Application Service Providers A La Carte.

Early adopters order up favorite technology solutions via the application service provider model.

ANNA M. HOEMEISTER, CERTIFLED PUBLIC ACCOUNTANT AND PARTNER, Tate & Tryon CPAs and Consultants, Washington, D.C., estimates that a mere 6--7 percent of association executives understand the term application service provider and what this hot technology trend means for their organizations. When queried as to their understanding of ASPs, the participants in ASAE's January knowledge network "Application Service Providers" at which Hofmeister was a presenter, substantiated by a show of hands that her estimate was on target.

Despite the minimal understanding of ASPs, association leaders are making their way up the learning curve. And, in some associations, earlier adopters are already realizing benefits of increased efficiency, lower cost, and added member value resulting from this new business model.

While migrating association management software systems to ASPs is being met with understandable reluctance and concern (see companion article "What's Up With ASPs?"), a number of single and bundled ASP solutions are gaining popularity, with the more extensive AMS system following suit in the not-so-distant future. Advanced Solutions International, Alexandria, Virginia, for example, recently announced the availability of CyberiMIS (www.imis.com/www/CyberiMIS/cyberimis_main.htm), a new application hosting service that gives associations the ability to run their iMIS association management software over the Internet.

ASP evolution

Ed Lang, vice president of strategic partnerships and technology for Cvent, a Web-based event management company headquartered in Arlington, Virginia, explains how these individual applications can allow associations to provide enhanced member service, save money, and streamline human resources--and do it all within a short time frame. Viewed by most industry experts as best for small-and mid-sized associations, "ASPs have gone through an evolution that began with companies merely hosting your organization's Internet-related activities," explains Lang, "to three basic business models today." ASP aggregators, says Lang, partner with other companies that specialize in delivering certain applications via the Internet. Lang notes, "These aggregators offer your organization the opportunity to bundle your business operations and processes together and run them through the ASP aggregator's system."

Other ASPs provide vertical industry solutions that serve particular needs. While they focus on a generic category, such as online education delivery or event management, they also tailor the application specifically to an association's individualized needs. "Roughly one third of the broader ASP market is of this vertical profile," says Lang. "The rest provide a horizontal solution--what people are calling a niche ASP--that provides business processes that are shared across associations, such as accounting and human resources services.

"The challenge with associations," continues Lang, "is the question about data. Because of concerns about security of data, the ASPs that will penetrate quickly and achieve firmer market traction are the ones that are not so centrally located with that core of membership data that associations protect. Distance learning, for example, has really taken hold. That's because distributing educational programs doesn't necessarily require a lot of data migration and integration with the AMS system. The ASP's software simply allows the education department to do what they do better, in a more efficient manner, and on a wider scope."

What ASPs are doing, explains Lang, is developing software that eliminates the need for association IT departments to figure out how to build, install, maintain, and update their solutions. In addition, he says, "ASPs can identify particular needs that large numbers of associations are indicating that they want, make the revisions, and roll them out so that everyone benefits. You don't have to wait for the next release--as you do when you license software. We continually upgrade the product based on customer feedback."

Other advantages Lang mentions mirror what the overall ASP industry promises: speed to market, cost savings, better customer service including more customer relationship marketing opportunities, and freeing up of staff to get other jobs done. "Even if we are working with a new meeting planner," says Lang, "in one day we can import the association's data and integrate it with our software solution to put together an event campaign. Then we provide an online interactive training session of about two hours that allows the association staffer to get an event campaign up and running using the association's data.

"Since ASPs spread costs across a large number of users," explains Lang, "the association pays much less than it might if purchasing an off-the-shelf solution or trying to customize or build a solution on its own."

An irony that Lang points out is the hypersensitivity of some associations to losing control of their data. "One of the stronger objections to using ASPs," adds Lang, "has been that the association provides the ASP with its most valuable intellectual property--membership data. But it's interesting to find out from individual associations just what their back-up strategies are. Do they back up their data to a remote location? Oftentimes we find that the back-up tape is sitting next to the same computer that holds the original files--which is useless if the building catches fire. If their data is on our servers, we back it tip to two different locations. So if the facility that we host burns down, the chances that fires in both locations occur simultaneously is slim. If the association hasn't formalized its disaster recovery plan and implemented other security measures, then an ASP may actually safeguard the association's data better than it does itself."

