It isn’t uncommon for operators to consider building their own proprietary IT systems. Larger operators may feel they need to build their own system to stand out from the crowd, meet the unique needs of their own operation, and reduce IT spend. Unfortunately, proprietary IT systems are often built for the needs and budgets operators have today, but not tomorrow.
Proprietary systems that are built solely for a single organization often end up inefficient, unreliable and rigid. Moreover, the building and installation costs of an application are only a fraction of the real cost of running and maintaining it. This leaves operators with unexpected costs and poor member experiences — the opposite of their original intents.
Don’t Ignore the Running Costs
Gartner research analyst Andy Kyte showed the “go-live” cost of any application is only 8% of the total cost of ownership over 15 years. For example, a $20 million initial investment would demand a little over $15 million each year to keep updated.
These costs often come as an unexpected surprise to investment teams and executives who can be reluctant to set aside the needed funds for maintenance and further development. This leads to IT debt that stalls future improvements and innovation. In other words, a proprietary system that was intended to save money and differentiate an operation may end up as a financial burden and barrier for improved services and new business initiatives.
If operators insist on building a proprietary IT system for the sake of differentiation, they should base the investment case on a realistic analysis of the total cost of ownership (TCO), rather than a return on investment (ROI) case that is based solely on the “go-live” cost. Since differentiation is built on top of the system, time-to-market must also be considered.
Enable a Flexible System
While the fitness industry has its share of homegrown legacy systems and immature vendors, there are robust standard products that offer strong solutions to the back-office portion of member management. Rather than building an entirely new IT system, operators can achieve their goals for differentiation and cost-effectiveness by using a best-of-breed standard solution that is operated by specialists and has been refined through decades of investments.
These systems offer openness through application programming interfaces (APIs) and real-time data utilization capabilities, allowing operators to differentiate themselves on a level members actually see and use. This can be done via proprietary member-facing apps, and business intelligence (BI) and marketing automation tools that are built on top of the core system.
Members won’t notice proprietary back-office procedures or business process automation, but they will immediately notice if their bookings disappear, gates don’t open or billing information is incorrect. A standard member management system will act as a foundation on which operators can create value and differentiation.
Brian Sørensen is Exerp’s chief business officer. He can be reached at sales@exerp.com.
