Five signs that you’re missing strategic opportunities, plus questions to guide your new approach
Vendor and partner relationships are essential to credit unions. Taking a strategic approach to these important relationships can better position the organization for future moves, boost performance, save resources and maybe even lessen the total number of relationships required.
Optimizing these relationships helps add value for your members and employees, yet the complexity and sheer volume of relationships can be overwhelming. As the industry continues to evolve, institutions will have to rely even more on third parties, which means this challenge is growing. Taking action, sooner rather than later, will help.
Most credit unions have the objective to leverage vendor and partner relationships to their fullest advantage for the benefit of the membership, employees and other key stakeholders. Many have systems in place for contract management, due diligence and managing/monitoring third-party risk. While those foundational functions are critical, there is far more opportunity to leverage relationships for higher performance and efficiency.
Five Signs for Evaluating Vendor Management
Here are five signs that opportunities are being missed:
- Contracts are renewed even though the partner has no plans to offer key capabilities that you will soon need to support your strategy.
- Multiple pieces of software or service providers are performing the same function in different areas of the credit union. Downstream effects are compounded when you’re left managing extra relationships and updating more software than is needed.
- Features and capabilities planned for implementation are never made available because they were postponed during a complicated rollout with the best intentions to go back and activate them later.
- Desired features and capabilities are added by the vendor but not implemented. No one may know they’re available, and it’s not uncommon for software to be branded “no good” or “out of date” because it was not updated regularly or features were not implemented.
- Products or services are contracted, but training is minimized. This is often due to time constraints, making the new products or services far less effective and beneficial.
It’s important to understand your partners clearly, just like you would your employees. Are they bringing the minimum requirements to the table or are they true extensions of your staff? How forward-thinking are they? How quickly do they adapt? How does their strategy support your strategy?
Getting Strategic About Vendor Relationships
As vendor and partner relationships grow in number and importance, determining how you will approach them going forward will provide clarity. Here are a few questions we’re asking our clients as they shift to a strategic approach:
- What is your strategic position on vendor and partner relationships?
- Who owns the overall vendor and partner relationship process?
- If the process is broken down into categories, such as software and non-software, who owns each category?
- Who owns the individual relationships? If a vendor provides multiple products or services, is there a single owner or multiple owners?
- The owner of the relationship is the person responsible for paying attention to what’s happening with the company, its software or service, its plans for the future, its representatives, etc. This includes understanding and choosing whether to implement updates and new features.
- Relationship ownership is a strategic decision. Why are the owners chosen? How well do they understand the business and organizational priorities? How well do they build relationships and drive results
- What should the relationship owner know about each vendor to be able to understand how well their strategic positioning aligns with your strategy? For example:
- If you are interested in banking as a service/embedded finance in the future, is the vendor planning to support those capabilities?
- If you’re utilizing the cloud for some services, is it important for this partner’s services to be cloud-based?
- What does this vendor’s development road map include, and how can you assess its ability to deliver on that road map?
- What other products and services does the vendor offer that may help you move forward strategically?
- Is your organization using the products or services at the desired level (include upgrades, features, training)?
- What type of customer do you want to be to your vendors, and what level of service do you expect in return? How difficult or easy are you to work with? How difficult or easy are they to work with?
- How should specific vendor/partner relationships be prioritized for the organization?
- How many resources should you dedicate to ensuring that these integral relationships are optimized?
Strengthen your approach to vendor and partner relationships to meet today’s and tomorrow’s needs. These relationships will only become more necessary, complex and further ingrained in the fabric of your business. Investing intentional effort in this area brings organization and efficiency; a strategic approach helps leverage the institution’s relationships for optimal performance.
c. myers helps financial institutions take control of their future by linking strategy, desired financial performance, and consistent execution with the right talent. Their experience and thought leadership allows them to work as a strategic collaborator and help uncover opportunities that result in continuous business model optimization. They have the experience of working with over 600 financial institutions, including 50% of those over $1 billion in assets and about 25% over $100 million. c. myers helps credit unions think to differentiate and drive better decisions through strategic planning & business model optimization, strategic solutions and implementation, strategic leadership development, real-time ALM and financial planning, education, and thought leadership.