This is a collaborative blog post by Matt Cohen and Judith Lindenau
Matt: My industry colleague Judith recently posted brilliantly about Associations having an IT strategy outside of MLS (http://www.realtown.com/Judith2/blog/it1). I’m also hearing from more and more Associations evaluating how to distance themselves from MLS functions – some just by governance changes, others going all the way to the point of having Association dues pay for Association functions and MLS dues pay for MLS functions, with no money flowing from the MLS to the Association.
Especially with but not limited to smaller organizations, it is difficult to get all the way to that latter point, and there will be payments to the Association for use of facilities, staff time, and other resources – but just like RESPAs “no unearned fees”, in this case Associations are providing specific value to the MLS and earning the money they receive from the MLS. To get back to Judith’s point, whether there is full separation from the MLS or some staff are shared, this means that IT staff at the Association have time devoted to specific association activities and carrying out the Association’s IT strategy. If the IT staff is shared with the MLS and 60% of their time is billed to the MLS, then they should be able to show how they spent 40% of their time working on the Association mission. But I rarely see this happening in practice.
I’ll spend a little more time on the shared resource question, as it is quite common. If there is not complete Association / MLS separation, there may be some shared IT infrastructure. For example, overall network management and associated costs may be split evenly between the organizations – but if the organization’s workstations and servers are 80% Association identified, then 80% of the costs of server management would be allocated to the Association. If a common billing infrastructure is used, costs for that infrastructure and its management are split between the organizations. Likewise, I know when I visit some organizations to perform an information security audit, the cost is split between the Association and MLS budgets.
Judith: You’re absolutely right on! I have suggested in earlier blog posts that good financial management of any association demands careful financial tracking of activity centers – not only the ones that have had direct income and expense, but also programs where the cost is buried in the overhead. Professional Standards is a good example: running an ethics enforcement service is very costly in terms of education for members and staff, volunteer time, clerical time – even if an association only hears a very few complaints a year, the infrastructure must be in place and ready to be utilized.
Certainly associations with MLS operations should set them up as separate cost centers, and factor in staff time and other overhead costs separately for each area. It’s not difficult to obtain a rough working percentage allocation of resources. Usually staff can pretty accurately estimate time spent, or a manager may want to maintain a time log for a period of time in order to substantiate the operation.
Matt: So, let’s talk about how IT supports the Association’s mission. As I recently blogged about on the Clareity Consulting blog, the Association mission is not homogeneous across the country (See: “Taking a Good Hard Look at the Realtor Association Mission” [http://www.realtown.com/clareity/blog/realtor-association-mission]). But, some of the more common Association strategic components include:
– Member profitability / success
– Advocate for ownership / property rights
– Support professionalism / competency
– Support ethics / integrity
– Advocate for REALTORS(R) / interests / public policy
– Provide member services / resources / education
How can the IT strategy support those mission components? I see “member profitability and success” and “professionalism / competency” as pure mission components and “member services / resources / education” as strategies for helping to achieve them. Not that the latter components need to be cut from the mission statement – it’s okay to describe a bit of the “how” in a mission statement. Anyway, these days, technology supports member services, resources and education. What kinds of things would IT staff do to support them?
What is really the point here is that if we, as trade associations, are concerned primarily with the professional welfare of our members, then all of our organizational activities must be directed that way. And certainly member education, product and service delivery, community building through electronic media, and developing technology strategies and budgets are crucial functions. That sounds to me like the components of a job description for an IT person.Matt:
So, the IT person might do any or all of the following: manage the servers and workstations and all associated software used by Association staff, manage hands-on computer classrooms for training, manage or develop online education along with subject matter experts or third party companies, create and manage a virtual technology tradeshow develop or gather content about ‘tech tips and tricks’ for success, provide software training, provide computer support, create, manage and innovate the Association website, facilitate online external communications – IP Telephony, social networking and community building, email, fax-blast, voicemail-blast, etc., facilitate internal communications – intranet, internal newsletters, instant messaging, help desk tracking, call tracking, and/or create statistical market analysis for internal, member, and external uses.
Obviously, as mentioned previously there are general IT infrastructure components that aren’t directly tied to the mission but are necessary anyway. An association wouldn’t work without billing which – unless it’s entirely outsourced – requires PCI Compliance [https://www.pcisecuritystandards.org/] at the office, association management software, and merchant account levels – so staff must manage information security and IT risk mitigation. IT staff must also help plan and test disaster recovery planning and business resumption planning (BRP), since the Association must be able to deliver on its mission reliably – even if, and perhaps especially if, there is a disaster.
