How Much Should Associations (Trade/Professional) Spend on IT Annually?

For many trade and professional associations, IT is inextricable from the success of your mission; from member management to event planning to effective communication, operations tend to have their roots firmly embedded in dedicated technology solutions.
In a different article, we spent some time working through the key elements to consider when it comes to crafting your association’s IT budget. While this discussion digs into the nuts and bolts of what specific pieces combine to form a successful budget, it opens the door to another side of the conversation: when all of these pieces come together, what should your total annual investment actually look like?
This big-picture question is one that we strive to help all of our clients address throughout our relationship with them. It’s a complex subject without a clear-cut answer, but it’s one that is well worth the effort to evaluate—for tech-heavy associations in particular.
Below we’ll work through the main factors that will affect what your association’s annual IT investment will look like, and what you should expect to see once all of the dust settles.

Key factors that influence the nature of your annual IT spend

The amount you want to invest in your association’s technology each year depends on the following factors:

  • How essential IT is to your internal operations. Do you rely on an Association Management System (AMS) to keep your members, events, and reporting in order? Do you have a number of remote staff members who need access to your network in order to perform their daily tasks?
  • How essential IT is to your external engagements. Do you interface with your members through mass mailings? Is this function based in your AMS, or a separate technology solution? Do your members rely on your website to manage their profiles? Do they register for events this same way?
  • Your growth mode. Are you in a heavy growth mode? Steady state? Shrinking? As you could probably guess, growth translates to much heavier technology demands (and, by extension, larger expenditures). Shrinking does too, though to a lesser extent.
  • How much organizational change you’re experiencing. Are you moving offices? Replacing a number of your staff members? Going through any kind of merger? The more flux your association is in, the more money you’ll have to put into your technology to get from A to B.
  • Your service expectations. Does your ideal IT scenario include a lot of hand-holding from your technology provider? Is it important to have a dedicated representative to oversee your account? Or are you willing to sacrifice overall service in the name of cost savings?
  • Your tolerance for risk. How long are you willing to go without functional technology in the event of a disaster? How much data are you willing to lose? What’s your comfort level with equipment failure? Do you want to outsource all of this risk to a provider in the form of a fully-hosted solution? Across the board, lower risk equals higher investment.

As a benchmark, then, steady-state associations with moderate technology needs (AMS included) should prepare to invest 3-4% of their annual revenue in technology.
Those who are in the midst of significant change or growth, those with exceptionally low tolerance for risk, and those who rely on technology to gain competitive advantage are looking at closer to 6-7% of their revenue.
If you are spending much less than this, please proceed with caution—given that technology generally plays an integral role in managing and communicating with your members (and thereby gaining revenue), making sacrifices in the name of cost savings could very easily have a direct, negative impact on the success of your mission.
And, if it all just seems too much for you to work through on your own, look to getting some strategic guidance in whatever form is feasible. There are countless resources out there who can help get your spending and your technology on the right track.
All you need to do is ask.

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Topics: associations