Accelerating the Dynamic Church : Total Cost of Ownership

2007 OnDemand Conference

jhook — Wed, 14 Nov 2007 22:50:00 GMT

One of my commitments to our partner churches is that Fellowship Technologies will stay current on what is happening in the overall software and technology industry. I came from that market and want to bring the best business and technology concepts from the commercial world to the church world. Along that vein: we are currently moving Fellowship One to be more Web 2.0-like; we are building our new functionality on a new architecture (MVC) that will allow us to develop new functionality rapidly and be more agile; and we are committed to put custom reporting tools in your hands so that you can directly access the data. And that is just the start!

One of the ways we all stay up on technology is via the Internet, through articles, blogs, etc. But that is not enough! I believe it is imperative to attend technology conferences and events to learn, affirm and network with others within the industry. One such conference is SIIA’s OnDemand Conference.

I wanted to attend last year, but chose not to due to the cost and timing. This year I took the plunge and made the trek to San Jose last week. I am glad I did!

In short, the opportunities and challenges other SaaS’s and their customers have are very similar to what we all together are experiencing. There were numerous presentations about: how processes are essential to successful application change; what was once hard to accept concepts about data being stored off-site are becoming non-issues; and it is not just a way to deliver software over the web more cost-effectively, it is about collaboration across departments, business partners, even competitors; and putting the customer at the center of the experience.

I am convinced that Software as a Service is the future of many application solutions, especially for the SMB (small and medium-sized business) market. By the commercial definition, that includes nearly all churches. The total cost of ownership, the integration capabilities via the Internet and the future of computing, all point to the fact that this is the way. Like other forms of new computing, it may that some time to truly take hold, but the value proposition is enormous and, in the long run, cannot be denied.

Grace to you,

jhook

Cost Considerations – Part 3: Value

Jeff Hook — Wed, 13 Sep 2006 02:09:00 GMT

In part 3 of my 3 part series on software cost consideration I will address the value-based pricing concept and explore why the value that the software provides is more important than the out-of-pocket direct costs, or for that matter, the overall Total Cost of Ownership (TCO).

When considering what software solution to buy, the real measurement to take into account is the “value” that the organization or people within the organization receive from the implemented solution. Case in point, we find that many churches have had our competitors’ solutions in-house for several years, yet the solution is so underutilized (meaning that it is not being used for one or more reasons: too hard to learn, lack of availability, does not do what the users need, etc.) that no matter how cheap the system appears to be, the church is over-paying because it provides so little value.

The problem with the value concept for software justification is that it varies significantly from church to church because what individual churches value varies greatly. The components or line item categories are usually transferable across churches, but the level of value will differ. Some of this variance is attributed to what “value” the individual church places on certain capabilities.

Let me present some examples to help clarify:

What “value” do a church and its congregation place on being able to “quickly” and safely check-in children for Sunday services?

It affects the brand of the church – how people perceive the church and the Sunday experience. There is definite value to the brand; but if the church does not understand branding, the value is not perceived.
It affects the convenience provided to the congregants. This also affects the Sunday experience; especially for first-timers. But if the church is not focused on seekers, then visitor first impressions are not valued.
It affects the security that a parent “feels” when they drop their children off for the first time in an unknown church. Again, seeker sensitive churches value that first-time experience so much more than inward focused churches.

What “value” does a church derive from being able to offer activity registrations from the church website?

If the church does very few during-the-week or special activities, then the perceived value of this feature is smaller than for a church that conducts a lot of activities and is looking for a better way to administer them.
We recently received an email from a customer that claimed that Fellowship One WebLink saved their church over 1,000 man-hours in administering one of their activities. Now that’s value!

What “value” does a church assign to the accountability of being able to track whether congregation contact items are followed up quickly by the right people?

Believe or not, some churches do not place value on this kind of accountability – so having such a feature in the system, although I would consider it part of the value proposition of why we cost what we do, is not considered when determining the cost-justification of a new church management system.
To other churches, this is huge value because they believe that caring for their congregation needs in a timely matter one of their primary jobs. But if a church does not culturally appreciate a quick follow-up to information requests, then no matter how much we “preach” its importance, it is viewed as superfluous functionality.

What “value” does a church associate with the church staff and volunteers being able to easily access its information from anywhere there is Internet access?

