Calculating the Cost Savings of a Board Portal vs. “Free” Options
Last week a prospective client asked us how BoardEffect users typically measure organizational cost savings from using our product. This is a relatively common question, which isn’t surprising given that virtually all organizations today operate with budget constraints. But this frequent and seemingly simple request implies a range of related questions centered around calculating Return on Investment (ROI). In an effort to address this question completely but concisely, I’ve broken this into a two-part response. This first post articulates a way to think about and justify the general cost of implementing a board portal versus the most common alternatives. The ensuing second post will offer a framework for comparing the cost of commercial off-the-shelf software versus building one’s own custom board portal solution.
Where You Stand Depends on Where You Sit
The costs of implementing a commercial board portal are pretty straightforward. For products like BoardEffect, there is an annual subscription cost and the cost of internal resources needed to administer the system.
The alternatives can be more diverse. How one thinks about these costs depends largely on what your spending picture looks like today. It’s a useful exercise to take a few minutes to understand the costs embedded in your current mode of managing board materials. No matter the answer, these costs are inevitably comprised of a combination of time, labor, and out-of-pocket expenses. A few of the most common scenarios include:
Paper Board Books
Many organizations still prepare board materials in big paper packets and mail them prior to each meeting. In this scenario, there are generally significant savings to be derived in both labor and out-of-pocket expenses. Moving to a digital system often unlocks savings that can be calculated by tallying:
- Labor costs – the number of hours spent preparing the paper books, multiplied by the average hourly labor cost
- Printing costs – including paper, toner, collating, and binding materials
- Shipping costs — depending on the process, these might be very costly. In my experience, shipping board books often requires using overnight carriers which can add up quickly.
The above tally gives you the cost per book, then:
- Multiply the cost by the number of books you have to print/mail
- Multiply that total by the number of meetings you prepare each year (including committee meetings).
This number typically ranges from $10,000-$100,000 per year depending on the size of your board, number of meetings, and level of sophistication of current process. Setting aside the many other prospective benefits of using a board portal, this simple exercise is often enough to demonstrate a positive ROI and justify an investment in technology.
A Shorter Hop to the Future
Having said that, we observe far more organizations today that are already using some form of digital means to manage board meetings and materials. When assessing the costs of such efforts, it is tempting to consider tools like email or free online file sharing programs as cost-free alternatives to investing in a board portal. But, just as the old adage says, “nothing in life comes for free.” Here are some ways of thinking about the costs of various options for managing board information.
Still the most common form of digital communication, email is often the go-to method organizations use to distribute information to board members. Email software (Outlook, Gmail, etc.) typically costs somewhere between nothing and very little; and board-related usage invariably represents no incremental cost over what the organization already spends on this ubiquitous technology. Moreover, email is used by more than 90% of adults, making it an intuitive way to reach out to board members. But, emailing any sensitive board information is a risky venture, as most email programs don’t offer privacy or security. Depending on an organization’s set-up, emails can in some cases be mined for personal data that can be sold to advertisers (at best) and to those seeking to steal identities (at worst). While using a secure email messaging system can alleviate most of these concerns, there is a very different risk of relying on email as the primary way you communicate with your board – your messages are getting lost in the shuffle.
According to the latest statistics, there is now a daily average of 216 billion emails being sent worldwide every day, and this number is increasing at a rate of about 5% a year. This problem is not going to change anytime soon. As our inboxes become increasingly bloated, the likelihood that we will read any given message continues to decrease. Further, e-mail bloat means that it is increasingly difficult, time-consuming, and aggravating to go back in time to find important message in our inboxes – it can feel like embarking on an archeological dig to find information in your inbox. Sending documents to board members, and then a few days later sending additional / updated information (hint: this happens all the time), makes it highly unlikely that board members have correct / current / updated information at hand when they arrive at a meeting.
“Free” Information Sharing Software
There are a number of “free” tools available that allow individuals to share files and information more securely than in email – Google Drive, DropBox, and others. These tools include the advantage of keeping everything in one place, and often offer the ability to organize content into folders to make searching easier. And while some of the privacy policies of these services are complex or invasive enough to make you cringe, most of these services handle your documents in a responsible way.
That said, there is a cost to these “free” tools: it is paid in the form of the inconvenience and frustration they can produce for board members. For example, many of these types of services require board members to create personal accounts to the service. For many board members, navigating this learning-curve is unappealing; and, depending on where your board member works, this could be a non-starter from a policy perspective. Even looking past privacy and policy for a moment, this approach can introduce other issues of control.
When each board member has a personal account, your organization loses control over how the information in the system appears to the board member. Likewise, you lose opportunities to make it simple for the board member to find the most current / relevant information. Nothing rises to the top or stands out in an intuitive way. For example, take a look at this screenshot from my own personal DropBox account:
The first folder is one that I created, and the other two are folders created by someone else and shared with me. It can be frustrating and time-consuming to determine which of the “Dottie” folders has the right version of the documents I want, and it doesn’t help me know what’s expected of me, or give me an opportunity to respond/engage meaningfully.
The Cost of Engagement
A large percentage of our clients express their desire to get their board members engaged in supporting the organization. Conversely, using “free” services like email and file sharing solutions for board-related work can undermine board members’ experience and engagement. I’ve never joined a board in hopes of mining my inbox, fighting to maintain version control, digging for long-lost historical documents, or giving my personal information in exchange for file storage capability. I consider each of these to represent time wasters and missed opportunities for real engagement. These can lead to board member aggravation, disengagement, attrition, and ultimately the need to recruit more new board members. In my experience, organizations consider this a very steep cost and one to be avoided if at all possible.
This is the first of two posts focusing on how organizations can think about and justify the cost of implementing board portal technology. Its primary aim was to offer a framework for identifying the costs the most common (commonly considered “free”) alternatives to commercial off-the-shelf solutions. In the follow-up to this post, we’ll go to the other end of the cost spectrum and examine the “build versus buy” decision contemplated by many organizations.