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Hawthorn Football Club

Productivity and Organisational Transformation: optimising investment in ICT

Case Studies

HAWTHORN FOOTBALL CLUB

Summary
Implications and Lessons
1. Industry Background
2. The Organisation
3. Approach to ICT Investment and Use
4. The Project
5. Project Outcomes
Contact Details

Summary

The Hawthorn Football Club (HFC) is a membership organisation operating in a competitive environment. Its business is to field Australian Rules football teams and to promote football within the leagues in which it operates. Like many other sporting clubs, it has a tradition of relying heavily on the efforts of volunteers, particularly in the important area of enrolling new members and retaining existing ones.

The HFC recognised that it could not continue with the inefficiencies of volunteer and manual systems for processing membership applications and expect to support the higher levels of membership required for commercial sustainability into the future. It therefore established an enterprise data base system for the professional management of membership processes, and outsourced the technical operations associated with data entry and content management of the system to a mail house.

The results have had important effects on the HFC, not only in terms of better management of key processes, and better servicing of existing and intending members, but also on skill levels and work priorities of staff, and on organisational cohesion. The club has retained support of its volunteers by re-channelling their energies into other activities not associated with basic membership processes.

HFC's interest as a case study lies in the fact that member organisations with little experience of enterprise level ICT applications can gain substantial benefits in terms of productivity and organisational effectiveness in the way they adopt and deploy the technology. In this case, as many, the use of external professionals to guide the implementation and operate the system after installation is appropriate, thereby freeing up internal resources to concentrate on work that matches their strengths.

Implications and lessons

This case study illustrates the challenges faced by many membership and not-for-profit organisations that have come to rely on the support and enthusiasm of volunteers for the completion of processes critical to revenue generation and the achievement of commercial results. The challenge is to improve the quality and professional management of the organisation, without losing the support of volunteers.

This case study illustrates the way in which an organisation can implement process re-engineering and an enterprise data base system to address the major inefficiency problems associated with poorly coordinated voluntary efforts. The decision to outsource the maintenance and basic operation of the data base is an important one that needs to be based on considerations of the relative costs and benefits of in-house and outsourced approaches.

The case study shows that important organisational assets such as project management skills, ICT literacy and improved internal communication can result from the design and participatory implementation of the system and related changed work processes.

Importantly, although membership organisations of this type may have strong volunteer traditions and a pervasive sporting culture, they must also develop work cultures based on professional resource management, including the management and deployment of ICT solutions.


1 INDUSTRY BACKGROUND

The Hawthorn Football Club (HFC) is one of 16 clubs that fields teams in the Australian Football League national Australian Rules competition. This group of clubs forms the immediate industry. However, the effective industry in which the HFC competes for sponsors, patrons and funding is the sports and entertainment industry.

Competition within the more broadly defined industry for sponsorship, payment for broadcast rights, and for part of household entertainment budgets, is fierce, and is generally regarded by those involved as becoming increasingly so. Within the sports and entertainment industry competition is between sporting codes and other forms of entertainment, and is conducted at that level.

2 THE ORGANISATION

The Hawthorn Football Club (HFC) was established in 1873. Its principal activities were and remain 'to promote the playing of Australian Rules football in general and, in particular, to promote the same by maintaining, providing, supporting and controlling a team of footballers bearing the name of the Hawthorn Football Club'.* The HFC has a long tradition of being proud and passionate in the pursuit of Australian Rules football. The HFC promotes a family club image and related family values. This philosophy and these values result in the HFC being involved in a range of community activities, such as a schools program in the Eastern and South Eastern suburbs of Melbourne. In addition the club undertakes regional promotion of football in Victoria and Tasmania.

The HFC is a not-for-profit membership organisation, structured as a public company with liability limited by guarantee. It is organised in terms of departments reporting to the CEO who reports to the Board. The departments and other organisational units are:

  • Membership
  • Football
  • Marketing
  • Finance and Administration
  • Social Clubs

The HFC has around 33,000 members. These are its primary clients. It operates in the Melbourne suburb of Hawthorn with the Melbourne Cricket Ground as its home ground. The HFC has subsidiary social clubs at Hawthorn and Waverley Gardens. It employs approximately 110 full time staff, including its list of contracted players, and a large number of casual staff, particularly at its social club facilities.

