How to Buy Technology: Goals and Processes

Maybe the number one challenge to selecting a data processing vendor is identifying and understanding the window of opportunities that exist. Managing vendor contracts, windows for conversions, and overlapping accounting issues needs to be a continual process for each credit union.

Wesco is a credit union-owned CUSO and an independent data processor and management solutions firm. The first part of this article ran on the week of August 27th.

''DBPN'' Goals and the Overall Capability of the Data Processing Vendor

Software solutions are developed in three major strategic pieces (Data, Business Logic, and Presentation) and then married to a Network plan that provides an overall solution for the credit union. Historically, the three major strategic pieces have been presented as one overall component, but today's credit union buyer must pay attention to the plans for each piece of their solution and how it fits with their overall goals and plans to implement.

  • Data
    What data is needed to successfully complete business between the member and the credit union? What changes does the credit union anticipate in their overall data needs in the next few years? It used to be as simple as a few dates, account numbers, and name and address fields, but today's databases are becoming more complex in trying to match the overall business plan of today's credit union. From MCIF and CRM pointers, to text-based consulting and competitive marketplace statements, to the increasing needs of Internet self-service products, today's credit union database is evolving at a breakneck pace. Today's technology is designed to use automated databases to carry on full conversations with employees and members. Identifying your vendor's plan for database structure, adding new data, and effectively communicating data to the credit union is key to your next purchase.

  • Business Logic
    Simply put, business logic is the set of formulas, processes, and specifications that a credit union uses to process data for a planned outcome. In other words, if you can calculate a member's dividends with a pencil and calculator, your core data processor should be just as effective. What are the restrictions of a core data processor's business logic? What is the timing of key processes? How does the vendor develop new business logic for new challenges? How does the vendor define its role in providing credit union services?

  • Presentation
    Consider how many ways data can be communicated to today's consumer-through an employee, on a full office-based network, through a cell phone with a 12-character screen, through an Internet browser with mind-blowing graphics, or even through a telephone system. Now imagine the challenge in trying to develop a central product that can effectively work with all of these audiences. It's more than just asking the data processor if its system is in Windows or still based on ''green'' screens. It is about understanding that when a member chooses a device through which to contact the credit union, he defines an audience parameter that the vendor and the credit union must recognize. Each audience or contact point requires a different management of data and business logic to complete the transaction (remember your culture or style goals for contact points). How many audiences does your credit union wish to serve? How does your credit union manage adding new delivery challenges or audiences to its overall plan (e.g., wireless)?

    Consider that the average member, through Internet sites and products such as Microsoft Word or Excel, now has exposure to technology presented in an interactive, colorful and communicative way. The bar has been raised for presentation. What is your credit union's plan, and more importantly, what is your vendor's plan?

  • Network
    When the big 3 (DBP) of the software solution are known and you are confident of the vendor's plan, you'll need to round out the solution by understanding the network. Whereas traditional thinking rates the need for open systems very high, the concept of broad-based networking is often overlooked. Broad-based networks consider more than just the desktop network or the core data processor's primary audience. The credit union's goal for networking should be nothing short of understanding how a single desktop can interact with any other desktop in the world.

    Today's CIO needs to plan not for how the credit union creates/connects to a core data processor hub. The focus should be on how the core data processor's product fits into a network where databases, communication, and interaction can be internal to the credit union, external to the member, or translated fluidly to new business partners. Today's leaders need to understand that the marginal gains made by selecting incrementally different core data processing solutions cannot make up for being left out of cooperative and collaborative efforts that come from network interaction.

Leaving Your Current (or Next) Data Processing Vendor

Sit down with your management team and ask a few questions. What is the contractual responsibility of your current data processor in aiding your transition to your new data processor? What data files and data content are under contract to be converted? What is the price for de-conversion? What will be lost? What will need to be rebuilt?

Almost without fail, credit unions continue to sign new data processing contracts with the expectations of never going through another conversion ever again. This unfounded optimism is based on the sheer fear of data processing conversions and an arrogance that the diligence done in selecting this provider will result in the solution of all solutions. De-conversions are the black hole of the entire process. Without knowing what to expect from your old processor, how can you judge the quality of your conversion and what to expect from your new processor? In your Technology Strategic Plan, you hopefully set a strategic goal to be known as an organization that can manage change. The first goal to managing anything is understanding the variables.

Contracts should only be entered into if they guarantee that the content of your database is one hundred percent owned by the credit union. Imagine buying a paper-based filing system, only to find out when you buy a new file cabinet that you only get to keep half the sheets of paper from the old one.

Vendor Patronage is an Investment . . . Plan for an Investment-Based Return
When choosing a data processing vendor, soliciting a reference for a new vendor, or planning for a conversion, it is common to hear comments such as, ''My credit union is with ABC vendor, and they're the best of a bad lot'' . . . ''Conversions may be a necessary evil, but only once in a career'' . . . ''It's not what I want, but it's the best I can do.''

For a very long time, most credit union professionals would tell you that dealing with technology vendors is a frustrating and out-of-control process. Many professionals today believe that only the largest data processing firms will survive based on the fact that R&D dollars and DP overhead is just too overwhelming. For all the negative talk, it is surprising there are not more efforts being made to actually change the process from the inside out.

Throughout this article, the concept that the core data processor is but a single component of an overall technology plan has been repeated again and again. It seems apparent that credit unions must try to find a way to have more of a voice in the overall orchestration of these partners if they are to increase their comfort zone with the entire process. Data processing at its best is simply the electronic execution of intellectual processes dictated by doing business. In the case of the credit union business, credit union leaders need more leadership in the actual vendor firms with which they do business, having a voice in the intellectual processes and software.

In selecting a data processing vendor, the credit union's Technology Strategic Plan needs to outline the goals it expects as far as an invested return with each vendor. Credit unions should no longer settle for being part of an advisory group, included in ''quality circle'' studies, or just trusting that what is good for the vendor is good for the marketplace. Credit union leaders need to set higher goals for participation in these firms, ultimately looking for equity positions that give them greater insight into managing member services over technology.

Becoming a Power User

After everything else is said and done, no credit union should make an investment in a core data processing solution without openly stating their intention to be craftsmen in utilizing this very important tool. Egyptians built pyramids without power tools; renaissance artists created masterpieces without computerized graphic design tools, and credit unions should understand it is more the implementation of a tool that leads to member satisfaction than the tool itself.

Goals and plans for staff education, vendor interaction, and a true ownership of the concepts that drive a tool will make the difference. No longer can credit unions rely on budgets just to purchase; they must focus on the budget and the effort necessary to implement and maintain.

Flip the coin. Does your data processing vendor set the same goals for you as a user? What are the vendor's education programs? What are the goals for determining whether the tool is strong or weak? What procedures are used to correct flaws and recognize opportunities? It all comes down to business, not tools. Your data processing vendor needs to be an extension of your staff, committed to execution, not just invention.


Maybe the number one challenge to selecting a data processing vendor for a complex technical credit union is understanding the window of opportunity. Managing vendor contracts, windows for conversions, and overlapping accounting issues needs to be a constant process.

In the end it's not about technology at all. 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. Bottom line, the magic in technology often lends itself best to gadgets, but your credit union needs a plan, a focus that says the member comes first and all your partners understand your direction.

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, please contact:

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, please contact our Callahan Media team at or 1-800-446-7453.


Nov. 5, 2001


  • This guy wouldn't know credit union ownership, much less operational goals, if he met them in an amusement park wax museum!!BEEN THERE, DONE THAT!!! Karnes portrayed what was then and possibly is still, a credit union " Wannabee" without actual experience of accountability to the membership and the resulting responsibility.