The Cost Of Wrestling With IT
One midsized credit union has cut costs and reduced inefficiencies by outsourcing all of its technology functions.
Todd Kenthack knew something had to be done about Information Technology (IT) at Pacific Resource Credit Union.
The Pacific Resource CEO realized that his staff was wrestling with technology instead of focusing on "what we're good at-which is member services. Inefficiencies flowing from our network through the organization were resulting in time delays."
Just 18 months later, Kenthack said that Pacific Resource has sheared 30% of its total IT costs, facing up to what many say is the No. 1 business driver in IT these days: cost pressure.
The tonic was simple: "We no longer have an IT staff," Kenthack said. "We're 100% outsourced."
The $115-million CU was always treading water to keep its network environment-and therefore business processes- updated and running smoothly. "We had an IT coordinator, someone who was skilled in particular areas but not as adept at others. And we were always concerned with retaining the talent we had in IT.
"In addition, we were dealing with the obvious costs of salary and benefits. If the IT coordinator was ill or busy, then he or she was unable to attend to every area."
Pacific Resource called in Pasadena, Calif.-based Btech Computer Technology and Service, which designs, installs and maintains computer networks.
"We feel that going with Btech gives us a broader range of knowledge, with access to people at different levels of network management," Kenthack explained. "Btech is there all the time, with 24/7 monitoring and regular checks on our security."
During the three-month assessment phase, Btech engineers spent several days a week at the CU. "They looked at software, hardware, architecture, security, and end-user issues," Kenthack said.
Once Btech implemented its recommendations, "it scaled back. Today we have Btech here one day a week," he said. "Depending on where the fire is, that's where Btech tech is."
The 10,000-member credit union has spruced up its data protection and recovery process, for example. "For about one year now, our nightly backup system has been automated, relieving someone from having to manually insert CDs or disks and take them off-site," said Kenthack.
The CU outsources backups to Walnut Creek, Calif.-based EVault Protect online data protection and recovery service, referred to Pacific Resource by Btech.
Employees don't have to worry if their computers give up. "We've standardized our boxes and have four extra, standardized machines ready to be swapped out," Kenthack said.
Kenthack is impressed by the range of service Btech provides.
"Btech handled the design, hardware purchases and installation of our network for our recent Wilshire Branch opening in L.A. With the many areas involved in a branch build-out, it was a great relief for us to know the whole IT function was going to be handled by our trusted IT partner."
Outsourcing is not perfect, of course, said Kenthack. "The negative to outsourcing is that you don't have your go-to person on staff at all times. In some cases, it just means that employees are taking some additional responsibility solving problems on their own. Outsourcing is always that battle between control and efficiency."
Still, Kenthack feels that Pacific Resource is headed in the right direction. "The tendency for many CUs is to have one person in the IT area. But here, we don't want to be in the IT business."