The HFC achieved total revenues of $20.3 million in 2001, and this has been growing at around 15% annually over recent years. It is expected that this rate of growth will continue into the future. Revenue growth depends on a number of factors including the successful development of the code as a whole by the Australian Football League and the expansion of the membership base by the club itself. These matters are related.

The HFC compares itself to the other AFL clubs. In relation to sponsorship and corporate entertainment, the main immediate competitors are the other AFL clubs. HFC does not specifically compete with other AFL clubs for members. In order to convert its supporter base into members it competes with other entertainment alternatives that are vying for the consumer dollar. The threat of substitutes is more at the code level than the club level.

In the 1970s and 1980s the HFC's on-field success was not translated into off-field performance in terms of the development of a sustainable membership and revenue base. By the mid-1990s the HFC's future was in doubt. It has now turned that around, and avoided a merger with another club.

Since the merger period the main achievements have been:

  • stability as a viable enterprise
  • planning and positioning the club for the future at Board and management levels
  • achieving the above during a period when its on-field performance was in the bottom half of the League ladder

HFC measures its achievements by benchmarking itself against other clubs and assessing its results against its own targets. Benchmarks include membership, net assets, profitability, level of debt and investments.

* Directors' Report, 2001

3 APPROACH TO ICT INVESTMENT AND USE

The HFC's ICT budgets are approved as part of the overall budgetary processes of the club. All budgets are established and managed by Rob Ewart, the Financial Operations Manager. This is carried out in consultation with all relevant areas of the organisation. Operations are reviewed with relevant areas of the organisation and needs are assessed and included in annual budgets. This process extends to all budgets, including those for ICT.

The ICT budget in 2002 was $572,000, of which $100,000 was for telecommunications and Internet charges, and the balance for IT systems development and operation. The budget includes $66,000 in internal staff costs. ICT capital expenditure budgets have been lumpy over the past four years, with a substantial one-off commitment of $300,000 for the first stage of the membership management data base in 1999. Apart from this, ICT budgets are largely for operational expenses, and have been growing at around 5% per annum. It is expected that growth will continue at this rate into the future. The major new item will be the further development of the HFC website*.

The HFC has a number of ICT systems in operation, including:

  • The membership data base system, used for management of membership and related marketing activities (and which is the subject of this case study)
  • The website, commenced in April 2001. (By the end of 2001 net-based transactions accounted for 15% of merchandise sales and 10% of membership sales)
  • The football IT system, for the production of video based statistics of player and team performance
  • The accounting system, comprising various accounting and payroll packages.

* http://hawthornfc.com.au

4 THE PROJECT

Membership of the HFC, and other AFL clubs, is a year at a time for most members. Therefore, the HFC must approach all existing members every year to rejoin and, possibly to upgrade the level of their membership. In addition, the HFC must undertake a range of marketing activities to enrol new members. The churn rate of members from year to year is around 25%. This means that 25% of members typically do not rejoin in the following year. This level varies from year to year, but is believed to be typical of all Melbourne-based AFL clubs in recent years.

Following the period of the possible merger in 1996, HFC supporters made major efforts, heavily dependent on volunteer labour, to promote the club and attract new members. Their efforts were welcomed and received extensive media coverage at the time. Other clubs sought to emulate what the HFC was doing. In fact, voluntary effort was not a sustainable basis for membership management. A range of problems developed in the period from 1996 to 1999 (when the membership management database was developed) including:

  • membership applications not being processed or 'lost'
  • membership applications and records being duplicated in data base systems
  • prospective members being duplicated on mail out lists
  • poor, inaccurate and out of date records membership status
  • multiple mailings to prospective members, including those that had re-joined thereby leading to avoidable enquiries over their membership status
  • membership applications outstanding, waiting to be processed by volunteer or other club labour, for up to 6 weeks, with 6 Ð 8,000 forms outstanding at any given time over the period November Ð March
  • members sometimes not receiving seasonal tickets until after the commencement of the new season

These problems seriously compromised the image of the HFC with its members, and raised doubts about the ability of the club to grow and sustain the much larger membership base needed for future commercial viability. Members need to be effectively served, and their standards are those based on experience in commercial transactions generally.

The HFC went from a limited IT usage environment to an enterprise database system in a number of stages. The first stage involved the purchase of PCs for administrative staff in the organisation and the development of the membership management data base in 1999. Initial development and implementation was planned for early 2001. The business case for a membership database system was put to the Board by the Director of the Finance & Administration Department, in conjunction with other directors. The case was for a capital investment of $300,000 in hardware and software. With consultancy charges, internal project staff costs and training costs, the total development is estimated to cost $1 million. Full implementation has been planned to extend over three seasons from 2001 to 2003.

