Consider the affordable alternative

As a member of the Utah Credit Union League's Credit Union Development Committee, I have the opportunity to review applications from small and struggling credit unions that would like to receive funds set aside for this purpose by some larger credit unions. Many of the requests towards the end of 1999 were for $5,000 to upgrade computer software. Upon further investigation we realized that one large computer software provider was asking its users to pay upfront for an upgrade that they said would be available at some unforeseen time in the future. This prompted a good deal of discussion among our committee who had already received several complaints from credit unions about the expense of doing business with large computer software companies. I understand the plight of these small credit unions. I have been there. It seems that once a small or medium sized credit union purchases a software package from one of the big guys, the investment is so enormous, the credit union feels as though they're being held in bondage for years, having to pay upgrade fees at the whim of the company because it is too expensive to bail out and buy a different package. But there is an alternative. In 1982 I went looking for our credit union's first in-house computer system. At that time, there were some fairly large vendors, but because I was so impressed with the personal touch of two young owners and their user friendly programming, I chose to go with a company that was just starting up. The system was not terribly expensive and if I had a problem, one of the owners answered the phone and immediately knew what to do. If the problem was really bad, one of them would get in the car and drive to my credit union to fix it. My suggestions for enhancements were taken seriously and usually incorporated into the system. Life was good. I was happy. Fortunately for the owners and unfortunately for me, others recognized the quality of the system and when the company took off and became more successful, it grew with alarming speed and as a result, experienced some growing pains. Support people couldn't be trained fast enough and the overhead became such that the monthly software support fees no longer generated enough revenue to cover the cost of new programming. The level of service deteriorated and upgrades became expensive. So, four years ago when I needed new hardware and a software upgrade, against the advice of our league staff and the NCUA examiners, I went looking for a smaller company. I found what I was looking for in a one man operation with 13 credit unions to support. The credit unions ranged in size from $5 million to $70 million and the package contained every service available at the time plus an integrated loan application system. The owner charged $3,500 for the software. The monthly support fees were a bit more than I was used to, but they covered support and all upgrades. Now, if I want a small enhancement, I tell the owner and he does it immediately. If I want a major change, I call a member of our enhancement committee and they put it on a list in order of priority and it gets done a few months later. When I have a problem, I page the owner and he usually calls me back within 5 minutes. If the problem is really bad, he gets in his car and drives down to fix it. Life is good. I am happy. In case you're wondering what's going to happen if hypothetically the owner gets hit by a truck, the two large credit unions using the system each have an IT person on their staff that knows how to program. In fact, they do some of the enhancements and support the rest of us when the owner is on vacation. So, the moral of the story is if you want to save your credit union a bundle and have some control over your computer software and service, consider doing business with a smaller company. Don't listen to the NCUA examiners who will try to convince you that there is more safety with a big company. If a programmer subscribes to credit union publications and listens to his credit unions, he or she will stay in compliance with all of the changing laws and regulations. And a prudent group of credit unions will make sure there is always a back-up to that main programmer. To address the issue of keeping data processing affordable, the Utah Credit Union League is analyzing the possibility of creating its own computer group with our league IT person programming and supporting a system. I think this is an extremely worthwhile league project and I am excited to see how it turns out. For the sake of the small credit unions in our state, I hope it is smashingly successful! Another solution to the problem is for the large computer companies to create small credit union subsidiaries that maintain and support basic accounting software without all of the bells and whistles and only enhance when there is a compliance issue. A smaller, more localized operation without all of the upper and middle management people would mean a more affordable computer system.