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."

While White said credit unions are capable of handling negotiations internally, CU executives might only review contract terms every three to 10 years whereas consultants handle them daily. "We have more leverage within the vendors as it's not unusual for us to have several negotiations ongoing with any given vendor at any one time. This also allows us to know the vendors well, particularly their decision-makers."

Samaha agreed that consultants aren't a requirement to the process, but added that their experience and influence will ultimately save the credit union time and money. "If a credit union doesn't work with a third party, it is tantamount to self-counseling or performing an operation on oneself. And you don't want to wait to the point of no return when the window has closed and there is no time left."

Keeping Up With The Joneses
Among reasons SafeAmerica CU selected Corelation's core system is that it's the newest solution on the market and utilizes IBM's version of the UNIX operating system and DB2 database. It's written in Java and C++ and what Gracyalny referred to as the most robust third-party interface tool in the market.

"While it can run very effectively out of the box, it is also designed to be customization friendly, and will allow us to tailor workflows to match our processes and to even build our own subsystems within their framework," he said.

An additional reason for the selection is that the DataSafe operating system, database engine and programming language are no longer in the mainstream or taught in computer science classes, according to Gracyalny.

"We have also been challenged with recruiting new hires in IT that have experience with the DataSafe environment," said Gracyalny. "Our goal was to find a system built on either the Unix or Microsoft Server operating systems, with either Oracle, DB2, or MS/SQL as a database and written in java, C++, or other modern languages."

Admittedly, he said Corelation was an interesting selection because the provider is so new to the market. And while this could present red flags to certain C-Level executives, the executive team embraced the offering.

"There are less than two dozen credit unions currently running on the system. This meant that we were able to contact every credit union client they have, either in person or on teleconferences, rather than just a selected sample," said Gracyalny. "The uniformly positive feedback we received helped our Executive Team get comfortable with the idea of installing a system with a two-year versus 20-year track record."

Next Steps
While upgrading and converting to a new core system is exciting, equally important is honorably breaking ties with the old core provider. After signing the contract with Corelation on May 22, SafeAmerica CU sent the formal notice of termination to Fiserv. To date, the CU hasn't seen any changes to service levels.

"Now that they have the official notice, it will be interesting to see how quickly they move forward with providing the deconversion programs and documentation," said Gracyalny. "One factor in our favor is that while we are leaving Fiserv as our core provider, they will still be our ATM/Debit/Credit network switch provider, so we will still be part of the Fiserv family, and hope to continue to be treated as family members."

Over the course of the next several months, there are countless tasks on the to-do list. These include upgrading current infrastructure for non-core items, enhancing the virtual server engine that handles ancillary functions, configuring many workstations for dual monitors and building out a dedicated training room.

"We are also gathering and analyzing the use of all existing system reports and forms. We need to get our hands around what we truly need to port over to the new system," said Gracyalny. "We are also starting in on cleaning up our database — standardizing addresses against the U.S Postal Service standards, reviewing consistency in all the User Defined fields we have added to our system."

On June 9, SafeAmerica CU and Corelation had an official kick-off telephone call. This was an important call for many reasons including the fact that Corelation has yet to complete a conversion from DataSafe, explained Gracyalny.

The discussion centered on the hardware configuration to take advantage of new processors not available when the formal quote was submitted as well as facilitating the contracts with all recommended third-party processors that will be part of the project. These include a new disaster recovery facility that will support the system, a new interactive voice response (IVR) system, a new home/mobile banking provider and new process automation tools, among other action items.

"While we are ultimately responsible for all this, it makes my life much easier when my core vendor contacts work on our behalf," said Gracyalny. "We expect the hardware to be installed mid-summer, and to be able to start testing the conversion process by early fall."