Tips for Successful ACH Usage Discussed in New Council White Paper
CUNA Councils
July 1, 2009
Credit union professionals can discover tips to get the most out of automated clearing house (ACH) usage in the first of two recently released white papers from the CUNA Councils.
“ACH Payments: A Key Tool in Your Electronic Payments Toolbox,” from the CUNA Operations, Sales, and Service Council, analyzes this important time- and money-saving tool for credit unions. The paper looks at how ACH works and how it has evolved, its benefits and pitfalls, and future innovations.
Additionally, it provides examples from credit unions that use ACH to originate and receive funds transfers. It illustrates how each of these credit unions approaches the process a little differently, and includes tips for successful usage.
A second white paper, “Differentiating Credit Unions by Asset Size: Key Financial Issues,” examines the characteristics of credit union groups when asset size is the distinguishing variable. The paper, sponsored by the CUNA Chief Financial Officers (CFO) Council, was authored by Dr. Harold Sollenberger and Andrew Stanecki from Michigan State University in East Lansing, Mich.
Using trends from the past four years, the paper arranges credit unions into six asset size groups and draws comparisons. It then offers analysis on key issues, including: member growth, deposit growth, loans-to-deposits patterns, asset quality, capital, earnings, operating expenses, liquidity, and more.
CUNA Council members are entitled to complimentary copies of these white papers; non-members may purchase the white papers for a price of $50 per copy.
The papers are available online in the white paper section of each council site - choose the “OpSS” tab for the ACH paper or the “CFO” tab for the differentiating credit unions paper.
Why Enterprises Don't Like SaaS
Bernard Lunn
June 30, 2009
At the Enterprise 2.0 Conference, I asked all of the vendors, "SaaS or on premise?" The assumption, because this conference was all about modern 2.0 stuff, was that everyone would say, "SaaS, of course."
Wrong. At least 50% of the vendors were deploying primarily on premise. Even some of the pure SaaS crowd would admit to an occasional on-premise deployment. Anecdotally, even some of those who say they are pure SaaS will deploy on premise quietly. Why are enterprise customers telling vendors that they want on-premise deployment?
On Premise Does Not Mean Old-Fashioned
Some of the vendors selling on-premise solutions are bang-on up to date in the two ways that really matter:
- Low-priced monthly subscription pricing with freemium entry
- Grassroots adoption, one click at a time, based on usability as the core advantage
For example, Atlassian sells only on premise.
Those Old IT Worry-Warts
There are some red herring issues. For example, security. There is no reason that cloud-based systems should be less secure than on-premise ones. But some high-profile lapses by cloud vendors have given enterprise decision-makers sweaty palms. "Having it in our data center just feels more secure, right? No one could hack our data center, could they?" Let people keep their illusions if it makes them happy.
The concern about application integration is a bit more valid. Sure, a cloud vendor could integrate just as easily with in-house apps. But all that data transfer comes with a cost.
It's All about that 6% Utilization
But the figure that really tells the story is 6%. That is the percentage of server utilization in enterprise data centers, according to McKinsey. That is a lot of wasted cycles. It would be much better to use them up with new applications, and to bring in virtualization technology to use them more efficiently.
Why rent more cycles from a SaaS vendor when you are swimming in excess capacity?
Shh, Don't Tell Our Investors
So, why the big fuss? Because customers want on premise, and the customer is always right.
As long as the vendor can deploy the whole solution stack really simply, there is no deployment cost issue.
The problem is that words like "SaaS" and "cloud" loosen investors' wallets. As one entrepreneur put it to me, "The moment I admit to selling on premise, I lose the VC." Anecdotally, even Salesforce.com, which is religious about being pure cloud, has deployed on premise when the customer is big enough. But saying so ruins a good story.
Google is one vendor that seems to be sticking to its pure-cloud approach. It can afford to forego a few mega-enterprise accounts because it makes so much from consumers and small and medium-sized businesses (SMB).