Straightforward applications

Among the most popular ASP solutions being used by associations are those that fill specific ongoing needs, such as accounting services, event management, and member relationship management. As Lang mentions, another ASP service that has really taken off is distance learning. See ASAE's June 2001 Technology Solutions directory for a discussion of this popular technology tool set.

Accounting options. During her presentation at ASAE's knowledge network, Tate & Tryon's Hofmeister explained, "ASPs offer an alternative to what can be a costly process of acquiring an appropriate software package for your needs--and the seemingly endless training, troubleshooting, and upgrade costs that often end up being more than an organization has bargained for. Rather, using an ASP that delivers and manages software applications from a remote data center to multiple end-users via the Internet or a private network can offer an alternative to this costly process.

One of Tate & Tryon's clients, the Public Risk Management Association (PRIMA), a trade association based in Arlington, Virginia, with an annual operating budget of $2 million, realized that its outdated accounting and membership software was requiring twice the amount of time to process and close the books each month as more current software would have facilitated. With the organization having operated at a financial loss for several years, only minimal funds were available to purchase and install new software.

"The cost to purchase and maintain the software over the next three years was estimated at a minimum of $100,000. With this in mind, we recommended that the organization consider using an ASP," says Hofmeister. "In addition, since the association didn't have the resources to convert to both new accounting and membership software, we discussed running its membership data through the accounting software. Although it isn't an ideal solution, it turned out that the ASP's accounting software was stable and sophisticated enough to support this option."

"It was essential," says PRIMA Deputy Executive Director Jim Hirt, "that we switch to an ASP for effective financial management. Even with few staff members and our existing financial restrictions, we can now produce timely financial reports and manage our membership database more efficiently. This change, however, was not completed without some additional costs in time and money. For example, it meant training for the entire staff and a learning period during which business still bad to continue to move forward."

"In the end, we estimate the total cost of this project over a three-year period," calculates Hofmeister, "to be $35,000, including installation, database conversion, customization, and training." In this case, she concludes, there was significant cost savings by using an ASP solution. "But this might not always be a cost-effective option. For example, if you're planning to buy, keep, and maintain software in its present form for five years or more, the total cost of leasing (from an ASP) could well be more than the cost of purchasing."

On the other hand, "in our situation," says Hirt, "we had no other choice but to go to an ASP. We are thankful that this option was available and that we had a relationship with an organization that could offer it. Without it, our ability to manage the association would have continued to be very costly, while producing outdated reports.

Events large and small. Automated event management is nothing new, Many associations with financial, technology, and staff resources have provided online registration for meetings, conferences, and other events via a module on their Web site. Now ASPs make these services available for the association with a smaller staff and budget.

Support for small- to mediam-size events. For Sarah Drennan, vice president, operations, Council of Public Relations Firms, New York City, Cvent's event management solution fit well with the council's strategy of taking advantage of technology and selective outsourcing to keep salary and overhead costs well below national averages. "With a staff of two full-time employees and a receptionist shared with another organization," says Drennan, "the automated event management process provides a low-cost solution to our planning needs and allows the council staff to concentrate on establishing thoughtful, stimulating agendas and successful events." The council, which represents more than 125 of America's leading public relations firms, sponsors several small- and mid-sized events each year. Using an ASP to manage events has streamlined the process in several ways.

1. Freeing up staff. In 2000, the council sponsored five nationwide summit meetings (with 30-40 participants each) and four public relations career fairs across the country (attended by 200-400 students and mid-career professionals). "Prior to the ASP solution," says Drennan, "the council staff handled registration the old-fashioned way. An overwhelming amount of my time was spent answering registrant calls and e-mail queries and registrations." It now takes Drennan 15 minutes to set up the typical event and distribute the invitations. "The ASP manages the responses," explains Drennan, "and it even allows me to generate feedback, by surveying my registrants before and after the event."

The council now manages all its meetings electronically, including small regional meetings, annual board and member meetings, and an upcoming international summit in San Francisco, to which the council will invite CEOs of public relations firms from around the globe.