If the church staff works from home a lot, or travels a lot, this can be of significant value.
I was recently at a conference where one of the church staff was actually half listening to the conference and half doing F1 work via the wireless network. She was getting value.

I could go on with example after example of how a church management system can provide value to any church. But the value is particular to the church’s behavior, culture, focus and the implementation of the system’s capabilities. For any given church, if all of this value could be captured and documented, then the justification for a web-based church management system would be easy. But because it is particular to a given church, it is more difficult to provide a standard set of savings guidelines. And some of the savings are not savings at all, but actual “value creation” – value above and beyond what is currently done.

Take a look, what do you value? Is it the same thing that the congregation values? Can you increase your congregation’s experience by capturing some value that you are not even seeing at this time? Or are you walking over dollars to pick up dimes?

Grace to you as you go out and give value,

jhook

Cost Considerations – Part 2: TCO – Total Cost of Ownership

Jeff Hook — Thu, 07 Sep 2006 13:07:00 GMT

In part 2 of my 3 part series on software cost consideration I will address the Total Cost of Ownership (TCO) concept and why the price of software itself, whether it is a SaaS (Software as a Service) or of the client-server flavor, is just a portion of what needs to be taken into account when considering your software alternatives.

To start with, let’s define Total Cost of Ownership (TCO). TCO was originally developed in the late 1980’s by the technology research firm Gartner to determine the cost of owning and deploying personal computers. Although a new concept at the time, over the years it has been examined and refined to the point that it is now one of the more relied upon methodologies to evaluate the true cost of deploying computer systems. Basically, TCO consists of the direct and indirect costs incurred throughout the life cycle of a computer system, including deployment, on-going operations, maintenance and support, as well as the user costs associated with the business operation.

Direct costs are usually visible and sometimes are even budget line items to themselves. They include hardware and systems software, acquisition and on-going maintenance; operations which includes technical operations, help desk support, network costs, computer room space and utilities, such as electricity and cooling; and, administration costs associated with the above like technical and database personnel.

Indirect costs are always not so visible and may be dispersed across the church’s entire staff and congregation, including how its congregation interacts with the church for “church business and congregation administration.” Typically, the magnitudes of these costs dwarf the direct costs because it is spread over so many different areas of the church. So, to accurately measure TCO, the analysis must include all “end user” operations, including contribution reporting, event registration, children’s check-in, small group administration, volunteer recruitment and management, etc.

Another indirect factor that affects operations is system availability. Not having the ability to process and get to information when needed is a real, although many times hidden, cost. If the system is down for maintenance, it is not available for users to conduct their work - the more users who are affected, the larger the financial impact.

With a SaaS, most of the direct costs associated with the functionality of the application are rolled into the monthly or annual access fee paid to the solution provider. So when comparing on-going monthly costs, churches need to consider how much they spend to keep their member database operational. Many churches hire outside consultants to help write reports, defragment the database, and install software upgrades across all the PC’s at the church for the typical client-server system.

In our experience, many churches maintain multiple databases in their various ministries because their primary congregational database is not complete, not easy-to-use and/or is missing needed functionality. One of our recent customers was maintaining seven different databases that were never synchronized in trying to support its ministries. After converting to Fellowship One, they were able to shut down the conflicting information stores and move to a single consolidated system.

Another hidden but huge cost to consider is the operational costs associated with bad processes or bad information. As I have blogged about before, I’ve been dismayed at how poor the data management practices of churches really are. And churches seem to simply accept the concept of bad data – aren’t they aware of the adage: garbage in, garbage out? A friend of mine who heads up IT for a large church that has one of the leading client-server church management systems recently commented that frankly he did not know how much the old system was really “costing” his church, but he knows it is significant and a lot more than what they just pay to the vendor.

In my next blog, I will explore what I consider to be the most important concept associated with system cost considerations – Value. Something to think about, as long as the out-of-pocket costs are affordable, isn’t it the value of the things that can be done with the information more important than the costs themselves? If the value far surpasses the cost, then are the costs justified?

Grace to you,

jhook

Cost Considerations – Part 1: What does my monthly cost include?

