"Core due diligence is: know thyself," says Sabeh Samaha, the CEO of an e-business and technology consulting firm. "Credit unions must closely study their environment — the good, the bad and the ugly. They have to understand their core offerings department by department, all their third-party relationships and contractual obligations."
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Tracking SafeAmerica Credit Union's Core Conversion

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PLEASANTON, Calif. Even for information technology veterans, undertaking a core conversion is a daunting challenge. And for good reason as the core touches all moving parts from back office to member interfaces and all points in between.

"I know some folks out there think it is just another project, while others think it's like a simultaneous brain and heart transplant," said SafeAmerica Credit Union's Vice President of Technology John Gracyalny. "The reality is somewhere in between."

"Core due diligence is: know thyself," said Sabeh Samaha, CEO of the e-business and technology consulting firm Samaha Associates. And while Samaha did not consult on SafeAmerica CU's conversion, he has assisted in numerous core conversion projects over the last 25 years.

"Credit unions must closely study their environment the good, the bad and the ugly," said Samaha. "They have to understand their core offerings department by department, all their third-party relationships and contractual obligations."

Core Journey: First of a Thousand Steps
For the last 32 years, the $310 million credit union, supporting 25,000 members in eight locations, has been using Fiserv's DataSafe as its core operating system. While Gracyalny said the operating system has served the credit union well, it began showing signs of age.

"From an IT perspective, the biggest driver of our search was our desire to have a standardized system built with modern components and where we can plug in off-the-shelf tools," he noted.

Starting in the fall of 2012, and with the guidance of new CEO Barry Roach, all department heads were asked to provide a "wish list" to enhance respective operations.

For Gracyalny it was a no-brainer: a new core system. With board of director approval, the request for proposal (RFP) process commenced.

Gracyalny had a distinct advantage. Prior to his current post he spent the balance of his career, which started in 1967, as a programmer with a focus on CU core systems. By the mid-1980s, he worked for a number of leading core vendors and ancillary system vendors providing him with a unique perspective.

"I was given the task of drafting our official RFP in consultation with the other seven executive team members and our consultant, ICI," said Gracyalny who has been with SafeAmerica CU since 2006. "I also conducted a high-level survey of the core processing vendors to develop a list of those vendors who would receive the RFP."

ICI Consulting Partner and Senior Vice President Liz White explained that the firm currently has 12 credit union clients and said the scope and duration of any given project is different for respective institutions.

"Core engagements can last six months or more, particularly if we're retained to manage a conversion project in addition to the evaluation and negotiation," said White. "We also provide our services for ancillary solutions such as online and mobile banking, loan origination, closing and tracking, EFT and check processing, among others."

Last July Gracyalny delivered the completed RFP to the following vendors: Corelation, Fiserv DNA, Fiserv XP2, Harland Phoenix and Jack Henry Symitar. Over the course of the next seven months these vendors were vetted.

"We eliminated two of the vendors based on their responses to the RFP. We eliminated one after system demonstrations, site visits and reference checking," noted Gracyalny. "We entered detailed contract negotiations with two finalists and the result of those negotiations had a significant impact on the final decision."

A Democratic Process
He further explained that the credit union's executive team was comprised of all six VPs and Roach. Decisions were made by majority vote. During the process, informal straw polls were taken and by the last month the team was divided and at an impasse. ICI Consulting was then asked to develop and administer an objective scorecard that would allow the team to clarify its thought processes.

"Each team member fills out the score card after vendor presentations and then they rate the vendor within each category and sub-category from low to high, depending on the solution's capabilities," said White. "We then consolidate all team members' rankings and also tabulate the overall scores, providing side-by-side comparisons of the vendors."

The score sheet comprised roughly 40 line items broken into four categories: cost and contract terms, vendor support, functionality and technology. "It allows for an empirical and objective quantifying of features, functions and services within competing solutions," added White.

The team members rated each line item from one to three with Roach assigning relative weights to the various items, explained Gracyalny. "We then analyzed the results both by category and by executive and found our winner: Corelation. They had won six of the seven executive votes and three of the four categories."

Along with ICI, who Gracyalny said helped secure "the best possible price" and "crafted contract language that fit both our immediate needs and our long term strategic plan," legal advisors, Greene & Allison, were called in. "They are credit union specialists who are familiar with core processing contracts, but were also involved in the review and negotiation process."

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