2. Enhancing the basics. E-mailed invitations for each event explain the details of the meeting or conference and contain a link that when clicked on takes the invitee to a formal, formatted invitation. "The Web-designed version," says Drennan, "can be customized, although the ASP provides hundreds of template invitations. Right now, the link in the e-mail takes the person to the Cvent site (www.cvent.com) on the Web. We could also make a seamless connection to a site that appears to be part of our organization's site, but we chose not to incur the additional cost to do that."

3. Minimizing cost. The council is currently paying a low introductory rate, aware that there will be a significant increase later on. "But even with higher costs," says Drennan, "the price is significantly less than the lost productivity suffered when J managed registrations myself. It will be a predictable fee that we can budget for, and it means that we will not have to hire additional staff to manage our events as they continue to grow. Drennan also notes that if the council were to purchase the software to manage their events, it would require technology support and continual upgrades. "And you know," she quips, "the minute that you purchase new software, for some reason the vendor is always one week away from launching its new version."

4. Customizing information. Cvent can integrate information about registrants into the council's AMS database. "A password takes you to a section of the site that houses the information on all of your events," explains Drennan. "There's a separate address book for each group, and when you go to the file of a particular event you can gather responses to survey questions (Why did you choose to decline this invitation? What other programs would you rather see at this particular educational event?), download informational spreadsheets, and so on. It gives us a lot to work with in customizing our marketing and improving programming."

Supporting the mega-meeting. "When our annual floraculture conference and trade show attendance reached nearly 9,000 in 1998," says Dennis Kirven, executive director of the Ohio Florists' Association, Columbus, "we decided to look at third-party alternatives to see if we could process our housing reservations more satisfactorily." The Short Course, OFA's annual educational event and trade show for its 3,600 national and international individual and company members, had skyrocketed in size since 1993, growing from 5,450 attendees in eight hotels reserving 5,800 room nights to its 2000 event with 10,277 participants in 14 hotels reserving 9,100 room nights. "The size of the event and the less-than-satisfactory local housing service forced us to see whether we could get some quality help with our hotel situation," recalls Kirven.

A local destination management firm that Kirven had been working with became the lynchpin in the search process, identifying 12-15 firms that might become OFA's ASP for automating the room reservation process for the meeting. "In the end," says Kirven, "the members of our staff (currently 10 full-time and 4 part-time employees) who would interface directly with the ASP narrowed the choices down to five, compared them against the criteria we had identified, and then selected two that we decided to visit.

1. Shopping list specifics. Kirven, along with his housing staff representative and the destination management company representative who had conducted the search, decided to do a site visit at the headquarters of the two potential outsourcing partners. "Our purpose in doing a site visit and conducting discussions with the potential outsourcing companies," says Kirven, "was to try to find out exactly what kind of services they provided and the level of customer service each exhibited. Wanting to make sure that our members would be treated with the kind of customer service that we've always tried to provide, transitioning that relationship over to a third party created some degree of trepidation for us."

In the end, Kirven's group decided to work with b-there.com, Westport, Connecticut, "because they seemed to be focused on our needs and how they could adapt their system to meet them," says Kirven. "That seemed like the right fit for us rather than to try to fit into a company's predetermined system."

Peggy Lee, founder and chairman of b-there.com, says, "The support offered by your service provider can make all the difference. If you have ever tried to call a traditional software support line, you can immediately relate to this point. We recently invested in the addition of 10 client service and account management positions, because this level of support helps customers maximize their use of the system and enhance their return on investment."

Once Kirven began negotiating the details of outsourcing the housing service, b-there suggested that they also handle registration. While Kirven hadn't originally considered that, the cost for the package of reservation and registration services was much less than he anticipated. "Since I desperately needed to free up time for my small staff," says Kirven, "so that they could concentrate on enhancing the quality of the meeting and troubleshooting other details of coordination for our nearly 200 seminars and speakers, I felt that it was worth the risk to take this step."

2. Learning curve. While the automated housing module went extremely well the first year, "the registration process did not run as smoothly as we had wanted it to," admits Kirven. "If we had given the ASP more time to develop the process and to react to our requests and needs--and if I'd given more thought to selecting a person with third-party management experience to manage the ASP relationship-- that first year would have gone smoothly. But our designated staff member--with the first year of experience behind her--made our second year successful. We are more than satisfied-having created one-stop shopping for our members."

