Trusted Advisor to Banks and Credit Unions

Selecting a New Core Vendor on a Limited Budget

Community Banks and Credit Unions often do not have the budget to hire a consultant to manage the project to select their new vendor. As a result, we often get the question:

“What is your best advice for managing a core systems selection on a limited budget?”

We always confirm that managing a systems selection is really about being organized and dedicating an internal resource full time for several months to drive the project from start to finish. Here are the critical elements of a good systems selection:

  • Set your timelines and project plan. Settle on a date that you plan to finish the project, and establish a team that has that date in as their primary target
  • Complete your needs analysis.  Figure out where, specifically, your current vendor is failing and document those items. Decide what the team is looking for in their next vendor relationship.
  • Define the criteria used to select the next vendor. – Survey your power users to find out what elements are important to them and how they would rank the criteria.
  • Develop your RFP.  Keep this as short and simple as possible. For Every question in your RFP, ask yourself if it is a question that will differentiate one vendor from another. If it is not, delete the question.
  • Choose Vendors that will receive the RFP,  Five vendors is too many, three is optimal, as your team will need to do a full day demonstration for each, read through and RFP, and compare financial proposals for each. A large group has a difficult time making a decision when they have too many options.
  • Arrange Vendor Demonstrations. All vendors should demonstrate within a reasonable period of each other so the team has them all fresh in their mind when it is time to make the decision.
  • Review the RFP responses.  Have a plan for which members of your team will review the RFP responses. Build a list of follow-up questions after reviewing the RFP’s.
  • Model the Financial Proposals. Your Senior Management team will want a side-by-side comparison of what each vendor will cost them over some defined period. That is typically 5 or 7 years.
  • Score results and prepare a presentation for Sr. Management. Show how you scored each vendor, based on the selection criteria in bullet #3 above. Allow Sr. Management to override the scored decision, because these are emotional decisions and the score is simply to provide guidance.

The bottom line is that Do-it-Yourself core vendor selection (or any other major software product) are mainly a matter of dedicating the time, staying organized, and controlling the internal team.

Consultants Have a Slight Advantage over D.I.Y.

The reason that larger clients opt to use an advisor like Remedy is generally because we have several of the critical elements that make us more efficient than an internal resource:

  • A time-tested RFP template that can be customized for each client.
  • A Financial Model for comparing the proposals (which often come in varying formats).
  • Project Managers with experience, and a proven methodology.
  • A vendor scoring process that can be easily customized.
  • A strong understanding of the timelines.
  • A management reporting template to more easily summarize results.

Consultants will have a bit of a leg up on a bank or credit union that wants to do-it-themselves because they have the tools developed from previous engagements. Customizing these tools takes far less time than creating the tools from scratch. You can see some of those advantages when you speak with a Remedy Consultant:

The financial modeling in particular will take even a seasoned CFO a long time to grasp, since each vendor proposal may have several hundred lines and unfortunately, product names across vendors are rarely consistent.

Plan 4-5 months start to finish for a systems selection, and expect to pull the internal person that will manage the project off of all other duties. The Selection Committee can expect to increase their workload 15-20% during that period as well as they assist.

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