very often the assessment I hear is that technology's promise is
rarely realized. A new solution just enhances older functions but
does not deliver the hoped for breakthrough. I believe that success
with technology implementation is not simply selecting a better
tool, but requires choosing the right business partner. Competitive
advantages gained through technology are fleeting. By the time you
implement the newest technology, your competition has copied, modified
or maybe even improved on your process. But selecting business partners
to help meet your goals, develop your tactics and effectively focus
on your execution, can mean the difference between success and failure.
It All Starts with a Plan
First thing, pull out your strategic and tactical plan called ''Maximizing
Technology in Our Credit Union.'' When you don't find it, the
next thing to do is spend some time developing a technology plan
for your credit union that is specific to your goals, your resources,
and your credit union's ability to adapt to change. Without a doubt,
most credit unions fumble through core data processing changes without
any real long-term plan or thoughts on how these factors play in
short-term decisions. Consider the following outline:
Your Credit Union's Technology Strategic and Tactical Plan
Historically, credit unions have allowed core data processing decisions
to dominate their total investment in technology. But over the last
several years, developments in telephone systems, the Internet,
and additional office technology offered through PCs and laptops
have begun competing for investment dollars and project priorities.
Competing technologies have created conflicts over the capabilities
of additional investments versus the ability of core processors
to interact with these technologies so that the overall technology
plan of the credit union can be maximized or realized.
Overlapping vendor contracts and accounting for these expenses
have locked credit unions into relationships where a change to a
coordinated long-term plan sometimes seems impossible. It all has
to start with a plan. Credit unions today need to sit down and review
the following set of issues before moving forward with any decision
or trying to adjust their overall technology capabilities:
What are the credit union's goals for how the membership, staff,
and overall organization perceives the credit union's technical
capabilities for providing credit union services?
One valuable point to consider when developing your Technology
Plan: Acquire an ''insider's'' perspective for technology.
To be a good consumer of technology, an organization must have some
insight into what it means to be a provider of technology. When
looking to understand whether a contract is fair or not, it is best
to consider both sides of that contract. Look for vendors or consultants
who have insight into development processes, ongoing support, and
problem resolution. Simple RFPs that look for a myriad of yes/no
answers as to feature functionality, and reference lists on who
uses what vendor, are not specific enough for your credit union's
A Core Processor's Role In The Overall Technology Investment
The key to credit union management today is managing member relationships
and member trust. Nothing can be more disruptive to those concepts
than misinterpreting how the technology choices a credit union makes
change the interactive contact points between the member and the
credit union. Credit unions must determine a style or culture (part
of the Technology Strategic Plan) for these member contact points
that defines their organization's presence and ability to serve,
and then consistently buy based on reinforcing that positive presence.
Historically, core data processors have played more of a ''back
office'' role or a partner tool with employee staff in servicing
members. Today, core data processors are more key to direct member
services through interaction with call centers, third-party networks,
and direct Internet services. As much as the capabilities of the
system to calculate dividends, provide balances to employees, and
effectively present credit union financials, today's core data processor
must have a vision of how its services blend with other credit union
tools and set the direction for further technology investment. As
a buyer, today's credit union must consider the core data processor's
ability or plans for an overall efficient credit union operation.
Too much emphasis has been placed on core data processing systems
being ''open'' or easily translated to common networks,
downplaying the actual desire or direction of the vendor's business
plan as to interacting with other credit union technologies. It
is not the technical ability of the software to adapt to new challenges,
but rather the ability of the vendor's business structure and internal
goals. Too often, vendors create artificial barriers to change or
effective partnership by inflexible conversion/de-conversion processes,
restrictive contracts, and limited capabilities for managing change
from the vendor's side. Vendors are driven by new sales and supporting
current clients, and often have put very little thought into processes
where their current clients wish to change or accommodate new challenges.
Credit unions must look for vendors who understand their role as
an overall partner, a technical consultant, operational specialist,
and manager of effective transition.
Randy Karnes is the CEO of WESCO. WESCO is a credit union-owned
CUSO and an independent data processor and management solutions
firm. WESCO was named 2000 Operational Services CUSO of the Year
by NACUSO and is a strong advocate of credit union ownership of
alternative service and financial organizations. For more information,
Randy Karnes, CEO
(800) 327-3478 ext 101
This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.
If you are interested in contributing an article on CreditUnions.com, please contact our Callahan Media team at firstname.lastname@example.org or 1-800-446-7453.
March 17, 2003
7/26/2012 04:01 PM
Many of Randy's comments are on point, particularly his comment, "I believe that success with technology implementation is not simply selecting a better tool, but requires choosing the right business partner." But Randy reveals his true feelings by not pluralizing “partner”. Like other core system vendors, including most that advertise open systems, they genuinely believe they are the only business partner a credit union should have when it comes to technology. This is adverse to the best interests of their clients.
Like a family doctor, can a core system vendor supply all of a credit union’s needs? You probably wouldn’t want your family doctor to do your heart, brain or eye surgery. And while you might value your family doctor’s opinion and referral, you probably want the right to pick your specialist, and be free to discuss any treatment directly with that specialist. After all, isn’t the specialist the one you’re counting on to treat your condition, and who you need to depend on, as long as you have the condition? In building a relationship directly with the specialist, you gain a new partner in managing your health. Should that be any different when acquiring or applying technology in your credit union?
Randy also writes, “Too much emphasis has been placed on core data processing systems being open." If a core system is not open, how can a credit union choose the best partner and solution to fulfill a given need? A “truly” open system prevents a credit union from being limited in choice or held hostage by their core system vendor.
What makes a system truly open? Simple: a published document of the vendor-supported transaction formats and communication protocols for data exchange. Such a document reveals no source code or database layouts, and no vendor secrets except those a CU client should know. A withdrawal is a withdrawal; every core system vendor needs the same information to process any given transaction (account number; amount; etc.), so transaction formats certainly aren’t trade secrets. However, if a core system does not support an external transaction to obtain or update specific data, or certain communications protocols are not supported, the only secrets revealed are the core system’s deficiencies.
System vendors who honestly believe their clients should be ‘empowered’ to select the best business partner and solution don’t hesitate to provide clients with their data exchange/interface specification. They’re confident of the soundness of their systems to reject any improperly formatted transactions, and they acknowledge there’s nothing magical about interfaces. So why don’t open core system vendors adopt truly open systems? It’s more about revenue and client control than hiding any trade secrets.
Would you use your family doctor if he did not provide arms-length referrals? Or insisted you use one of his “authorized” or “certified” specialists, or pay an exorbitant fee if you wanted to use your own? What if he wanted to sell you some specialist’s work product, and insisted on supplying all post-operative support, denying you a direct partnership with the specialist? You’d probably seek a new family doctor immediately.
Yet that is the way most credit union technology products are sold today, even by ‘open’ system vendors. Vendors’ business partners are exactly that; their business partners first, and yours only second, if at all. It may be an easy solution, but is it the best one for your credit union? In this increasingly flexible and complex technical world, can the core system vendor/family doctor help you implement and utilize a third party solution to the fullest? What do you lose by not having a direct contractual partner relationship with the underlying solution provider? Only control, dollars, and s
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