Software has a cost, but it may not be as clear as you may think. Yes, purchasing Excel may be straightforward, but what about the core of any association – the Association Management System (AMS)?
In the old days, it was relatively simple: the application was usually custom-written, and the annual support or license fee was somewhere between 15 to 20 per cent of the development cost. Today, it is more complex. Consider the following cost elements:
- Base application
- "Apps" and plug-ins (usually a subscription)
- Data cleansing
- Data import
- Connection/integration with other software
- Customized documentation
- License fees
- Support fees
Then there are the internal costs that directly impact the value that will ultimately be delivered by the software:
- Needs analysis
- Process re-engineering
- Change management
- Project post-mortem
Finally, there are two hidden costs that are rarely considered:
- Opportunity cost of the software not being a "perfect fit"
- Opportunity cost of not using the software to drive your unique advantage and deliver member value
It is these last two costs that are connected to one of the most difficult choices an organization must make as it decides on a software platform: custom development, packaged proprietary software, or flexible framework.
1) Custom-developed software
This software is built exclusively for you by a developer, often because your needs are so unique that there is nothing "in the market" that can do the job. The advantage is the perfect fit: The software meets your precise needs, and precisely drives strategic goals. Two key disadvantages of this approach are the cost, and the significant time that it takes to design, develop, and deploy a custom solution. It is because of these disadvantages that packaged proprietary software became so popular.
2) Packaged proprietary software
Whether it is delivered using client-server technology or via the cloud, packaged software is relatively simple. There is a feature list in the base application, additional "modules" that might be purchased, and often the option to skin the software with an organization's colours (and logo). Examples of this include well-known names such as AMSoft, iMIS, and many others.
Advantages usually centre around cost, but also in that many vendors tout that the software embeds functional "best practices.” The key disadvantages of this approach are the opportunity costs. Because the software does not have the flexibility to be customized, the organization will need to change to fit the software - no small endeavour. Furthermore, because others are using the exact same software, the software itself cannot provide or support your inherent strategic advantages.
Even the assumption that the software truly does embed best practices is open to the question, who says that the best practices for others are the best practices for you? Finally, as your needs change over the years, there is no ability to have the software adapt to these changes (unless, for example, they have a module available). It is because of these factors that a flexible framework approach has become so popular.
3) Flexible framework software
Using this approach, the base capability of the software is already developed, but it can be customized by a developer to be a perfect fit. Examples of this include Salesforce or the various other general-purpose CRM systems. It is possible to use this software out of the box, but both have very robust development environments, as well as add-ins/apps that extend the functionality significantly.
The key advantage of a flexible framework is that core functionality has already been developed, speeding deployment - yet significant customization is possible, which reduces the opportunity cost, or sometimes removes it completely. The disadvantage of this approach is that when comparing the "feature set" to the packaged software alternative, a flexible framework rarely wins. And because flexible frameworks are so often delivered via the cloud, not every organization is ready to make this leap.
Back to the cost of software. When comparing each of these approaches, comparing costs means evaluating each of the 17 different cost dimensions identified earlier. They are very different depending on the approach. At the core of the decision, however, is how you view the software itself. Is it a necessary expense, or is it an investment that can "drive" engagement and form the core of a digital transformation initiative?
This week's action plan: How is your organization set up? Has it started to make the transition to flexible frameworks? This week, take an inventory of the software that you use. Is it custom-developed, packaged proprietary, or a flexible framework?
Randall Craig addresses this and other issues related to associations and technology in his book Digital Transformation for Associations: Competing in the Marketplace for Ideas. This publication provides invaluable advice for associations facing challenges in the digital age.
The role technology will continue to play in the association sector's evolution is something we all need to be aware of. Thinking of the future of associations is what CSAE's upcoming Associations 2025 event is all about. Will you be attending?