By Roy Urrico
It is financial planning season at many credit unions and other financial institutions (FIs). It is never an easy process, but the Salt Lake City-based the AuctionIQ (AIQ) team, a consultancy firm that helps businesses renegotiate and procure technology, believes it can help FIs increase enterprise value and operating cash by materially reducing IT costs.
“We typically find that banks, credit unions, payment processors, and other financial services companies spend a lot more on technology than what is necessary,” explained Blake Wetzel, CEO of AIQ. “There are many reasons why this happens. Sometimes technology is acquired through a merger, and it quickly becomes antiquated. And many times, a company is an early adopter of a specific application or product, such as collaboration applications or cloud storage. As technology matures, new competitors bring innovation into the space, and pricing subsequently drops. Companies that are early or mid-term adopters are subsequently penalized for investing in new technology.”
AIQ specializes in creating savings of technology-centric IT services in over 100 categories, such as cloud, software as a service (SaaS), infrastructure as a service (IaaS), platform as a service (PaaS), digitization, and big data, through the application of its tools, expertise, and business processes.
Wetzel sat down with Finopotamus to discuss how AIQ delivers maximum savings for clients.
Getting Multiple Bidders
Wetzel claimed that some other advisors helping to select suppliers for FIs settle on a specific vendor. “They will pick a supplier and then they try to negotiate with the supplier. So, now you are in a one-to-one relationship and you have lost a lot of the competitive market-driven price or opportunity.”
The AIQ CEO maintained the company’s process to help its clients reduce technology spending involves a data-driven reverse auction that brings in different vendors invited to participate that compete against each other. “What we do is we identify the market of who can actually supply that service. We do a very quantitative analysis that would replace a traditional RFP (request for proposal), which allows us to do an actual quantitative scoring on the suppliers,” noted Wetzel. The credit union, or other financial institution, is not obligated to work with any of them, but according to AIQ, these organizations can achieve substantial savings.
Wetzel explained the AIQ customer has visibility into all the technology suppliers that might meet their needs. “I have seen as little as three (bidders); we just did an auction for 20 different suppliers for a customer. Statistically what we have seen is it drives about two-and-a-half times the savings than traditional procurement methodologies.”
Payback in Less Than Five Months
Wetzel asserted AIQ is a contingency-based organization. “We work with the financial institution, so we get paid out of the savings that we create.” He further explained, “We go end-to-end from the analytic side all the way to the contract negotiation to deliver outcomes. We put our money where our mouth is. So, if we do not save money, the client does not actually have to pay us.”
AIQ’s payback period is 140 days, said Wetzel. “Think about that from an investment perspective. Our ROI over a 10-year period is 900%. When I was a CFO, we looked for a payback period between 12 and 18 months. And to say it is actually less than five months is an incredible thing. “
Wetzel added one more caveat: “Seventy percent of the time they do not have to change technology providers. We come in, we create an outcome and we leave.”
Working With Mergers and Expansions
Wetzel noted some of the other benefits AIQ provides to credit unions:
Consolidations. “There is a lot of consolidation in this space. A lot of times we will take all the disparate IT information and give a very streamlined strategy for consolidation, (and) for maximizing and simplifying contracts. And that is an ancillary benefit,” he told Finopotamus. “What ends up happening in some mergers, he added, is the IT infrastructure for multiple different organizations stays in place. “Unless there's an effort to consolidate them, they're either buying inefficiently or they're probably having technology stacking or you're going to have different technologies.”
Most organizations do not have the time to do the integration, suggested Wetzel. “We actually will help them put together a strategy to consolidate suppliers, get them out of old contracts, and then get them onto a more cost-effective, better contract.”
Expansions. Wetzel noted one of the stories AIQ “loves to hear” about is when organizations such as credit unions use their services for expansion. “We've got a lot of clients across multiple verticals who come to us and say, ‘Hey, I want to build a new product. I want to expand into a new market and we want to self-fund that.’ Well, that is what we do, we help them self-fund that.”
Other Areas. Besides mergers and expansions, a number of FIs seek AIQ’s help with call center and customer support systems incorporating omnichannel capabilities and artificial intelligence (AI) engines.