You're ready to add a new technology that will help your credit union improve service, reduce costs, drive efficiency or achieve another equally critical goal. You've done your due diligence on the products available and the providers that offer them. It's an involved decision process, but now that you're ready to choose a solution, the process is over. Or is it?
How you implement new technology is an important part of the decision, just as vital as choosing what to implement. Whether you're making a major core system switch or purchasing an add-on technology, whether to implement it in an in-house or in a service bureau/ASP delivery model is a key consideration. The pendulum has swung between the two choices historically. And in tough economic times like these, CUs often focus their sights on ASP options to avoid upfront capital expenditures. But to make the best long-term decision for your organization, you need to consider much more.
Five Factors To Consider
By carefully weighing these five factors, you can determine if a service bureau/ASP model is right for your credit union.
1. Business Continuity. Ensuring your CU stays operational despite many potential threats is no small task. While the technology component is only one part of your continuity plan, it's a vital part - and one that requires a significant investment in time and resources. Using a service bureau model for your core processing or ancillary technologies shifts that investment to providers with the scale to build out the necessary infrastructure, including fully equipped data centers and the staff to run them.
If you'd rather not take on the cost and task of building out those capabilities in-house, or you don't have the staff to maintain that infrastructure, ASP may be a good option.
2. Security/Regulatory. The two go hand-in-hand when it comes to your technology selection. Security is increasing in importance and complexity, with threats growing more frequent and sophisticated. Couple that with the fact that regulators continually add more security-related requirements to protect member data and it becomes increasingly challenging to keep up. It requires not only the right hardware and software, but the qualified staff to implement and support your security measures.
When you choose a service bureau/ASP solution, you turn much of that burden over to a provider with the means to implement the sophisticated security features that are beyond the reach of many credit unions. With an in-house system, you'll still obtain the periodic software updates you need to remain in compliance; but the other tasks associated with ensuring the security of your technology are in your court.
3. Financial. Service bureau technology involves a different cost model than in-house: not better, just different. The approach that's right for you will depend on your budgeting preference, financials and growth strategy. In-house solutions require upfront capital expenditures, with a modest annual maintenance fee; with a service bureau solution, you'll forego the upfront expense and pay as you go, usually on a per-member basis.
Can a large or fast-growing CU afford to pay per-member? There are billion-dollar-plus CUs running service bureau solutions that will tell you the answer is "yes." Many ASP solutions are priced in tiers that bring the cost-per-member down as the membership figure rises. If this financial approach appeals to you, you'll want to enter into a financial arrangement that suits your credit union's growth plans and strategies.
4. Operations. A major consideration in the decision is your CU's preference for running the operation. An in-house core system requires both operational resources and focus. You must hire and retain the appropriate IT staff, which may include specialists, to operate and maintain systems. In return for that investment, you gain greater flexibility and control over how the system is run - for instance, how and when you process jobs, install upgrades or implement new features.
Some prefer to shift the IT operations responsibility to a third party, essentially staying out of the IT business as much as they can. They lose some control over how they run the system, but in return they avoid the need to focus operational resources on technology.
5. Culture. Your organization and its leadership may be predisposed to one option over another based on your culture and philosophy. Do you believe your members will be best served if you focus less time and resource on technology and more attention on product development and member service? Or do you see the in-house advantages of greater flexibility and control as critical to delivering new products and service and improving member satisfaction? Would you prefer to have your IT staff resident in-house? Or do you prefer to stay out of the IT business as much as possible?
Your culture will influence your answers, which in turn will sway the decision in one direction or the other.
Review each of these factors, determine which are the greatest priorities, and you'll be in position to choose the technology implementation mode that works best for your credit union in any economic environment.
David Turner is CIO, Fiserv Credit Union Solutions. He can be reached at 469-287-3210 or
