When creating annual IT budgets, credit unions often get trappedin a complicated maze.

Increasing demand for mobile services, rapidly changingtechnology and tighter security regulations regarding innovations such associal media make it tough to pinpoint the best ways to spend techdollars.

Do you go with the cool new mobile banking technology? Or savethose funds for cyber security to prepare for the possibility of tighter scrutiny from the Federal FinancialInstitutions Examinations Council?

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During the IT budget planning process, expensive mistakes couldinclude cutting corners on security, splurging on ineffective newtech tools and not aligning future technology investments withexisting business strategy.

“One of the biggest challenges isidentifying what technology will be the most beneficial,” saidTeresa Trostel, director of IT at the $230 million Red Rocks CreditUnion in Highlands Ranch, Colo. “Sometimes we have a changemid-year on strategic direction and we need to move in a newtechnology direction, but often what we now need isn't inbudget.”

Pinpointing the right IT priorities requires advance planning,she said.

“For example, as we're looking at budget-related items, we wanta remote workforce and we need to build disaster recovery,” Trosteladded. “Whether we go in-house or cloud – we have to decide howquickly we want to recover. Then, based on that time frame, we putpricing around it. Then we have to decide if we can afford toimplement it. Or if we need to step back and readjust.”

To create effective IT budgets and reap the best return oninvestment, experts say, credit unions must plan ahead, thinkstrategically and partner with reliable vendors.

“The first step is to gain a thorough understanding of thecredit union's strategic business plan, and then you must ensurethat your IT strategy is updated each year and in sync with overallstrategic business plan,” said Brad Smith, co-founder andCEO/president of Austin, Tex.-based Abound Resources.

In a recent webinar on “Developing a Technology Strategic Plan that Hitsthe Target,” Smith offered these tips:

• Perform a gap analysis against existing technology to identifyshort-term and long-term priorities required to align IT systems tosupport the institution's business strategy.
• Evaluate current business processes and determine ways toimprove efficiency with existing infrastructure before implementingnew technology.
• Get CEO and business line execs engaged in the IT budgetingprocess.
• Address the cost-effectiveness of new technology such ascloud-based storage.
• Learn about the FFIEC's 2013 IT audit findings and how toaddress them in your plan.

Creating a strategic IT plan is especially important as anincreasing number of members opt for online and mobileservices.

“Credit unions used to have a fewyears to ponder what was happening in the market, but now we'refinding a need for real time lessons and constant evaluation,” saidJason Nelson, vice president of development at Red Rocks, whichoperates only two branches, and serves its 17,000 members primarilyonline and on the phone.

“Research done a year ago or 18 months ago has already shiftedby the time it comes to bring a new strategic initiative or serviceonline,” he continued. “No longer can a credit union identify oneclear plan at the end of the year and expect it to remainsubstantially unchanged. You can't close your eyes once you make anIT decision. You must constantly evaluate and revise.”