Cloud Is Ideal for SMB
Small companies don't have the scale to run their own data centers. And an awful lot of small companies are out there. Department-wide deals in which the decision maker does not want to "go through IT" will still go with the cloud.
But the really big enterprise-wide deployments seem to be going with on premise.
This article was posted on ReadWriteWeb, a weblog created by Richard McManus that provides Internet technology news, reviews, and analysis covering web applications and social networking. Reprinted with permission.
As Smartphones Proliferate, Will One Company Emerge as the Clear Market Winner?
Knowledge@Wharton
June 24, 2009
Just as computer operating systems vied for dominance back in the late 1970s and early 1980s, smartphones these days are jostling for market share, hoping that their mix of capabilities—ranging from web surfing to e-mail to calendar management—will ensure them a critical mass of customers. The makers of mobile devices such as the BlackBerry, iPhone and Treo are all scrambling for position in case this race turns out like the previous one, when Microsoft ended up the dominant player.
Indeed, more than 80% of the desktop and notebook computers in the world run Microsoft's Windows operating system, giving the company tremendous market power over both software developers and computer makers.
As is usually the case when the competition gets fierce, consumers are reaping the benefits: The smartphone marketplace is full of increasingly clever devices offered at steadily falling prices. Yet, at the same time, the tight integration between the cellular networks, device manufacturers and operating system vendors also serves to limit consumer choice. Want an Apple iPhone in the U.S. ? You'll need to select AT&T for your cellular service. Interested in Palm's forthcoming Pre? You'll have to switch your service to Sprint.
All of this comes at a time when many consumers use their smartphones as if they were tiny PCs. The palm-sized devices "are becoming more like laptops," notes Gerald Faulhaber, a business and public policy professor at Wharton. Adds Wharton operations and information management professor Karl T. Ulrich, "I know several people who run their lives on smartphones, including viewing documents and accessing the web."
According to research firm IDC, while mobile phone shipments overall fell 15.8% worldwide in the first three months of 2009, the smartphone segment of those shipments gained 4%--even in a declining economy.
Industry observers, including faculty at Wharton, generally agree that the smartphone market is at a tipping point—moving from the realm of niche product to game-changing, mass market item . Less clear is how the industry will evolve. Will the variety of mobile operating systems—the software that is the foundation for all the devices can do—be winnowed down to one or two, or will the Balkanization of mobile software hamper the growth of the industry?
Locking in Users
So far, Balkanization has proved the rule. "Most observers agree that handheld devices are the next big thing," says Kendall Whitehouse, senior director of information technology at Wharton. "But these are all single vendor environments with the same kinds of walls that we used to have for PCs."
Apple announced the third version of its iPhone operating system in March, and analysts expect the company will roll out new versions of its popular phone in June at its annual developer conference. Around the same time, Palm is expected to launch the Pre, a device that has earned rave reviews for its slick operating system, dubbed "webOS." BlackBerry maker Research in Motion (RIM), and Nokia, the world's largest mobile phone maker, are also vying for consumers with a barrage of new devices.
Speaking to shareholders and analysts last month, RIM co-chief executive James Balsillie described the competitive environment as "a land grab," an analogy also used by Wharton management professor David Hsu: "For these companies, the ideal is to be the preferred next-generation smartphone. Once that happens, users are locked in."
Lock-in refers to the practice of requiring users to use hardware and software from a prescribed set of vendors. Apple has achieved a degree of lock-in with its iPhone and App Store; its customers can use only those applications available from Apple's online market. If the new Palm Pre includes a must-have application, iPhone users who want it would have to switch devices and even their wireless phone service providers from Apple's only U.S. provider, AT&T, to Palm's partner, Sprint.
Other firms are adopting a more open strategy in which they develop an operating system that can be used in phones from a variety of manufacturers. Examples include Nokia's Symbian, Google's Android and, of course, Windows Mobile from Microsoft. They hope to win through ubiquity—gaining market share by being installed in multiple brands of smartphones.
