Lehman Reports Annual Industry Study: Association Management Software Use and Satisfaction
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1 2012 Lehman Reports Annual Industry Study: Association Management Software Use and Satisfaction Lehman Associates, LLC Minneapolis Washington, DC 2308 Mt Vernon Ave, Suite 713 Alexandria, VA / info@ansible.com / info@lehmanreports.com
2 Lehman Reports AMS Use and Satisfaction Study, 2012 The Lehman Reports Annual Survey of AMS Use and Satisfaction is the most comprehensive study of associations use of and satisfaction with AMS products. First launched in the fall of 2005, findings from the study have been cited in articles in the ASAE magazine Associations Now, industry conference presentations, webinars, and newsletter and blog posts. Selection of an AMS solution is a critical decision with major strategic and financial implications. The AMS Study is based on an online survey distributed to nearly all US-based associations with an annual budget of at least $1M. Lehman Reports The Lehman Reports is a series of industry studies focused on the use of technology by associations and other non-profits. In 2010, we expanded the AMS study with parallel studies of associations in Canada, Australia, and the UK. In 2011, we launched a new association Technology Study to cover other uses of technology by associations; that study is now in its second year. The Marketplace of AMS Products Most associations in this study are using an AMS product or online service. More than 70% are using a commercial product. Even among the smallest segment of associations with budgets of $1-2M, nearly two-thirds report using a commercial AMS product. The remaining associations are using an in-house custom system or office database. There has been shifts among the smaller organizations towards AMS products and away from in-house office databases and custom systems. Membership Database Solution Full Sample $10M and Over $5-9.9M $2-4.9M Product Custom System Local / office database $1-1.9M 0% 20% 40% 60% 80% 100% A number of companies offer full-featured AMS products, and many more offer products that include one or more key functions. There is no single best AMS product. The best product for a given association is one that offers required capabilities at an affordable cost. Lehman Associates, LLC 2012, All rights reserved Page 2
3 Market share changes slowly reflecting the 4-5 year purchase cycle for AMS products and upgrades. Within the market of associations with budgets of $5M or greater, three companies account for over three-quarters of the installed base of AMS products: Advanced Solutions International (imis), TMA Resources (Personify, TIMSS), and Avectra (netforum). The next tier, representing just under 20% of the installed base includes ACGI Software (Association Anywhere), Aptify (Aptify), and Protech Associates (CRM for Members). ASI has the greatest market share in the $2-10M market. Among the largest associations with budgets of at least $10M, the market is split among ASI, Avectra, and TMA Resources. Among smaller associations with budgets less than $2M, the mix of products is much greater. ASI and Avectra are the market leaders, each with nearly one-quarter of the installed market. However, the remaining half of this segment is shared by a number of providers, none of whom has a dominant position. TMA Resources is not present in this segment, focusing exclusively on larger associations. CRM The interest in customer or member relationship management (CRM, MRM) by associations has increased in past years, mirroring well-established trends in commercial sectors. As the database of record for member activities and information, the AMS is the logical place for those functions. Respondents to this study agree. Over 90% say CRM should be part of their membership management system and a majority of those are satisfied with the degree to which their current solution provides those capabilities. Still, over 40% remain less than fully satisfied. 8% CRM Consideration Should be part of AMS, we are satisfied 40% 52% Should be part of AMS, we are not satisfied Prefer to use a separate CRM / MRM application (integrated) The level of satisfaction varies considerably by the type of membership management solution in current use. While 60% of those using an AMS product are satisfied, for those using custom or office databases, the rate falls to one half of that figure. These data suggest that gaining effective CRM capabilities would be an important reason for associations to move from in-house database and custom systems to one of the AMS products. It is undoubtedly a factor in the high rates of new product adoption evident among associations using these in-house solutions and smaller associations. Lehman Associates, LLC 2012, All rights reserved Page 3
