FEATURE Five Key Steps


Choosing a new system for your financial institution is one of the most significant decisions your management team will make. Avoid making a quick decision based upon internal struggles or vendor pressure. After all, your selection can directly affect your institution’s ability to meet strategic initiatives. Through a carefully planned and diligently followed process, you can secure favorable contract terms, reduce costs, and set performance expectations. Before doing anything, make sure you review your current contract and understand your contractual commitments, terms and

conditions, and cost structures. If you are looking to replace a current system, plan to begin the selection process at least 12 to 18 months prior to contract termination of your current system. Once you have decided to select a new system, follow these five key steps to choose the right fit for your institution.

1. Perform a needs assessment A needs assessment provides a deep analysis of the present and future viability of your current system. The insights gained through an assessment will help identify system weaknesses or potential threats that are critical to maintaining a competitive position and financial stability. A systematic approach can then be developed, aimed at continual improvement and system utilization, and in alignment with your business goals and objectives. An assessment should include the following:

Create a selection committee Hold a kickoff meeting Gather your data Analyze strategic drivers Identify key objectives Define functional requirements Conduct a cost-benefit analysis Set expectations Contact your current vendor

2. Complete a system analysis After an assessment has been completed, the system analysis can begin. Data gathered during the assessment can be used in the analysis to determine the best system—both functionally and financially—for the future. A thorough analysis also aligns the vendor relationship with your business strategy. An analysis should include the following:

Conduct vendor pre-selection Develop a Request for Proposal Establish vendor requirements Evaluate proposals Conduct on-site presentations

3. Perform due diligence Once the analysis has been completed, vendor due diligence should be performed. Due diligence serves as a verification and analysis tool, providing assurance that the selected vendor finalists meet the needs of your institution and that you understand any risks posed by the relationship. Due diligence should include the following:

Conduct reference calls Perform site visits

4. Select a system After vendor due diligence has been completed, selection of the system can be finalized. A thorough selection gives you the opportunity to invest in and/or improve the critical issues identified during your assessment. This helps you avoid any negative impact or adverse conditions that would hinder achieving your strategic initiatives. System selection should include the following:

Select vendor finalist Finalize any questions

5. Negotiate Negotiation can begin after the system has been selected and an updated vendor proposal has been provided. A well-negotiated vendor contract is an important tool for ensuring a long-lasting relationship with a vendor. Negotiations should include the following:

Review package and price Appraise terms and conditions Address training and implementation Finalize the agreement Manage the contract

CliftonLarsonAllen’s (CLA) Technology Advisory and Strategy (TAS) team has developed a system selection and contract advisory methodology for financial institutions that challenges them to think holistically, set clear expectations, and evaluate price. Whether your institution is considering a new system, looking to renew a critical contract, or considering a merger or acquisition opportunity, our advisors can help you secure a contract that fits into your budget, meets your service level expectations, and aligns with your critical business objectives. You can reach Janine Wright directly at

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