The case for cooperative IT: How it works and who it's for

Both a technology model and a business model, cooperative IT brings companies together to share technology and resources. Where does such an approach pay off — and where should it be avoided?

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Over ten years ago, five credit unions came together and formed a credit union service organization (CUSO). A majority interest was held by one, very large credit union, which owned all of the technology, had a full-time IT staff and was running an online banking system. The other players were much smaller credit unions that couldn't afford their own systems or IT staffs. Together, these credit unions formed a technology company that was organized as an S corporation. The company was designed to retain very little profit, but instead to pass on any savings to its participating credit union members. Every founding credit union had a seat on this company’s board, although board control was held by the largest credit union.

As a board member on this organization, this was one of my first experiences with cooperative IT in the days that pre-dated what we now call cloud computing. The organization and its cooperative computing concept was a win all around. Owners and board members from small credit unions obtained online banking and other IT services they desperately needed but couldn’t afford on their own. The large credit union offset costs for its data center and IT resources.

“Cooperative computing strategies like this have been used by credit unions for many years,” said Gregg Tushaus, CEO of Emergifi, a CUSO that was originally formed by Corporate Central Credit Union in Wisconsin. The credit union now has three separate CUSOs—one for business services and healthcare benefits; one for asset liability management; and a third for technology services.

The CUSO that Tushaus runs provides IT services such as network management, hosting and maintenance for common applications like Microsoft Office 365, workstation and security management and cloud backups for disaster recovery.

“Our goal was to extend these IT services to other credit unions at attractive price points so they could focus on their core business and IT goals,” said Tushaus. “We are also planning a heavy emphasis on digital transformation, which many credit unions want to do but might lack the internal IT resources for.”

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