WASHINGTON — Three small credit unions have given up trying to manage IT themselves, handing it over to managed services provider RedZone Technologies-at about half the cost of hiring a CIO.
"Our previous security and monitoring services were woefully inadequate," said James Norris, CEO, AFL-CIO Employees FCU here. The $76-million CU had been piggy-backing on services provided by its main sponsor. "We were considered a low priority by our sponsor," he said.
Now, IT is delivered by RedZone CORE 360°, which provides 20 credit unions nationwide with day-to-day management of security, network health and disaster recovery technology, said Bill Murphy, owner of the Annapolis, Md.-based RedZone. The firm also runs an NCUA compliance program designed to fit NCUA audits to a "T," he said.
"RedZone is our entire IT department from 'A' to 'Z,'" added Shannon Lavender, VP at $43-million E&P FCU in Washington, D.C., which started with CORE 360° two years ago. "We have no full-time IT staff. We depend on RedZone for everything from fixing the printer to responding to penetration testing."
When the CIO at National Science Foundation (NSF) FCU in Arlington, Va., left two years ago, the $30-million CU decided not to replace him, according to Lynn Whalen, CEO.
"At $30-million in assets, you're not large enough to afford a CIO, and yet you still have technology needs. We went with RedZone instead of hiring a new CIO because you get more expertise at half the price. There's such a breadth of knowledge at RedZone that helps us keep up on new technologies. When you're dealing with just one CIO, you find out you're limited to that person's knowledge and research."
NSF FCU's contract includes a flexible monthly visit from RedZone, she said.
E&P FCU is now better at planning for future IT expenses, said Lavender. "Before RedZone, we were more reactive. If a server crashed, we'd pay several thousand to get it back up." Redzone recently identified two servers that looked unstable - so E&P replaced them before they crashed, she said.
"Now that RedZone is monitoring the network, we know how long we should expect our equipment to last and when to replace it," she said. Lavender said she spends about two hours a month interacting with RedZone, whereas she had to spend about two hours per day resolving issues with a previous IT outsourcer.
The managed IT service isn't all gravy, however. The initial work to clean up the credit union's infrastructure comes with some sticker shock, said RedZone's Murphy. "You can't just charge into managed services and a fixed monthly cost. The hardest part for any credit union is that it's going to take anywhere from $8,000 to $20,000 to get the network stabilized. These networks are sometimes inherited from over a decade ago. You have to find all the dead bodies and fix them."
Norris agreed: "I definitely balked." But all three CUs said the initial costs are worth the results. "I understood the reasons behind the clean-up, and now our network is always up," Whalen explained.
"Now we've got a fixed monthly cost, and that helps during this economy," Norris said.
