4 steps to build a business case for new membership software

You know it’s time for new association management software. Does your organization?

Here’s how to create a compelling case for an investment in new membership management technology.

As your association grows, eventually it’s time to move to new membership management software. Your old technology might have worked in the past, but it just isn’t keeping up with your organization’s evolving processes and needs.

But here’s the catch: Not everyone at your organization understands the challenges with your existing association management software (AMS). They don’t know the value a new solution could bring.

So how do you build a business case to get executive buy-in and board support for a new membership system? Here are four key steps:

Step 1: Go beyond the numbers.

Building a business case starts well before the board reviews bottom line costs. In fact, John Walker, an independent IT consultant with COTIQU Consulting in Australia, suggests associations should make two visits to the board: the first to present the business case and the second to discuss actual cost estimates.

The business case presents your proposal for change. This is where you outline the opportunity cost for staying with the system you have.

“You don’t necessarily need to quantify the actual costs of what a solution is going to be or speak to the cost of that implementation,” Walker says. “What you need to do is present to the board a case for change. And the constraints that you’re facing could be inefficiencies at the operational level, or opportunity cost. But the case has to demonstrate that it is time to do something.”

It can be compelling to show that, given the constraints of the current system, your organization might stand to lose x number of members and x number of dollars. Then, the outcome of your first meeting should be that you’ll receive the approval to execute an AMS selection process.

Notice that the first step doesn’t include a discussion about new system pricing. At this point, it’s too early in the process. And, Walker says, beware of the temptation to mention ballpark pricing. While the number you discuss early on may be an estimate, that’s the number the board will remember. Without your requirements in place, that ballpark figure is meaningless and can do damage if you include it in your initial presentation.

Here are some discussion points that go beyond the numbers:

  • Connect it to a strategic initiative and the bottom line. Is the association making process/organizational changes or an update to its website or other critical system? If so, this may be the opportunity to approach your leadership about a new AMS. By combining initiatives, your organization may be able to reduce costs by launching the new systems or changes together.
  • Get personal. Be clear on what the direct benefit to leadership will be. Detail how the new AMS will give greater visibility of membership data and enable executives to make better decisions. Develop a clear understanding of their goals. Show how the new systems can facilitate and drive those goals.
  • Talk benefits, not features. Instead of discussing features like “responsive member portal,” talk about improving how members can use the portal to manage their details and understand the association’s value proposition and the value of joining or renewing. Show leadership how better reporting and business intelligence can give them more clarity into revenue, including reporting on which programs helped drive revenue and which aren’t yielding results.
  • Clarify the risks of doing nothing. While there is risk with any new system, leadership needs to be in the loop about the risks of doing nothing. These may include:
    • brand/image of the association
    • falling behind the competition
    • staff and member retention as they get frustrated and leave
    • data issues
    • continued investment in outdated technology
    • difficulty achieving the organization’s mission

Step 2: Discuss the difference between ROI and TCO.

If you think the board will want to talk numbers in the initial meeting, then you’ll need to focus on return on investment (ROI). Think of ROI as a justification for the investment and total cost of ownership (TCO) as what the bottom-line cost will be.

The ROI belongs in the first meeting. The TCO shines in the second.

According to Walker, ROI can be quantified in terms of operational inefficiencies inside the organization. For example, the return can manifest itself in solving operational shortcomings. Say you’re keeping member data in your finance system, your customer relationship management (CRM) system, and in an online member directory. You can show the ROI of a new system by profiling these inefficiencies and proving the pain these cause your members. Be specific and have the numbers to back up your case.

ROI is, in effect, the pain you’re walking away from when you move to a new system. TCO, on the other hand, is a forecast of the opportunity you have with the new.

Arriving at the TCO is where you’ll spend the bulk of your time between meetings with the board. This shows the outcome of your selection process – where you define your requirements, determine the upfront investment, and outline the ongoing operational costs. There are several factors that go into determining the TCO, and it’s best to make sure, when comparing systems, you get to as close to a direct comparison as possible.

Step 3: Play the numbers game.

When you meet with the board the second time, you’ll have a project plan in place that shows the outcome of the selection process. Now is the time to talk numbers. A solid plan contains:

  • the project structure
  • stakeholders and their roles and responsibilities
  • identified risks
  • a TCO modeled over three to five years
  • what’s in and outside of scope
  • the governance that’s going to control the project

This is your chance to get everyone in alignment so that well-defined expectations are set and all sides are comfortable with the approach.

Step 4: Be prepared for questions.

Leadership will likely have multiple questions. Initial questions typically fall into one of these categories: challenges, TCO, ROI, timeline, and resourcing.

Do your best to anticipate those questions and prepare answers in advance. Consider creating a brief executive summary that gives a succinct overview and addresses anticipated questions.

Learn more about how to get your organization on board with new membership management technology by reading the paper, Gaining Board Approval for Technology Budget.

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