Don't Get Dust in the Server & Other Core Conversion Lessons

Share One CEO finds that sacred cows make delicious hamburgers.

December 23, 2010

A core processing conversion can be more than a technology upgrade. Done right, it has the potential to transform a credit union, says Daryl Tanner, CEO of Share One Solutions.

The former CEO of Pacific IBM Employees Federal Credit Union (now Meriwest Credit Union, San Jose, Calif.) has seen such transformations first-hand, most notably when he converted the credit union’s 20-year-old mainframe during the early 1990s.

He shares valuable lessons from that experience—and others that went less smoothly.

CU Mag: How’s business?

Tanner: Busy as heck. The lull is over and the pipeline is fuller than it’s ever been. People are waking up and deciding the future isn’t as bright as they thought it would be, but it’s still the future. Good old human survival.

CU Mag: How did you approach core conversions when you were a CU CEO?

Tanner: I did four core conversions during the 27 years I was a credit union CEO. I was involved in writing some of the systems, so we were very familiar with what was being installed.

When I was at Pacific IBM Employees Federal Credit Union (now Meriwest Credit Union, San Jose, Calif.), we replaced a 20-year-old mainframe system IBM designed for us. We asked employees to make suggestions to improve processes in their departments. We thought that getting employees involved in redesigning their jobs would be a golden opportunity to make the credit union more progressive.

Nothing takes the place of broad employee participation and training.

We awarded a free weekend for two in Napa Valley to the person who came up with the best suggestion for improving his or her job. The young woman who won eliminated her own job: She made suggestions that basically left her with nothing to do.

We moved her into another position where her innovative ideas would keep flowing.

We also gave away smaller prizes, such as fuzzy, stuffed “sacred” cows to people who slayed a sacred cow—a practice or procedure that “had to stay that way.” And we served hamburgers made from “sacred” cows.

This had a major change on the culture. People were so excited. The credit union jumped from $350 million in assets when I left to $1.2 billion in three years. That was after IBM let 100,000 employees go. The CEO who’s there now [Christopher Owen] was my chief financial officer (CFO). He’s done a great job.

If you do it right, a conversion can create new ways of doing things and establish a whole new paradigm for the credit union.

Next: How to ensure a smooth conversion process

CU Mag: How else can CUs ensure a smooth conversion process?

Tanner: Include as many leaders, decision makers, and influencers as possible in the vendor selection process. One of our clients brought in six people to look at our system. I applaud that because those people will shape not only the selection process but the training and implementation processes consistently all the way through.

These people have other jobs to do. Making them part of this early on not only gives them status in the organization, it makes them much more effective as leaders. And you get better decisions, too. We encourage that.

Once you’ve decided to purchase a system, the CEO has to strongly and visibly communicate that the conversion is important to him or her, to the credit union, to members, and to staff.

The worst thing that can happen is to have someone in the back of the room whining about having to change or do something extra. It drags people down, and puts the complainer in the position to do material damage to the training and conversion processes.

You also need a strong team. This is too big of a project to be delegated to someone with no authority.

Sometimes the CEO will be involved in the decision-making process and then hand it off to the No. 2 person. The danger is that the No. 2 person often is already overburdened, especially if the CEO is heavily involved in chapter or league affairs.

Make sure your expectations are realistic. Don’t expect that the day after the conversion the organization will be transformed and butterflies will sail through the lobby. People will have memory lapses a couple of months after the conversion, or they’ll forget about a form that they now need right away.

If this happens, don’t get disappointed or feel you’ve made the wrong decision. You want to make sure your employees are happy with the decision and the system is solving their problems. It takes leadership to do that.

Have a single point of control. This can be one person or a team. Everyone in the credit union should be aware that this is the person they should go to. This person should have a broad awareness of what the credit union does and who does it so he or she can direct the vendor staff quickly to the right people to minimize wheel-spinning.

Recognize that a system conversion is an opportunity, not just a technology upgrade. Done right, it’s a business transformation project.

Have all key people, as they learn about the new system, evaluate the changes their areas will require. Having a department head involved at this level will allow this person to see changes that need to take place. Then they can help staff make the transition to the new procedure and software.

Our staff works closely with credit union department leaders. This isn’t unique, but it’s essential to support the leaders in the credit union who are facilitating the process.

Do simulation tests. In the old days, we used to run parallel processing. You can’t do this anymore; there are too many electronic transactions coming in.

We’ll select a weekday for which we save all of the batch files, transmissions, and everything else. We schedule a test on a Saturday where we post all of the transactions and batches from that weekday on the new system, and then verify that all of the numbers and accounts match. It’s a time-shifted parallel operation.

This way, staff get to work their way through the transactions on the new system without members standing in front of them. It’s a nice confidence builder—and a legitimate test.

Next: Conversion ‘don’ts'

CU Mag: What are some conversion ‘don’ts?’

Tanner: Don’t expect terminology to be consistent between the old and new system: Symitar calls something one thing, Fiserv calls it another, and we have our own name. You can’t ignore the semantic differences—don’t expect process terminology to be consistent.

We supply documentation early on so people can become familiar with our terminology. Of course, we know that only one in 10 people will read the documentation. We try to make sure during the training process that credit union employees make the transition from the old semantics to the new.

And never expect procedures to be the same with the new system as they were with the old system. Getting this across to people is challenging. We do that with training.

Similarly, many people learn their jobs so well, almost by rote, that getting out of that mode and into a new one is difficult for them. So we try to make sure from the first meeting that the credit union emphasizes that every procedure is up for review. Not all procedures will be rewritten, but many times they’ll change.

We wrote our system so that credit union processes that took multiple steps in legacy systems were reduced to one step. And posting batches on our system is handled through one screen for the whole process.

We want people to take advantage of streamlining and improved efficiencies. Why buy a new system if you’re going to run it just like you did the old one?

CU Mag: What are some common stumbling blocks?

Tanner: The biggest one is time. This process takes six months, but it’s not unusual to get a request for a four or five-month timeframe. Even if we get six months, everyone at the credit union has a full-time job to do, and you’re asking them to do additional things on top of that.

Often, management hasn’t made sure there are no vacations scheduled during the conversion. An employee might have planned a vacation two years earlier and the CEO has to deal with that. Usually they can work something out. But I’ve seen cases when four or five key people weren’t there during key parts of the process.

There also are times when the credit union has other major projects going on at the same time. During a recent conversion, the credit union was renovating the entire building—part of the building was studs; part was finished. That’s a distraction.

We had one in California where the credit union was remodeling and the training room wasn’t available because it was on the second floor and there weren’t any stairs. When they finally put the stairs in, we installed the computer equipment.

The credit union had to do some drywall work—and it got enough drywall powder into the computer room that it destroyed one of the servers. Coordination has to happen because, at the very least, this is a distraction. At the worst, you can lose some equipment.

Next: A good conversion experience

CU Mag: What’s a good conversion you’ve experienced?

Tanner: One of the most effective was at a credit union in Northern California. The CEO, after everyone had posted their transactions during a simulation test, took everyone to a beauty shop for pedicures.

They came back, balanced everything, and did the evaluation. They shifted into a relaxing environment and got a little body work done.

CU Mag: Any last thoughts?

Tanner: At Pacific IBM, we had several core conversion mottos, including “There’s no finish line.”

That’s not a comforting motto.

Another was, “There’s only one wrong answer: ‘Because that’s the way it’s always been done.’ ”

If you say that, you know you’ve got trouble. When you think something can’t change, you’re probably wrong.

• Compare and contrast the credit union movement's top core processors and their systems' features and functions using Credit Union Magazine's 2011 Information Systems Guide.