4 Product Custom System CRM Consideration Should be part of AMS, we are satisfied Should be part of AMS, we are not satisfied Local / office database 0% 50% 100% Prefer to use a separate CRM / MRM application (integrated) AMS Purchasing Triggers Associations initiate the process to upgrade or replace their current membership management solution for a variety of reasons, but the reason most frequently cited is to gain greater integration capabilities with other applications that enable them to engage, deliver value and transact with members online. Today this includes more than website integration. It also includes a variety of third-party applications to support social media, marketing, e-learning, meeting registration services and others. As associations make greater use of these third-party tools, a key success factor is the ability to tie them directly to the AMS database of record. The first level is to be able to pull member information from the AMS, but increasingly the challenge will be to push information back to the AMS. A major reason for upgrading a current AMS product is the expectation that the upgrade will address problems or bugs with the current software. Lehman Associates, LLC 2012, All rights reserved Page 4
5 Purchase Reasons by Type of Purchase Greater capabilities to integrate web / other applications Dissatisfaction with current function and capabibilities Staff dissatisfaction with previous product Dissatisfaction with previous provider Outgrew current capabilities Enhance e-business / e-commerce capabilities Believe upgrade would address problems / bugs Previous product no longer supported Desired features required newer version Advised to upgrade by consultant Enhance social media capabilities Policy is to run current versions New Product, New Provider Believe upgrade would address problems / bugs Greater capabilities to integrate web / other applications Desired features required newer version Policy is to run current versions Enhance e-business / e-commerce capabilities Previous product no longer supported Dissatisfaction with current function and capabibilities Staff dissatisfaction with previous product Advised to upgrade by consultant Outgrew current capabilities Enhance social media capabilities Dissatisfaction with previous provider Upgrade or New Product, Same Provider 0% 20% 40% 60% Percent of Associations Citing Reason AMS Purchasing Upgrades and New Products The current data is consistent with past findings that associations entered into a AMS purchase process every 4-5 years. For mid-to-large associations and especially those using one of the three leading providers, the vast majority choose to upgrade rather than move to a new product and vendor. The 4-5 years purchase cycle coupled with high levels of upgrades suggests that an association is making an 8-10 year commitment when they move to a new AMS product. With added dependence on these systems to drive online engagement and commerce, and as the hub for a growing number of third-party applications, the strategic and financial investment in a current product is also like to increase. That in turn may lengthen the commitment period. Lehman Associates, LLC 2012, All rights reserved Page 5
6 As noted in the 2011 study, smaller associations with budgets less than $2M are rapidly adopting new AMS products to replace custom and in-house office database solutions or to replace an existing commercial solution. The findings last year were that nearly two-thirds of recent installs were to implement a new product. For 2012, the figure has risen to well over three-quarters. The availability of lower priced online solutions is undoubtedly driving much of this conversion. The lack of required in-house technical resources coupled with a monthly subscription payment brings full featured systems within reach for these smaller associations. Most Recent Implementation Total $10M+ $5-9.9M $2-4.9M Less than $2M 0% 20% 40% 60% 80% 100% New Product / Company Upgrade / Same Company Hosting Associations are steadily moving away from hosting membership databases in-house. Today one-half of AMS products are hosted in-house as compared to over 60% as recently as The change from 2011 is due primarily to a shift towards hosting with the AMS provider. There are several product offerings that are now offered as a hosted service either exclusively or as a primary mode. This is in addition to SaaS-based solutions that are only offered online. Associations operating custom solutions are also shifting their hosting to an external provider. The trend is expected to continue as cloudbased resources become increasingly reliable, secure and inexpensive options. Product 2012 Product 2011 Custom 2012 Custom 2011 Hosting by Solution by Year 0% 20% 40% 60% 80% 100% Hosted in-house Hosted by provider Hosted externally - other SaaS Lehman Associates, LLC 2012, All rights reserved Page 6