3. Advantages. The use of the service provides members with 72-hour turnaround of their registration and reservation requests compared to the one to two weeks typically needed by OFA. "This gives us a lot of roomblock and seminar-registration information quickly," explains Kirven, "and attendees take advantage of the preregistration pricing in a multitude of ways. Consequently, any problems are handled on site without staff involvement. The b-there representatives are on site when attendees arrive, fielding questions and problems--and leaving our staff free to handle on-site registration, logistics, and other issues."

To offset some of the cost of the new service, Kirven transferred fees to the people who would benefit most-those using the automated, more efficient system. "We incorporated some of the housing module cost into the reservation fee," explains Kirven. "And we charged a one-dollar fee for the automated preregistration so that only the people who used the new service paid for it. Those who registered on site did not incur any additional cost."

Member relationship management.

Michael Meneer, executive director, AmenCorps Alums, Inc., Washington, D.C., used an ASP to coordinate the 2000 Friends of AmeriCorps fundraiser last October. With a membership of 1,500 and a database of nearly 70,000, Meneer's two-person staff chose seeUthere (www.seeUthere.com), Santa Clara, California, to take over the design and dissemination of approximately 1,000 invitations. "With new technology," says Meneer, "you have to strike a balance. Using seeUthere's service, we sent e-vites to all those for whom we had e-mail addresses. We also sent printed, letter-style invitations followed by a remindler postcard just prior to the event. Invitees could register online or use the option of calling our office. SeeUthere also created a customized Web site for our event page, with the URL included on all invitations."

Beyond the event management module, Meneer is taking advantage of some of the other bundled services that seeUthere provides, including some membership management tools. "The major benefit of working with the ASP that we selected has been the ability to provide online joining and donating functions. Since nearly 90 percent of our constituency is defined as part of Generation X, we have the advantage of targeting a technologically savvy group of people. Using online solutions makes complete sense in terms of effectively serving our members and potential members."

A "Join Here" button on Ameri-Corps Alums' Web site leads to a seam-less connection to the ASP's site, which then guides the prospective member through the registration process. "Our staff periodically checks the ASP's site to see who has joined or renewed. This information is automatically recorded into an information management feature, which essentially serves as an easy-to-use membership donor database. At least once per month, we receive a check from the ASP that includes all contributions and membership clues collected on our behalf--less fees of one dollar per transaction and 4.75 percent per donation."

When it comes to cost, "we spent $2,000 for everything," says Meneer. "This included a set-up fee, consulting and technical support, printing and postage for the invitational event, customizable Web design, data management, and a six-month subscription fee. Our ASP is quite sensitive to the fact that as a nonprofit organization, we do not have a large budget for consulting fees."

Meneer says, "I'm impressed with the ASP model for two reasons: continual innovations and service upgrades that put new tools at our fingertips, and responsive customer service capable of true problem solving. With software packages," he notes, "upgrades must be purchased--and rarely are innovations and upgrades timely. With our ASP, there are new services constantly being added, such as free e-faxing and blast e-mailing. In addition, when we have a technical issue, customer service representatives are able to problem solve faster because of the access they have to our data via the Internet."

As far as membership management, b-there.com's Peggy Lee points out: "Significant customer relationship management advances are possible with the use of an ASP, allowing associations to develop one-to-one member-centric solutions for their members."

Along those same lines, seeUthere CEO John Chang says, "The customer relationship management initiative facilitated by the exchange of data between ASPs and the associations they work with provides a new level of customer service that wasn't available before. While you may think it's a kind of 'Big Brother' scenario, the association can now answer the question 'Who are you?' much more definitively when it comes to identifying its members."

Immediate benefits

The first thing Meneer noticed after launching the ASP service was the more efficient use of staff time and talent. "With a staff of two, our organization lacks the resources to build an online donation or membership registration service on its own. Without resources to hire a webmaster," he adds, "using an ASP provides access to Internet-based transactions that would otherwise be unavailable to us."

