5 minutes
Editor’s note: This was adapted with permission from GonzoBanker.
Vendor management is a hot topic. Your team is talking about it. Regulators are talking about it. We’re talking about it. Let’s focus on a strategic view of the extent to which your vendor partnerships support your credit union’s competitive position. These 10 questions can guide your assessment on how well technology vendors function as true partners:
1. Who’s doing the research? When you want to know about online lending, Bitcoin, Samsung Pay, cloud computing or another hot tech topic, is your vendor supplying information about latest developments? Best practices? Peer success stories? Suggested responses/strategies? With a vendor-partner, there should be joint research and proactive sharing of new developments (not just an annual conference).
2. Is our vendor managing interfaces/integration with other vendors? Most credit unions don’t buy every product from one vendor, so competing vendors need to offer products that integrate and work with others. If they are handling these interfaces proactively and only involving you when necessary, you have partners. If you’re scheduling the calls, pushing for cooperation and arbitrating disputes, you don’t.
3. Is our vendor working to understand our unique needs? Every credit union has some unique system requirement that turns into a customization request—a report or a processing rule for members, for example. Our experience is that most vendors look at these requests as annoyances—and the price quote you’ll see confirms that. When was the last time a vendor dug into a unique need of yours and turned it into a project for you? Is that too much to expect from a partner? (Hint: No.)
4. Is our vendor worried about how we best spend our money with them? As Deep Throat told Woodward and Bernstein, follow the money. At Cornerstone, we look at vendor invoices every day, and we see stuff clients either shouldn’t be paying that much for or shouldn’t be paying at all. We see stuff clients are not receiving but should. But we’ve never seen a contract that vendors haven’t enforced 100 percent to the last day. Here’s our take: If executives see the vendor working to ensure that the credit union is getting value for its technology investment, they will spend more with that vendor long term. The credit union wins. The vendor wins.
5. Is our vendor updating us about project delays and scope reductions? Let’s agree there is no chance that every project you undertake with a vendor will finish on time and on budget. Life and technology don’t work that way. What can happen is transparent notification early enough to allow you to make necessary adjustments. Vendors share bad news at the last minute. Partners deliver it early and openly.
6. Who escalates a problem or issue: our account rep or us? Our retired partner, Carl Faulkner, says when he worked at EDS back in the day, an account rep could not only escalate a client problem internally but get resources redirected to fix it. How cool is that? When you’re having a problem, a partner contacts you instead of waiting for your call.
7. Has your vendor ever told you how you could be a better customer? One of our clients, Ed Speed, used to tell his staff, “They can’t be a good vendor unless we’re a good customer.” Credit unions need to do their part to make technology partnerships work—like taking vendors up on training and asking what your staff can do to improve your working relationship. It might stray from your comfort zone, but partners don’t shy away from uncomfortable conversations.
8. Are you are getting the maximum ROI from your systems? The most basic way to pick up productivity or reduce cost is to make better use of the systems in front of you—process automation, business intelligence and self-service tools, to name a few. When we visit clients and ask users what percentage of their system capabilities they think they’re using, they typically say 50 to 70 percent. If that’s close to your experience, do your vendors suggest ways to get nearer to 100 percent? Have you asked?
9. Who talks about—and delivers—a “great” member experience? Systems should create great service experiences for members—every channel, every time. All vendors promise their systems will deliver, but do your partners share success stories from other clients and delivery strategies you can adapt and improve? I was at a system demonstration recently where the vendor was asked, “Which of your clients has the best loan sales and onboarding process?” The answer was, “We have so many options and clients that use them differently it’s really hard for us to know.” That might be a typical vendor response, but partners are passionate about sharing best practices.
10. If your credit union is not on a vendor’s flagship product, do you have a roadmap to get there? This is an especially big question for core systems. Credit unions that are not on a flagship core product (and we all know which ones those are) know there may be a conversion in their future. Has your partner laid out recommendations about how to accomplish this with the least member, staff and cost impact? Have they asked about your roadmap? Or have they told you why they don’t think you need to take this route? If you are in this situation, this conversation is the basis of your future relationship.
These questions lead to one final, big one: Do we have the right partner for the next five years, or is there a system selection in our future? For all the talk about technology, fintech and disruption, the most common reason a financial institution replaces a system is that its team has lost faith in the vendor or product. Products can be outgrown or become inadequate for valid business reasons. But relationship failure, in a time when so many big technology advances and projects loom, is unacceptable. Maintaining an equitable, profitable, forward-looking partnership is the crux of strategic vendor management.
Terence Roche is principal with CUES Supplier member and strategic provider Cornerstone Advisors, Scottsdale, Ariz.
