Ways credit unions and community banks are wasting money
Credit unions and community banks waste millions of dollars every year. The easiest, fastest way to stop wasting your money is your vendor management program.
As a part of this series, Maple Street’s pros explore ways your institution could be wasting money and what you can do to fix the problem.
Wasting money mistake #261: The vendor made me do it
In an attempt to lighten the workload, speed up operations or modernize the institution, credit unions and community banks often buy new systems, software or services that have all kinds of unique functions and promise great results. Or they see a feature, something new and shiny, and buy it thinking their problems are solved.
What they often don’t realize, because not enough homework was done beforehand, is how much time needed to be invested in order to learn how to use and fully implement the new product or service.
The result? Many features are never fully implemented, or many of its components never got used. Not only did they not receive the benefits and results they paid for, they ended up wasting time and money.
Who gets the blame? In many cases, the vendor will get thrown under the bus.
This isn’t to say that sometimes vendors deserve it. Vendors are often partially responsible because salespeople tend to gloss over the “hard work” part of implementation or make it sound easy, which it rarely is. “The vendor made me do it” is often a justifiable response if the vendor promised results so remarkable and so easy that credit unions and community banks can’t help but fall for the sales pitch. Have you ever heard, “We have an API for that”?
However, when you don’t get the results you want, even if the vendor did everything it contracted to do, it’s still easy to blame the vendor. It’s an easy way out to say the vendor’s product, service or system is lousy and – here’s where a lot more waste comes in – institutions move on to another vendor and pay for another implementation.
How to fix this money-wasting mistake
A better way to look at the situation is to gain an understanding of how the vendor’s solution will integrate with the resources of your credit union or bank. Based on what your team needs to do, you can then determine if you have the time and skills to implement the proposed solution. Part of a vendor management system should include a process to select the right vendor, which means an understanding of the resources you will have to commit to get the benefit of the purchase. Buying software is like buying a fishing pole – owning the pole doesn’t put any fish in the boat.
Here’s a tip. Don’t make the reference check perfunctory. Take some time with a reference and ask if the reference is fully implemented – and, if so, what it took to get there. How much resource did the reference have to involve to get fully implemented? Ask the reference if it has seen demonstrable results and what kind of results, not just “do they like their vendor.” That should provide you information you can use to plan how you’ll have to resource.
Another tip: Do you know where your vendor makes its money? If the product or service is low-cost, where are the add-ons that generate the vendor’s profit – because you’ll find out you’ll need those add-ons.
Does your vendor management process include evaluation of vendor business models to understand what you’ll have to do?
Maple Street’s Vendor Advantage System®
Only Maple Street has the Vendor Advantage System®, a comprehensive, systems approach to managing vendors, from new vendor selection through ending the vendor relationship. Leveraging the system ensures your vendor management program reduces your expenses, manages risk and improves vendor performance, and you can enter at any point. Our proven system includes:
- Vendor planning
- Contract management
- Due diligence monitoring services
- Qualifying, selecting, and onboarding vendors
- Negotiating best prices and terms
- Measuring vendor performance and scorecarding
Maple Street can help you evaluate vendor business models, assist with strategic vendor planning, vet your vendors, advise you on choosing the right vendor, and then negotiate your contract for the best price and terms. You’ll have peace of mind knowing you have the right vendor at the right price for the job. And that’s only the beginning.
Our professional team measures and monitors vendor performance to power performance and ensure you’re getting your end of the deal. Maple Street provides two guarantees: you’ll save you more money than you spend and you’ll pass your vendor management.
To date, we have saved our clients $132 million. If you’d like to stop wasting money by turning your vendor management program from an expense program to an expense reduction program, give us a call at 800-513-6839 or email firstname.lastname@example.org. Visit www.maplestreet.com/learn to learn more.