Getting Smart about Technology Costs: Potential Savings in the Cloud

How do credit unions keep up with increasing technology demands and still manage costs effectively?


Even as the economy rebounds, credit unions nationwide are still searching for ways to manage expenses. The average credit union spends between 8% and 10% of its total operating expenses on technology, which equates to between $2.2B and $2.8B spent by credit unions annually.

And for most credit unions these budgets are not decreasing over time. Based on Callahan’s 2009 Technology Survey, 56% of respondents indicated they would increase spending last year (even amidst the recession). We expect a similar trend in the 2010 survey, which is currently being conducted.

So how do credit unions keep up with increasing technology demands and still manage costs effectively? Understanding your total costs for managing everyday technologies - like email - is a good starting point.

According to a Forrester study last summer, on-premise email costs an average of $20.84 per user per month for the most active users (so-called “mobile executives”).

So what makes up this average? Server hardware and operating system, server software, client software, storage, message filtering, mobile messaging, and last but not least – staffing. That’s right, staffing is estimated as costing as much as $4.52 per month for the most active users.

In fact, Forrester’s research concludes, “For any company with fewer than 15,000 mailboxes, our cost calculator shows that it is typically cheaper to run email in the cloud for all tiers of the workforce. One 3,000-person pharmaceutical company, for example, estimates a three-year cost savings of more than $500,000.”

Leveraging “the cloud” by outsourcing select IT infrastructure is clearly one way credit unions can take more control of their technology spending and reap real benefits. But not all cloud solutions are created equal and many may not be appropriate for the security and other requirements of credit unions. This is likely the reason that many credit unions have not implemented cloud solutions just yet.