Pub. 8 2019 Issue 1

The CommunityBanker 22 Designing Your Renewal Game Plan By David W. Saylor | President & Founder | Genesys Technology Group, LLC Y our core vendor relationship is the most critical vendor relationship in your bank. Your choices are limited in the market, and the grass is not always greener on the other side of a conversion. If you are within two years of your contract expiration, it is time to start thinking about when and how to approach your next round of renewal negotiations. Whether you run your core in- house or outsource it, you need a game plan. Let’s take a look at six key objectives your bank should consider in putting together its next renewal game plan. Length of Term and Renewal Term We recommend that you start with a five-year term, which is just the right amount of leverage to gain sav- ings but not get eaten alive with termination fees if you sell the bank mid-term. Start with three or five years and only increase the term when the timing is right. NEVER go out be- yond seven years... ever. Shoot for one-year on your renewal term but accept no more than three-years. Co-Term Agreements To achieve this objective, you will need a vendor dash- board. Your dashboard should outline and identify each of your high-risk vendor relationships. Map your contract(s) to a spreadsheet describing the service, vendor name, non-auto renewal notification requirements, effective date, and end of the term of your agreement(s). Contact your account rep(s) and confirm you have the right information. Once complete, you have everything you need to understand how to co-term all of the associated vendor agreements. Your core contract should be the anchor point, and it can take years to complete a co-term initiative. Make the commitment and start today. Vendor Consolidation Managing high-risk vendors is hard, so deal with as few as possible. Take a look at your dashboard and determine if you are interested in consolidating any of the relationships. If so, build time into your game plan to allow for due diligence on the systems associated with the consolidation initiative. Renewal negotiations are the perfect time to shrink your “vendor sandbox” and maximize economies of scale. Renegotiate Price Your game plan should include your expectations as it relates to the overall savings you wish to acheive. It is almost impossible to benchmark what you pay versus your peers, so don’t go there. Look at your overall monthly spend with that vendor and determine which areas are “high growth” systems. Pay particular attention to the systems you have procured over the last term of your agreement. Areas of focus should include online systems, mobile banking, fraud/alert systems, remote deposit capture and payment systems. Also, are there systems you no longer need and any costly third- party integrations? Integration is expensive, and you should F E A T U R E