There is no amount of money that your IT department cannot spend. Think about it, Windows XP went out of support in 2014 increasing IT spending for PC and network upgrades, for example. This came as an unpleasant surprise to many credit unions, and those who had ideas of waiting to replace their Windows XP machines were put on notice by their auditors and examiners. In 2015, Windows Server 2003 will be going off of support, which may force the replacement of systems at many credit unions. Additionally, upgrading hardware can translate into requiring further product upgrades with many other vendors.
These are just two examples of IT related expenditures, and they don’t include the corresponding software changes required, which in most cases also include a multiplier effect. So how do you plan and prepare your IT budget for 2015?
1. Eliminate Waste:
“Best of Breed” was sold as the panacea for credit union core processing. It was supposed to allow credit unions the advantage of having the “best” software for each niche product offered, but has turned out to be far from those claims. If we have learned anything about best of breed products over the years it has been that they come at a steep price and are never fully utilized. Trying to get systems that are developed by different vendors to communicate and work properly can be challenging and time consuming. You can eliminate the waste of your time and money by selecting vendors that provide all-in-one solutions. Utilizing a single credit union core processing vendor for example, offers economies of scale in cost and provides simplicity to the end user.
2. Look for Efficiencies:
How do you calculate efficiency? Try net income per full-time employee. The right technologies should make you more efficient and increase productivity. Before you begin to implement your 2015 budget you should have a clear idea of the areas that need to be improved. Evaluate why these inefficiencies exist and then look to make investments. In many cases, no amount of spending can correct the problem, particularly if your current technology IS THE PROBLEM. Sometimes the fix requires more than a band aid, it may require a complete reinvestment.
3. The Case for Core:
Credit union core processing systems are the “backbone” for all IT related interaction with your members. This is true for transaction processing, lending, accounting, mobile & internet banking, card management, etc. Your credit union can only go as far as your core can take it. A thorough evaluation of your existing core system should be conducted each year. This is not to say that looking to outside sources is required - an internal evaluation may be all you need. You want to be aware of the features and options that are offered by your credit union core system and whether or not you are taking full advantage them. Many core processors offer core system reviews, including FLEX, which are consulting visits performed by qualified systems specialists. Your aim should be to learn what you don’t know and improve what you do know. You might learn that no monetary investment is required…
You can never be completely prepared when it comes to setting your IT budget; there will always be surprises like Windows XP and Server 2003. However, if you are willing to spend the time evaluating your process and systems you can stay ahead of most of the headaches and ensure that you are not throwing good money after bad. Happy spending!
Watch our video to hear how three credit unions experienced cost savings and increased staff efficiency through their core processing system.