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My Theory on Why Associations Won’t Invest in Technology
10 September 2009, by , in Data Management, 7 comments

In a blog post last week I discussed a handful of AMS packages available at very low cost to associations. In the post I stated the following:

But I would strongly argue that if your organization cannot afford several hundred dollars per month (for SaaS fees) for access to a database specifically designed to manage membership and related processes, then you have bigger issues than database management.

What I meant is that if your association isn’t willing to invest  money in technology that will clearly help you better serve your constituents (not to mention your staff) then your association has a very short-term outlook. And that’s a problem for the long-term health of your organization.

So why do so many associations have such a short-term view? WARNING: Generalization alert! Associations tend to think short-term (especially as compared to their for-profit brethren) because most executive directors are working on a three-year contract. As a result, many EDs think about the next three years (or less), not the next ten years. Thus, when the issue is spending “large” sums of money over multiple years (as compared to a large sum of money on a discrete item like an annual meeting), the ED is thinking (maybe even subconsciously) “Well, surely we can push through the next couple of years with what we have now.”

Now consider an equivalent for-profit organization (i.e., a small, privately held businesses). The CEO is likely a major stockholder if not the sole owner. Her view is “How can I make this company more profitable?” And when presented with a technology decision that has high short-term costs but potentially high long-term benefits, she’ll likely say “Hmmm, this is a lot of money, but in five years, imagine where the company will be. Let’s do it!”

Back at the association, the “wise ED” knows she needs to look beyond the expiration of her contract and consider what kind of impact a new database can have on her current and future membership, as well as the impact that better managed data can have on meeting her organization’s mission.

For too many associations, investing in technology becomes a “kick the can down the road” strategy. You see it all the time with our government agencies. And I think it occurs very often (more often than we’re willing to admit?) within associations.

So what do you think? Is this a factor in association decision-making? Is it the primary factor?

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  • I definitely think this is a primary factor in association decision-making. EDs have to begin thinking more long-term, and they should develop specific goals related to technology. One goal might be to institute training for future leaders, but there has to be some sort of clear (short-term) benefits to get EDs to invest in technology.

    I also think the number of vendors out there can lead to a feeling of being overwhelmed and/or confusion. Association staff members may just not know where to start when it comes to sorting out what features their database should have.

  • Wes,

    I agree. I think that you hit home on something that is a general problem with alignment of incentives in management positions. Short term mindsets are guaranteed if incentives are exclusively short term. Even if a contract is longer than 3 years, many executive bonus plans are focused exclusively on short term operating results. These plans often do not emphasize milestones towards strategic goals that would lead a group to realize their full potential over the long run. Thanks for raising awareness on this subject.

  • I definitely agree that many associations focus too much on the short-term horizon–keeping costs down in this fiscal year or the next fiscal year. But it’s interesting that you argue that for-profits are more likely to have a long-term vision. I just finished reading an article in this morning’s Washington Post that argues the exact opposite. Maybe you and Steven Pearlstein were just on the same wavelength today!

  • Wes Trochlil

    Lisa, thanks for the post. In fact, I think Pearlstein and I are arguing the same thing. He’s referring to publicly held and traded companies, which also have a short-term focus. I was making a comparison to small PRIVATELY held companies.

    Oddly, while most associations are small in staff and budget, because they are overseen by a board of directors, they have some of the same challenges of large, publicly traded companies. One of those being that board members of both tend to be short-sighted (for-profits focus on quarterly earnings, non-profits focus on “I don’t want to be the board that decided this.”)

  • Wes:

    I agree that many associations are shortsighted and trying to keep costs down in each fiscal year. Yet, I don’t think the monkey necessarily lies entirely on the back of the ED. I think the issue lies on the back of the entire association leadership, Board and ED. I also think that ignorance is the primary driving factor, not stupidity. They don’t know what they don’t know.

    How many associations have a technology plan? Not just a plan to replace outdated computers, but a big picture technology plan? How many small staff associations even know where to begin? Where’s the basic association checklist of technology needs for small-, medium and large-staff associations.

    I agree that most association leadership doesn’t think about technology from a strategic perspective. Ultimately, it’s often the Board of Directors who don’t understand the value of all the association technology pipes being able to talk to each other, work with each other and the benefits of investing in technology plumbing. Let’s face it. It’s difficult to discuss technology in lay terms and then cross disciplines to use the correct language with technology gurus.

    The AMS is the most pivotal piece of the technology plumbing. Then trying to connect the AMS to all the other tech pipes–phone, fax, website, social media, other databases, government, grass roots projects, webinars—can become very overwhelming.

    We need an Association Technology For Dummies book to get us started in the right direction.

  • Kevin Corcoran

    Wes:

    I agree with your premise, but not your conclusion. Associations suffer (and “suffer” is precisely the right word) from a short-term mindset, but the source of that mindset often is not the executive, but the Board.

    An executive may have a three-year contract, but that contract can be renewed indefinitely if he/she is doing a good job. Board members, on the other hand, have non-renewable contracts, given to them by the members who have elected them.

    Unlike assn execs, who have thousands of assns to choose from when they leave their current position, most board members have just one opportunity to lead an assn.

    Furthermore, a substandard AMS rarely has a direct effect on board members, both because they don’t know what data they’re not seeing and because staff jump through hoops to pull out the data that is needed. But the executive has to confront the weak system, and the disgruntled staff, every day.

    While an executive may not want to ask the Board to make a six-figure expenditure, he/she can easily make plenty of reasonable arguments why the investment is needed (increased productivity, enhanced member service capabilities, obsolescence of the legacy system inherited from his/her predecessor), and none of them are the exec’s “fault”.

    I have made major AMS purchases in both of the assns for which I was EVP, most recently last year. In both cases, the expense was amortized over a 5 to 10 year period, mitigating most of the bottom line impact in the year of acquisition. They significantly affected cash flow, but the profit/loss line on the income statement saw just a small blip, for which I had already prepared the Board and membership.

    Thus I would argue that it’s the Board that is more prone to the appeal of a short-term perspective.

    In fact, an executive with a short-term contract and a plan to depart at the end of that contract may be MORE inclined to make an AMS acquisition, for two reasons:

    1. Making a major capital investment and seeing the process through to successful completion looks mighty good on a resume and provides countless opportunities to expound on one’s project management skills when interviewing.

    2. If the new AMS proves not to provide instantaneous access to every piece of data the assn has ever created, increase membership by 20% and resurrect deceased members, resulting in a 115% retention rate, the executive who made the selection will be long gone.

    While spending and investment decisions can be proposed and championed by the executive, it’s the Board that approves or denies them. And the pressures that board members face, can lead to a bias against long-term investments, particularly when the Board is shielded from the effects of such a bias.

  • Wes Trochlil

    Jeff and Kevin, thanks for your comments.

    @Jeff, Association Technology for Dummies sounds like a good idea.

    @Kevin, I agree, the board’s short-term outlook also has an impact. But as you point out, it’s up to the ED to make the case for this investment. Probably too many EDs figure it’s not worth the fight, i.e., it’s not a priority compared to the other fights they need to have with the board. That’s unfortunate.

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“Wes was able to come in and offer tangible, relevant advice that made us more productive immediately. I value his understanding of databases but more so, his understanding of how nonprofits work. There was no lost time educating him about how membership organizations are “different.” Wes recommended changes in processes as well as tips and tricks that were easy to implement made an immediate positive impact.”

Mary Pat Paris, Executive Director
International Registration Plan

Mary Pat Paris
International Registration Plan

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Western Arts Alliance
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