Jeff Hook — Tue, 29 Aug 2006 01:35:00 GMT

This blog entry is the first of three planned blog entries concerning Fellowship One pricing. Subsequent entries will address the Total Cost of Ownership (TCO) concept and a look at the Value-based Pricing (VBP) concept of software.

At the recent NACBA conference in Chicago, Jeff Pelletier and I conducted a break-out workshop about Fellowship One. I started out the presentation with a series of myths and misconceptions concerning Fellowship Technologies and our flagship product, Fellowship One. Among the misconceptions I presented was around the belief that Fellowship One is expensive.

First, let’s understand that the term expensive is a relative term. I will talk more about that in the Value-Based Pricing discussion, but for now let’s assume that the relativity of the word “expensive” is a non-issue; let’s first look at what a church gets for its monthly fee.

When a church compares the monthly cost of Fellowship One to its current solution, many people note that the cost is often several times to many times more expensive than what they are used to paying for their current system. However, in most cases, this is not an apples-to-apples comparison. When comparing software solutions, one should consider everything the entire church, not just a few core users, is getting for that price.

For any system, legacy or new, a church must consider the incremental cost to not only buy but to also maintain the system. True, a church can save some money by cutting corners and not doing certain things they ought to (system back-ups come to mind!), but for discussion purposes here, I will consider that churches perform the duties that are recommended in conjunction with all computer systems. So what does a F1 customer get for its money?

With Fellowship One, the monthly cost includes not just access to an enterprise software solution (this would be the licensing portion), but also the following:

Up-to-date, fully-redundant, hardware (currently 3 full racks of servers) to operate the transactions;
Up-to-date application and operating system software to operate the hardware;
Unparalleled security when compared to what the church can offer locally; Your data is housed in a Tier-1 data center capable of withstanding an F5 tornado (twice the strength of a Category 5 hurricane); And we submit regular external security scans to further ensure your data.
Regular on-site and off-site data backups; We backup your data continually and take a copy off-site regularly. If your church office is destroyed, your data is safe with us and can be accessed from any Internet access point.
New software features and capabilities which are constantly being developed;
“No touch, no sweat” upgrades – these new capabilities are automatically added to the system without customer intervention;
Applications assistance through calls and emails into our technical support group with the broadest support coverage in the industry – Standard support is available 6am to 10pm CT, 7 days per week and emergency support is available round-the-clock; Although not perfect by any stretch, we consistently receive high accolades from our customers about our support.
A broad base of knowledge concerning church best practices from our Delivery Services group who have implemented F1 across our entire install base;
Proactive customer care based on our monitoring of the system’s usage to ensure that the capabilities are being best utilized and to help in those cases were portions of the system is left idle.

Now consider the following questions in comparing what you currently get from your church software vendor:

What hardware and system software does your system operate on? Both of these areas advance so quickly that for many it is hard to stay up with. Is your IT staff or consultant always keeping your systems up-to-date?
Are you doing all of the required system maintenance? Are data backups performed every night? What happens if a hurricane or fire destroys the church? How secure is your data, could someone simply break an window and take off with your server(s)?
Does your current ChMS vendor help you get the most out of the system? Or are you left on your own when it comes to implementation best practices and support?
What is the quality of your vendor’s support responses and when are they available? Many of our customers have said that they first came looking for a new solution because they could not get their current vendor to return their phone calls. And when is the vendor’s support available? Most are only available on THEIR schedule, 8 – 5pm, Monday to Friday. Sadly, many are not available during the most critical period for a church, the weekend.
How was the last upgrade by your vendor supplied? Many of our customers came from an environment where they were afraid to install a new release for fear that it would takes weeks or even months to recover from the new bugs introduced into the system. If that’s the case, what new features are you missing out on? With Fellowship One, our customers are always on the latest and greatest release.
If you are not using the features of your current system, how does your vendor help you implement the other things you are paying for? Do they even know whether you are using the system to its full extent? At Fellowship Technologies, we recently established a “Customer Care” group to proactively assist our customers to get the most out of Fellowship One. We think this will improve the adoption rate of some of the system’s most valuable capabilities.

As you can see, what a Fellowship One customer receives is far beyond simply a disk and some documentation. Now that you know all that is included, in my next blog I will address the Total Cost of Ownership of a software solution. This should help a church determine all things that come into the equation when considering the “true cost” of its current system.

Grace to you,

jhook