Judith: I think the other thing we need to discuss is, “OK, what kind of money are we talking? And how do I get it? And is there any ROI on these nerdy guys that I can explain to my Board of Directors?”
Matt: Wow, those are tough questions! I’ll take them in reverse order. I’m not sure we can talk ‘return on investment’ / ‘ROI’ when it comes to staff unless the association is going to use that staff person to start a new business with tracked profit and loss. What’s the ROI on your education staff or on your receptionist? They’re just part of the business of providing association service – and in terms of getting the money, association dues should support association services. Sometimes associations – especially smaller ones – just can’t afford a specialized IT person. Some outsource some of the tasks I described previously to a local IT company – and that’s a valid business decision. I do find that when IT is outsourced a lot of the more creative and innovation oriented tasks I mentioned previously just don’t get done. Even if non-technical staff comes up with an idea, the organization has a hard time getting a budget on-the-fly for the technical help they need to execute that idea.
Judith: That stands to reason. When you subcontract something, you really are defining a job to be done, usually at a specified price. The subcontractor does the job, and takes her check to the bank. But there’s no incentive to for her to spend any other resources on the organization: she did what she was paid for. A full-time employee is certainly more likely to be creative, and to see solutions that might be missed by a task-focused subcontractor.
But that’s what I was thinking about the “ROI factor”. An IT person can in fact discover and implement certain efficiencies which save the association time and money – data record management and accounting are good examples. And in my association management job, my excellent IT person was able to implement many additional association income centers – website advertising, featured listings, a vacation rental website. We couldn’t have even thought of these possibilities had we not had a really imaginative and skilled IT person on our staff.
Matt: About your question, “What kind of money are we talking?” associations get what they pay for. A general rule of thumb in IT is that you can get a junior person for 40-60k, a mid-level person for 60-80k, and a senior person with lots of skills is going to cost more than that. But, doing a lot of technical recruiting and staff evaluations, I can tell you that there are bargain employees to be had, and I’ve run into some highly paid IT people with little skill at strategy execution.
In your post “Part 4 of Life after MLS: Your IT Manager is Your New Best Friend” [http://www.realtown.com/Judith2/blog/it4], you referenced a NTEN survey from which one could draw the conclusion that, “In an association where the CEO makes $100,000, the IT Manager makes three quarters that much.” I disagree – they are paid what they are worth, and depending on the amount of skill required and desired. The NTEN figures don’t seem to be supported by real data from our industry either. Take a look at the figures from this industry survey I recently conducted (note, this is only a partial chart, for reasons of space). If the NTEN survey was accurate for our industry you would see almost all of the IT Director salaries in the yellow-highlighted area of the chart. Instead, you can see that where CEOs are lower-paid, sometimes the IT person makes as much as – or more than – the CEO does. And where CEOs are highly paid, sometimes the IT person makes less than the NTEN survey would have indicated.
Again, the salary will reflect the skills and experience required and desired by the association.
Judith: So the NTEN figure was a misleading generality. What I was trying to get at, though, was that the IT position is not only a necessity in the evolving and healthy association, but also that function should represent a significant investment in the organization’s personnel cost.
I was the AE of a smallish association, but we had – as I’ve said – one terrific IT person. Not full time, but I was fortunate enough to find someone who was brilliant and considered flat food (like plenty of pizza and Hershey bars) a real fringe benefit. He grew in skills, we grew in capacity, and it was a good relationship all around. My point is, there are ways to build your IT capacity, no matter how small the organization or how lacking in resources it may be. You’ve suggested subcontracting parts of the job, and often that’s all an association can afford to do. I’d go one step further, and suggest that in our current environment where everyone is examining ways to consolidate services and share resources, sharing an IT person between associations is certainly a logical way to go. Many of the basic IT tasks don’t vary that much from one association to another, and it would be a natural to share an IT position between 2 or 3 similar sized Realtor associations.
The important point here is for Realtor association managers to look beyond MLS in defining what an IT position can contribute to their association’s capacity to fulfill its mission. As I said before, if you’re an AE, your IT manager is indeed your new best friend.
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