7 Satisfaction Satisfaction ratings for AMS products remain moderate, but for the first time in several years average ratings have increased. The shift is evident across the full list of individual items. We have reported in the past that newer products consistently garner higher ratings on key items. As the cycle of upgrade and replacement continues, we would expect to see average ratings continue to rise. Product and Service Satisfaction Average Satisfaction Rating Customer self-serve options Basic reporting capabilities Supports bus process and workflow Ease of use CRM capabilities Extend through toolkit or API Event planning capabilities Website integration capabilities Technical and customer support Customize and stay on the upgrade path Datamart / data warehousing capabilities Development direction Support for allieds and components Cost and ease of upgrade Training options Overall e-commerce CMS within product Integration with third-party apps, in-house and Shopping cart functionality Meet bus process w/o customization User shopping experience Executive dashboards 360 degree view of members including social Fundraising capabilities Ability to customize look of e-commerce web Social media capabilities Sales force automation support Mobile options Average Rating across items: Mean Satisfaction Rating on a 10-point Scale Among the specific product functions and capabilities, the highest ratings are assigned to member self-service options (such as updating contact information), basic reporting capabilities, capabilities to support the organization s business processes and workflow, and ease of use. These associations are least satisfied with several e-commerce Lehman Associates, LLC 2012, All rights reserved Page 7
8 functions including the options to customize e-commerce web page and the online shopping experience, the ability to meet business process requirements without vendor customization, more advanced reporting capabilities such as executive dashboards, and newer items, social media capabilities and mobile access. Importance of Mobile The importance of mobile in a future AMS purchase decision has increased. In the 2012 study more than one-quarter, 28%, say that mobile is likely to be a requirement for a future AMS product purchase, and nearly 40% more say it is important but not an absolute requirement. This compares to only 17% and 32% respectively just one year ago. Taken together, the proportion of associations who say mobile will be an important element in their next purchase decision has grown from just under one-half in 2011 to two-thirds in Much of the year-to-year change results from a greatly increased importance reported by smaller associations. While the current rates are comparable to those of the largest associations in 2011, they are nearly double that recorded in 2011 from smaller associations. Mobile Importance, Future AMS Purchase 29% 5% 28% Very important, likely to be a requirement Important, but not required 38% Nice to have, not an important decision factor Not likely to use mobile, not a consideration Lehman Associates, LLC 2012, All rights reserved Page 8
9 Reporting Association reporting needs frequently exceed the capabilities resident within their AMS systems. More than 40% say this happens frequently and another 37% say it happens at least sometimes. Fewer than 20% of these associations feel that their needs rarely or never exceed the capabilities within the AMS. Reporting Needs Exceed AMS Capabilities 16% 3% 44% Frequently Sometimes Rarely or never Other 37% Larger associations encounter this challenge far more frequently than do small associations, despite operating AMS products that may have superior reporting capabilities. Over half of the largest associations say their reporting needs frequently exceed AMS capabilities and over 80% indicate that this happens at least sometimes. In contrast, only one-third of small associations feel this happens frequently. Even among that group, however, three-quarters say this happens at least sometimes. With this data in mind, it is easy to understand the earlier finding of a high importance assigned to enabling direct access to association data. Reporting Needs Exceed AMS Capabilities $10M and Over $5-9.9M $2-4.9M $1-1.9M 0% 20% 40% 60% 80% 100% Frequently Sometimes Rarely or never Don't know Lehman Associates, LLC 2012, All rights reserved Page 9
10 Integration Associations are adopting third-party applications to take advantage of new engagement models and to tap into specialized capabilities. This is evident in new areas such as social media and mobile services as well as enhanced capabilities for marketing and communications, meeting management and registration, e-learning, and others. AMS providers build into their products many of these capabilities but may offer fewer options than dedicated third-party applications and are likely to upgrade them less frequently. They do have a potential advantage of automatic integration with the other functions of the AMS, but surprisingly, some are not well integrated within the vendors AMS platform. The rapid pace of change virtually guarantees that associations will continue to make use of these third-party services to meet at least some of current requirements as well as yet undefined future needs. This poses a challenge to ensure that the applications are seamlessly integrated into existing systems, for both the end user and staff. Enhanced integration capabilities is the most frequently cited reason for embarking on a new AMS purchase or upgrade, and receives lower than average satisfaction ratings. When choosing an AMS product, a key consideration should be the degree to which the AMS offers the flexibility and integration capabilities required to meet these future needs Study The seventh-annual AMS Market Study launches in the first quarter Lehman Associates, LLC 2012, All rights reserved Page 10
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