"During my research on ASPs," says Meneer, "I was encouraged to read in David Lake's article "Time to Learn Your ASPs" in the Industry Standard, October 30, 2000, that by 2004 roughly half of all small businesses will be using ASPs for internal and e-commerce applications. (Go to www.thestandard.com/research/metrics, scroll down to the metric search box, key in the title of the article, and click on go for the full text.) I take this as a credible indicator as it relates to the risk and quality of products associated with ASPs. Our experience to date has been positive and productive. We are looking forward to continual innovations and access to better ways to

serve our constituency because of our relationships with ASPs,"

The Council of Public Relations Firms' Drennan would concur. "ASPs are the ideal solution for small associations that don't have the budget to develop customized solutions. We are big proponents of ASPs and have even asked several technology providers if they might be able to develop some applications specifically targeted to managing public relations firm operations. While we have several members that are public relations firms with a huge worldwide presence and resources to customize and manage their own technology solutions, there are many small shops that can't do that,"

While it's difficult to put a cost figure on what the freeing up of staff time does in terms of event quality and member value, Kirven is pleased that his staff can now work a more reasonable schedule and still know that they are doing a quality job. "We used to work seven days a week, until midnight sometimes," he recalls, "as we got closer to the event. Being able to leave at 6 or 7 p.m. is a tremendous benefit and will likely pay off in staff retention and employee morale."

Cautions and caveats

"To reduce difficulties in converting your existing system to the new ASP" says Jim Hirt at PRIMA, "it is essential that the contractor have complete understanding and knowledge of your current system. We found that there was not only a learning period for staff on the new ASP, but a learning period for the contractor to understand how our current system worked and what it would take to convert records into the new ASP-delivered system."

Meneer articulates the reverse scenario: "My main piece of advice to other associations is to take the time necessary to get to know the ASPs that you are considering. I took one month to consider seeUthere.com and five months to evaluate an ASP we recently hired to facilitate membership information management. There is no doubt that using an ASP can be a risky proposition, particularly for associations whose livelihood depends on their ability to effectively collect, broker, and manipulate membership data. I was particularly attentive to proprietary rights to our data. With both ASPs there is absolutely no question as to who is entitled to use our data; we made it abundantly clear up front and in writing that they will not broker or in any way use our data for profit. In addition, if we decide to go to another ASP or even go back to a software-based system, both ASPs have mechanisms for easy retrieval of all of our data."

Kirven can't recommend highly enough taking a site visit to the ASP you are considering. "All of these companies will tell you how competent they are," reminds Kirven. "But when you are standing behind someone who is fielding a call, and you can see how the call is handled from start to finish, it really tells the true story." When Kirven's group was shopping b-there.com, they were told that the maximum time on hold was two minutes. After someone is on hold for two minutes and 30 seconds, there is an all-points page that goes out--and someone immediately takes the call. "Many of these firms are like cookie cutters," says Kirven. "It's the people that really make the difference."

Kirven also recommends that the organization identify a liaison to the ASP, ideally a person seasoned in managing a third--party relationship--not an easy thing to do. "It's one thing to work with people whom you know and are accustomed to," says Kirven. "But it's another to work with people at a remote location."

"Although the results six months after the installation have been good," says Hofmeister about her client's experience with an ASP, "that's not to say that there haven't been some bumps in the road. Initially the system was often slow or even inaccessible clue to the type of Internet connection the ASP used. Although the ASP quickly identified the problem, it took several months to solve it due to the intense demand on service providers for better equipment." Hofmeister suggests asking derailed questions of the potential ASP and confirming that all the necessary equipment is in place before the conversion. "Also," says Hofmeister, "I wouldn't overlook the ISP industry's prediction that approximately 60 percent of ASPs will go out of business by the end of 2001. While I still think ASPs are a very good alternative for organizations to consider, associations must try their best to ensure that those they contact are long-term players."

For Drennan, the frustration lies elsewhere. "We have explored the ASP model for our AMS system, but all the products we've seen are for much larger organizations. Nothing is even close to what we need-and the prices are too high for a system that, even though we grow, we'll probably never grow into. For now, we'll have to continue to maintain our own system.

When it comes to the future of ASPs, see Uthere's Chang predicts: "Where the application makes sense, you'll see ASPs flourish. Where it doesn't make sense, the application will die. When you are able to send out 100,000 invitations for a single event, automate the response process, and interact with customers on a 24/7 basis, an ASP makes total sense. But if you're developing a brochure using a suite of applications that's sitting on the Internet, you can just as easily use software loaded onto your own server. The Web-based solution may be sexy, but it's not really adding value."

Carole Schweitzer is senior editor of ASSOCIATION MANAGEMENT.