Rather than scratch the surface that has been scratched so many times, I’m going to get down into the weeds and talk about implementation success in more detail. The topics here are not in order of importance, but they are also not arbitrary. There is a natural order of the presentation.
First, you must determine the scale of your implementation. This is not just a matter of size, but of scope. If you are new start-up lender without an existing portfolio of loans, then there will be no data conversion. If you also have no custom interfaces or customization needed for your implementation, then that implementation will consist of training only. You need to learn to use the software, and you may have some help in configuring it to service your loans, but you will not need any scripting or custom programming. In this case, where both of these conditions exist, you would not need any consulting services aside from training. This is as easy as an implementation can be. But, if you are going to need help with a data conversion, if you will have custom scripting and custom interfaces as well as complex workflows, then you will need the help of Consulting Services.
Objective of Consulting Services
The objective of consulting services probably seems obvious, but in reality, people often aren't clear on this. It's important that everyone has the same understanding. If you think that hiring consulting services means that you are going to pay money to have a team of consultants do the entire implementation, you are setting yourself up for failure from the start. We know the loan system, but you know your business. Only through collaboration will the proper balance be achieved to have the best possible implementation experience.
“But,” you may ask, “What about best practices?” Good question. While we at Nortridge Software have many years of experience in loan servicing software development and implementation, (the author of this blog has been with Nortridge since 1995), the lending industry in general is quite diverse. What may be best practices in one niche of lending would be overly risky or overly conservative in another. For example, a loan servicer that is lending to borrowers with 750+ FICO scores will likely be offering attractive interest rates and relying on their low default rates to make a profit, while a payday lender or auto title lender with high default rates would be offsetting the losses incurred by those high default rates with high interest rate loans. Clearly, there are few if any “best practices” that apply the same way to these diverse lenders.
Every one of our clients has different nuances to their lending, even within the same general lending type. It is what they refer to as the “Secret Sauce” - that thing that sets one lender apart from others and makes them attractive to prospective borrowers. So, while we will be able to guide you with regard to some practices that are generally accepted (as in GAAP means Generally Accepted Accounting Principals, but you already know those) and steer you away from those practices which have been shown time and again to not work, you need to ask yourself, when you are looking to a software company to tell you best practices for your lending business, are you really looking to get some insight into your competition’s “Secret Sauce?” If so, then it should be some comfort to know that we won’t be giving your trade secrets away to our other clients either.
So, bottom line with regard to the objective of consulting services: it is collaboration between the lender and the software vendor to work proactively to leverage the core functionality of the Nortridge Loan System to insure a smooth and efficient implementation.
When we say that process is proactive, we mean that it is going to require planning. Implementations have gotten out of control (over time and over budget) because the client insisted on beginning work immediately without allowing sufficient time to plan the entire implementation process. On a large implementation, a month of planning at the start can keep you from ending up three months overdue (and consequently over budget) at the end.
Planning will include gathering and documenting the requirements for the implementation, as well as determining how best to meet those requirements. Ranging from best case to worst case, requirements are met through: system configuration, customization of the system through scripting or the development of an outside interface, or as a last resort, a new feature in the core of NLS.
The last portion of planning will involve project timelines and estimates. Cost estimates will help you to prioritize and do cost benefit analysis to determine if a “requirement” is really required. If some customization is much more complex (and therefore expensive) than originally thought, it might be determined that it is not as important as originally stated. While estimates are just that, “estimates” and not fixed prices, they will help you to understand the order of magnitude of the projected cost. The project timelines will help you and the implementation team to know if the project is on track or falling behind as benchmarks are met or missed.
Not to beat a dead horse, but you know your business and you know what you want to get out of your servicing system. It will not help you to assume that you can just write a check and have the implementation done for you. In addition, there MUST be a project owner on the client side to provide a single point of contact throughout the engagement and ensure effective communication.
When planning how to meet the requirements, we will be planning for efficiency. The most efficient use of available resources would be in leveraging the features of the core software to meet your needs. You have already paid for it.
If your requirement can’t be met by the core features, then perhaps employment of the rules and scripting engines will meet the need. This may require some development time and perhaps some programming by a consultant. It is also possible to do scripting on your own. If you have in-house resources who can do scripting, then a small amount of support from a Nortridge consulting programmer to answer your scripting questions can be more cost efficient than paying to have it all done for you.
Beyond scripting, the next level of consulting is the development of a custom interface. However, depending on the functionality to be gained from the system that NLS is being integrated with, this can actually result in an increase in efficiency, so these do come up often, even though they require a higher degree of effort.
The least efficient solution to meeting your requirements (from a time point of view) is the development of a new feature in the NLS core software. However, if the requirement is one that many other lending companies could also potentially benefit from, Nortridge Software may elect to do this without you needing to pay consulting fees for it. That gives cost efficiency at the expense of time efficiency. Also, there are some requirements that, due to their complexity, can only be reasonably met in this way. This may result in core development that, while it would be available to other clients - as Nortridge Software maintains only once core codebase - it may not significantly enhance the utility of the software for other clients; therefore, this feature would not be put on the Nortridge development schedule without a commitment by the client to pay for it. This method is a last resort as it is the least efficient in both time AND cost, and will only be used if there is no other way to achieve the requirement.
I've given you a lot of information here, and I hope it's helpful. I'll be back in a few weeks with a post on the methodologies of the consulting process.