HAGERSTOWN, Md. - Three years ago a group of credit unions near Washington, D.C., knew they needed business continuity and recovery solutions, but were unable to find anything affordable or customized to their needs.
Having little success locating one vendor to meet all their requirements– and at a price they could pay–the group formed a CUSO, Ongoing Operations, LLC.
Today, the CUSO is offering business continuity and disaster recovery services to 60 credit unions nationwide, with 18 being owner credit unions.
According to Ongoing Operations President and CEO Kirk Drake, the CUSO is providing services for six new credit unions each month, with that number expected to grow to 12 per month by mid-2008.
“This started with me, when I was CIO of NIH Federal Credit Union, and a group of credit union CIOs in the in the D.C. area,” Drake explained. “We started out to study the concept (of a CUSO for disaster recovery and business continuity needs), and within nine months we had a business plan we felt would work. At that point we found a location, put in cubicles, and built the IT infrastructure. Then we started adding a bunch more clients, really by accident. We didn’t realize there was a national demand for this and started ramping up our growth trajectory.”
Ongoing Operations has a 50,000-square-foot facility in Hagerstown, Md., with a data center, as well as 500 cubicles, PCs, and phones for credit unions to use in the event of a major disaster. It has a 6,000-square foot facility in Oregon, and is in the process of opening another location in Denver.
What’s led the CUSO’s rapid development is taking the burden off CUs of putting together a solution through multiple vendors, Drake said.
“We saw this developing market because most vendors provide IT services and equipment but don’t deal with the call centers, the workspace for staff to operate, and the business continuity planning. And there was a real breakdown because of all the third-party systems credit unions run–the lending, e-mail, firewalls . . . Over the last ten years CUs have bought a lot of systems that the core IT vendors don’t support.”
Drake explained that for a credit union to go shopping for recovery services to support all the back-office components and third-party systems is expensive and time consuming, and Ongoing Operations does the legwork for credit unionss when it doesn’t have its own solution in-house.
“We can do this a lot more cheaply than an individual credit union (due to economies of scale),” Drake said. “We estimate our services cost credit unions about one to two dollars per member per year to build a full program. That seems to hold true whether the credit union has 150,000 members or 5,000. With us, we can aggregate everything into one fee structure. The CUs don’t have to manage 10 vendors, they just manage us.”
Most credit unions are up and running out of Ongoing Operations with initial business continuity service offerings within 30 to 60 days, Drake said, adding that it leverages virtual server technology.
“But it takes three to five years to build a fully functioning business continuity program that provides CEOs with a high degree of confidence that the credit union would survive any disaster,” he said.
Ongoing Operations specializes in credit unions with assets above in $100 million, but has clients as small as $5 million. The largest participating credit union is $6 billion.
