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Implications of Core and IT Contracts on your Financial Institution
- 1. Implications of Core and IT Contracts on your Financial Institution May 28, 2015 1 Stacy Litke, Managing Director Jennifer Healy, Managing Director
- 2. Market dynamics continue to dramatically change the way information technology (IT) is used and applied to support community and regional banks. Business units utilize departmental systems to access and analyze information Executive management has access to powerful information and analysis tools Anytime, Any where, Any Method computing with direct access to data Knowledge workers access and update data at the point of presence
- 3. Vendor Management as a Continual Process • Managing contract dates • Accountability for Service Level Agreements • Tracking of issues, required enhancements, partnership • Terms of the “divorce” • Annual financial statements and third party reviews
- 4. What makes core contracts different? • Mission critical • Difficult to replace • Holds key customer data • Integrated or interfaced to multiple systems • Long term HUGE RISK!
- 5. Trends in Core Technologies to Consider in Negotiations • Timing o 6 - 12 months o Over 12 months • Satisfaction with System and Vendor o Meeting needs of users and Management o Vendor viability o Ability to meet future needs Factors that will influence strategy:
- 6. Trends in Core Technologies to Consider in Negotiations • Pricing o Favorable? Average? Unfavorable? • Systems Position in Life Cycle o Growing – Winning deals, trending o Solid / Middle of life cycle – Vendor extension strategies include price cuts and rebranding efforts o Sunsetting - not profitable or vendor changing its focus
- 7. Keys to Remember • Be prepared with dates, terms, issues • Allow adequate time to complete process • Consider future needs • Option for professional assistance
- 8. Questions? Stacy Litke Managing Director 860.302.6554 slitke@thenbsgroup.com Jennifer Healy Managing Director 413.531.2618 jhealy@thenbsgroup.com www.thenbsgroup.com
Notas do Editor
- Timing: Our core contract is up for renewal in 6-9 months and we’ve just started the renewal process. This is the hardest position ot be in. Very little leverage with the vendor. You don’t have time to do a system selection and conversion. What you can do is ask for a short term extension from your vendor. Ask for a 12 month renewal term while you proceed with the process. If you can get that, great. Now you have a total of 18-24 months which is certainly enough time to perform a proper review. Satisfaction with the system and the vendor: Is the system meeting the needs of the users and management? Is the vendor? Have you asked or surveyed the heavy users of the system to ask their likes, dislikes and wish list? You should probably be doing that at least once every 12 months anyway. Is it easy to make changes in the system? Do you have to key in the same information multiple times to different areas of th system or multiple systems? Are you getting the reports that you need? How much do you know about your core system? Is it intended to be sunset in a couple of years or is it the premier flagship product for the vendor? Has it been winning or losing deals and customers in the past 18 months? What is your vendor spending on R&D every year? Are you happy with eth level of service you are getting from your core vendor? Are the users happy? How are the financials of the vendor? Future needs – does the system have updated technology? Does it have modern, open architecture? Is it easy to plug 3rd party systems into it? Do you have acces and reporting capability for your entire set of data that’s stored in the system and not just select fields? Is it capable of handling your planned growth? How big are the other customers on your system? Over 12 months to renewal offers a lot more options on how to play your strategy.
- Pricing: Category of clients – We are getting charged an arm and a leg; or I’m not really sure; or Everything’s great. I go to the annual conference and when renewal comes up I give my account rep a wink and ask for some discounts which he gives me and we move into the next contract cycle. How do you know the deal you are getting? When’s the last time you did a competitive analysis to see what else is out there and what the price tag is? Have you benchmarked all your products and services at a detailed level? Line by line items against othe rsystem users and against other core vendor systems? By what amount can your vendor increase prices on an annual basis? The answers to these questions can change your negotiation strategies.