Warren Buffet famously once said: “Price is what you pay, value is what you get.” Consider the last technology and software investments your credit union made to keep the organization running. Are you getting true value from the dollars spent? Are you maximizing all capabilities these IT investments offer? Have you calculated a measurable ROI?
Many financial technology firms are offering best-of-breed software solutions that have functionality and features that are typically under-utilized or forgotten in the urgency of deployment and day-to-day “firefighting”. In most cases 60-90% of the product features are often unused despite paying for 100% of the product. Ironically, most of these unused features are precisely the reason for selecting the product in the first place.
I call this problem the “ten percent syndrome”. Many financial institutions will purchase software and IT systems yet only use ten percent of its true functionality. Then in a couple years, management devises a budget for the next new, shiny software investment and will only use ten percent of its functionality. This syndrome repeats itself time after time, draining profits and potentially causing compliance hazards.
Deeply embedded within credit unions is the ongoing search for ways to better serve their members. Since improving efficiencies and member experiences lead to a greater competitive advantage, many credit unions are investing more on IT and software applications in the pursuit of better business outcomes. However, if these software solutions are not fully leveraged, they often end up being shelved. Waste always inhibits our progress in serving members better, faster or cheaper. Consequently, eliminating waste drives improvement in all three objectives.
Fix the Strategy – Not the Technology
It’s time to focus more on process and strategy rather than purchasing continuously under-utilized software.
Using new software and technology requires change in processes and in the workplace culture – two areas often not considered before implementation. In many organizations, the teams reviewing technology and its capabilities may not be the same team using and deploying the technology. This leads to implementation, training, and process challenges later on in the deployment process.
Technology is not the solution to business problems. Process, ownership, accountability and a defined strategy are the solution. During these next few weeks as executive management teams review budgets, technology spending and other software investments, consider these steps to ensure you’re spending your IT assets wisely.
Step 1: Align the Strategic Technology Direction with the Credit Union’s Overall Strategic Business Direction
Clearly understand and outline the long-term strategic goals of the credit union (i.e. growth, branching, new products and services, etc.) to identify and select technology solutions that fit your requirements both today and, more importantly, where you want to be in the future. Otherwise, you run the risk of investing in software that doesn’t fit the credit union’s vision, and the cost of converting later can be significant.
Too often, executive management teams have an unclear strategic direction with regards to their technology investments and how they align with their corporate objectives. In these cases, I recommend that the team take a step back and work on clarifying the overall strategic direction and outlook. Without this direction as a guide, the credit union’s technology decisions end up driving the overall strategic direction by accident.
Step 2: Appoint an Evaluation Team
Once you have documented and agreed upon the annual strategic direction, identify the capable individuals within the credit union who, given the time and resources, can select an appropriate technology vendor, software upgrade or technology investment. This effort should not be driven from a technology perspective — instead it must be a business-led effort based upon the strategic priorities of the credit union. Senior managers and employees that represent each of the major business functions can bring broad knowledge of the business, operations and existing technologies to the process.
Step 3: Commit to a Technology Assessment
A current technology audit is integral to understanding the present software environment and identifying the gaps and overlaps that need to be resolved by new software or the existing, under-utilized software. The technology assessment should include an inventory of your credit union’s current IT systems, software and hardware, and a review of overall costs. Additionally, you should assess employees’ and management’s overall satisfaction with current technology and systems. Most importantly, an assessment of key business processes and the current environment’s alignment with those processes is a prerequisite for maximizing each software investment’s ROI.
Step 4: Prepare a Needs Assessment
This step defines those issues and needs that are specific to your strategic plan. Every software investment will have its own unique features and functionality, so focus on what’s important to the credit union. This will guide the rest of the decision-making.
Step 5: See the System and Software In Action
Request that each of the software sales representatives make detailed demonstrations of their capabilities. Experienced technology purchasers should go into these meetings armed with information. It’s helpful for the employee end-users of the technology to attend vendor presentations and be given the opportunity to ask questions. Request the sales representatives provide a detailed analysis of the various features and functions of their IT solutions and software.
Avoid Buyers’ Remorse in 2018
Once you have selected the right solutions, be sure you fully understand the capabilities and extent of each product. Don’t get stuck trying to make a square-peg process fit into a round-peg software solution.
As the cost to win, retain, and serve your members continues to skyrocket, a true assessment of your technology needs, functionality and expenses could be a major place for cost savings. Reverse the ten percent syndrome and take these above steps to ensure you do not have buyers’ remorse with your next IT purchase.
At The Knowlton Group, we specialize in working with credit unions. We know your challenges, the technology you utilize, and can provide solutions backed by expertise and experience. Contact us today to discuss any upcoming IT or business intelligence purchasing decisions.