All the credit — and blame — for League Data’s IT infrastructure for the next 10 years will fall on CGI Group Inc.
Montreal-based outsourcer and Halifax-based League Data (LD), a credit union IT services and products provider,
finalized the $80-million deal last week. Under the terms of the agreement CGI will be responsible for application development and the operations and call centres.
LD had been taking care of these matters itself for 25 years, but according to Ian MacNeil, manager of corporate services, it was time for a change.
“”We were looking for a partner that had that expertise in that Canadian credit union market and with it we allowed them to reduce costs for our credit unions to make sure they remain competitive in the financial market place,”” MacNeil says. “”And since technology is one of their major costs this is one of the ways to do it.”” He wouldn’t say, however, exactly how much LD plans on saving.
CGI’s provides services to more than 2,300 credit unions across North America. This experience and a similar IT vision made the pairing a natural, MacNeil says.
“”One of the things that was important to us is to find a partner with a similar strategy on technology, and the technology strategy CGI’s deploying is quite similar to what League Data was deploying as far as a browser-based front end at the credit union branches,”” MacNeil says. “”We wanted someone that was familiar with the Canadian credit union marketplace and someone that was able to bring in the savings that we were looking for.””
IDC Canada analyst Jason Bremner says CGI has a large number of credit union customers and this knowledge of unique market characteristics can only benefit LD. He also says LD shouldn’t lose sleep over signing a 10-year contract.
“”Obviously changes are going to happen, but this is not the first time a 10-year deal is being signed. There are more than enough examples of 10-year deals that have been signed and the sky is not falling in on those deals,”” Bremner says. “”Yes, there will be change — it does not necessarily mean it’s a bad thing — and CGI certainly has signed long-term deals with other clients and it looks as though it hasn’t affected their clientele and their level of satisfaction.””
The potential danger is also minimized through service level agreements (SLAs). MacNeil says there are a number of SLAs involved in the contract, but wouldn’t provide detailed examples.
“”We already had service levels with our customers and we’re retaining the same levels. Our level are equal or higher than industry norms in most costs. We’ll just be bringing those over and CGI with be honouring them,”” MacNeil says.
CGI has 12 months to produce a browser-based, front-end banking system for the branches. The software will be responsible for deposits, withdrawals and loan origination.