According to Hsu, it's far too early to declare any winners. Apple's iPhone has millions of users due to its jazzy interface and integration with Apple's iTunes software, but there are many rivals. Research firm Gartner reports a jumble of operating systems vying for the mobile market. For instance, Nokia's Symbian operating system ended 2008 with 52.4% of the global smartphone market. But its share of the market in 2007 was 63.5%. For 2008, RIM's BlackBerry operating system had 16.6% market share followed by Microsoft, with 11.8%; Apple's iPhone at 8.2%; and Linux, which had 8.1%.
Fierce competition is to be expected in the early stages of a growing market, according to Wharton faculty. "Typically, in the early part of the lifecycle of an industry, you see the entry of a lot of competing solutions. Not all of them can survive, but that does not mean that a new entrant cannot prevail," says Ulrich. That late entry opportunity will be welcome news to Palm, which has been a long-time player in the market, but is rolling the dice by offering a brand new operating system, webOS, to run its highly anticipated Pre smartphone.
"I don't think the market is anywhere close to being mature yet," says Kartik Hosanagar, an operations and information management professor at Wharton.
It's All about the Apps
What will ultimately decide the fate of these multiple mobile operating systems? Hsu and Ulrich agree that the number of apps (software programs) for an operating system will separate the winners from the losers. "The main differentiator will be the availability of applications," says Ulrich. "The devices seem to be converging on two basic approaches: larger touch screens and keyboard-based devices with smaller screens. The best devices in these categories are substantially similar. The number of iPhone applications makes it the favorite in the touch screen category."
Still, many wireless carriers, such as T-Mobile, and device makers, including Motorola, are betting on Google's Android operating system, which is intended to be used by smartphones from a variety of manufacturers, just like Windows in the PC world. Sanjay Jan, CEO of Motorola's struggling mobile device unit, told analysts last month that Android is attracting "significant developer interest."
Smartphone vendors believe that if they can win developers, customers will follow. That is why smartphone operating system makers have all launched application stores to compete with Apple's App Store for the iPhone. Nokia, for example, started rolling out its phone app store this weekend, starting in overseas markets. According to the Washington Post, Nokia's first download—WorldMate, a travel assistant—was purchased in Singapore while in Spain, the first download was the free Flashlight app. In the U.S., it was the AP news app. Nokia-sponsored Star Trek ringtones were popular overall, the Post reported.
These stores allow software developers to distribute programs and get a cut—70%, in most cases—of the revenue. The goal: Emulate the success of Apple's store. Last month, Apple announced that more than a billion applications have been downloaded from the store in its first nine months.
While the competition may be producing benefits for consumers, Whitehouse cautions that the industry could face the same interoperability problems that plagued the PC industry. "Every vendor has its own operating system, device and application store. We're back to the point where consumers have to pick and choose which walled garden to live in. We're about to relive the fragmentation we saw in the past on the PC."
Whitehouse says he isn't arguing for one dominant operating system, but, rather, believes that smartphone makers need to pay attention to interoperability between devices. Vendors, he adds, need to make it easy for developers to create software that can run on multiple mobile operating systems. "The PC industry has evolved to an elegant situation where consumers have a choice of options, and developers aren't boxed into a corner of having to pick one [operating system] or the other [to target their development efforts]."
Faulhaber says the interoperability worries are overblown. "We have seen a lot more diversity in the mobile world on smartphones than we ever did in the PC world. But it doesn't seem to matter very much. I don't see that demand for interoperability yet."
Indeed, most mobile operating systems can read common Internet standards, such as the HTML web markup language, Adobe's portable document format (PDF) and common image formats. "As long as the operating system is able to meet these standards for classic things, your need for computing interoperability isn't an issue," says Faulhaber.
How the smartphone battle is resolved may also depend on the evolution of the devices, according to Wharton faculty. For instance, if smartphones evolve to become more like laptops—or their smaller cousins known as netbooks—issues like interoperability and the selection of applications will become more important.
Tim Cook, Apple's chief operating officer, said last month that smartphones will increasingly compete with netbooks, a category he dismissed as "junky." "People who want a small computer that does browsing and e-mail might want to buy an iPod Touch or they might want to buy an iPhone. We have other products to accomplish some of what people are buying netbooks for."
What Cook describes is a first step to the convergence of the smartphone and PC markets, says Hosanagar, suggesting that the latest smartphone developments, along with the popularity of netbooks, "mark the beginning of a convergence between the wireless handheld and the PC markets."
Whitehouse agrees that smartphones are likely to become better at web browsing and running Internet applications that are commonly used on a PC. "For now, it's challenging to do anything beyond rudimentary applications in a browser [on most smartphones]," says Whitehouse. "There are reasons for that: device constraints, battery life and slower processors. But those barriers are falling quickly."
If smartphone browsers improve, it's possible that the interoperability conundrum between devices can be resolved, Whitehouse says. Today, mobile browsers are similar to the computer-based browsers of the late 1990s, which had different capabilities. Over time, these differences faded, creating a more unified platform across different browsers and operating systems. Whitehouse is hopeful that mobile web browsers will follow a similar path toward convergence of key features.
No matter how the technology evolves, it's likely that consumers will have multiple operating systems and devices to choose from for a while. Although the current number of operating systems may consolidate—Hsu gives Palm little chance of success with its webOS entry—choice is likely to rule the industry because no one platform has proven it can satisfy everyone.
"No single operating system meets all the needs of consumers, enterprises and developers," says Hosanagar. "Today, the apps available on the operating systems are also very different. Some offer better security and encryption while others offer [something] richer and 'cooler.' That is just a reflection of the infancy of the market. Eventually, that differentiation will die down. I expect the market to consolidate."
Wireless carriers and device makers want as much operating system choice as they can get because they are fearful of becoming too reliant on any one company, notably Microsoft, says Faulhaber. "For the wireless guys, having a plethora of operating systems is a way to keep out of Microsoft's clutches. Symbian and Android were developed, in part, as a response to Microsoft's dominance in the PC."
And that's fine with Faulhaber, who says that smartphones have no particular need to follow the PC model. "They are a much more personal device. Consumers will simply choose the one that fits best."
Reprinted with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
FoolProof Deemed Tech Council's Best of Show at 2009 ACUC
CUNA Technology Council
June 23, 2009
FoolProof’s financial literacy education system was the winner of the CUNA Technology Council’s Best of Show Award at the 2009 America’s Credit Union Conference and Expo, taking place June 21-24 in Boston.
FoolProof offers credit unions five separate financial literacy programs for high school and community groups, parents, college students, young adults, and adults. This Web based financial education system is centered entirely on credit union principles and the concepts of consumerism and features videos, podcasts, online modules, and more to enhance learning.
When announcing the Best of Show winner, John Morawski, lead judge from the council and chief technology officer for the Massachusetts Credit Union League said he was impressed with FoolProof’s use of credit union principles and consumerism as building blocks for its program. “The program provides independent information, free of advertising, to help credit union members and non-members make wise decisions in tough financial times.”
FoolProof is owned by FoolProof Financial Education Systems. The Education Credit Union Council and the Colorado association’s Credit Union Strategic Partners partnered with FoolProof to offer the program to credit unions and other not-for-profit educational institutions.
Since 2001, the CUNA Technology Council has presented Best of Show awards to conference exhibitors that demonstrate a commitment to delivering technology that will further the growth of products and services in the credit union marketplace. Vendors’ products are evaluated according to affordability, the benefit to credit unions and their members, a commitment to open standards, current product use, and health of the company.
For more information about FoolProof, go to www.foolproofnational.com.
On hand for the award presentation are, from left: John Morawski, lead judge from the council and chief technology officer for the Massachusetts CU League; Nick Buettner, FoolProof’s vice president and chief operating officer; Benjamin Zanfagna, FoolProof’s financial education coordinator; Karen Morgan, senior vice president of Credit Union Strategic Partners; Dan Mica, CUNA president and CEO; and Bob Stowell, council judge and senior vice president and chief operating officer for US FCU in Burnsville, Minn.