The Board agreed to the expenditure based on the recommendations. It agreed that the organisation could not continue with the then-existing processes for membership and related marketing management, or on-going heavy dependence on volunteers in this area. There was clear recognition of the need for transformation of the administrative culture of the club. The CEO and Financial Operations Manager were responsible for managing and implementing the project. There was substantial staff involvement from the outset, since the business processes of a number of areas Ð including the Membership, Finance & Administration and Marketing Departments in particular - would be affected.

The project team worked closely with external suppliers and consultants. The technical development of the data base was outsourced to Pivotal Relationship Database (formerly Eclipse), and the operation of the data base, including data entry, was outsourced to Nautilus Marketing Services, a mail house. It was recognised that these organisations had the skills to establish and operate such systems for the HFC, and could do so efficiently and at lower cost than on an in-house basis. Productivity was a very important consideration. For HFC to retain existing members and attract new ones, it needed to be able to better manage the processes involved, thereby freeing staff and other resources for better use.

The HFC established a project manager within the Finance and Administration Department to coordinate the project with the contractors and internal unit representatives. Project management arrangements were improved and tightened as the project progressed.

5 PROJECT OUTCOMES

The membership data base system is reviewed annually, to determine its overall level of performance and to specify further development needs. So far it has been in use for two years with results rated as excellent by the club. Under the new processes associated with the system, all membership enquiries, however received (eg. by telephone, fax, letter, or e-mail) are batched and referred to the contractor (Nautilus) for data entry to the system. The system then generates the appropriate follow-up in the appropriate medium - for example, automated generation of letters with application forms, fulfilment following payment (sending membership badges, seasonal tickets, etc), or reminders for existing members to rejoin, etc.

The key business objectives for the system have been achieved Ð namely, better management of membership, and serving existing members better. The major benefits resulting from a common membership record, reduced re-work, reduced process times and improved member satisfaction were all largely achieved within the first year. However, further improvements and gains are anticipated. Benefits have not been exhausted. For example, it is more cost effective to handle enquiries online than in paper based forms or by phone. The planned further development of the website will encourage a greater level and proportion of online transactions, well above the 10% of membership sales handled online in 2002.

Membership application processing has been turned around from being many weeks behind to complete processing within 48 hours of receipt of an enquiry. Before the membership system was established there would typically be 6 - 8,000 application forms outstanding at any given time.

The Financial Operations Manager noted: "The impact of this IT system has been such that it is now almost impossible to imagine operating without it." The organisation has been transformed. Without IT the capability of the organisation to serve and grow its membership base would have been in doubt. Revenue and membership growth are useful proxy measures of the productivity improvement achieved over the last 3 years, notwithstanding that there are other influences on these.

ICT has enabled the automation and contracting out of lower level tasks and enabled the staff to pursue matters requiring higher levels of skill. In this sense there has been a transformation in the capabilities of the organisation.

The results have been achieved without alienating enthusiastic supporters and volunteers. These people are very important for any membership organisation, and need to be cherished. In this case volunteer effort was successfully redirected, and channelled to activities not associated with structured membership processes.

Within the organisation there have been specific further benefits that were not especially considered or rated as important at the outset, but which, in the event, have proven to be valuable outcomes. Communication within the organisation, and across departmental boundaries, has improved appreciably. HFC management considers that the membership data base system has had a material and beneficial influence on internal communication, in relation to the processes that flow from it. There is a new communications culture in the organisation underpinned by ready access to current and reliable information. Staff involvement in and acceptance of the system has always been high. Its successful implementation and high utility has improved morale further.

The estimated life of the system in its current form is 5 years in the sense that hardware is written off over 5 years, and software over 3 years. The HFC considers that the payback period will be well within 5 years, and could be as low as 2 years if all of the benefits, including organisational transformation benefits, were quantified and counted. The HFC notes that the precise contribution of the system to the club's annual revenue growth of 12-15% is difficult to measure. In any case, the management considers that previous processes would have materially and adversely impacted on revenue growth.

CONTACT DETAILS

Rob Ewart
Financial Operations Manager

Hawthorn Football Club Ltd
Ausdoc Oval Ð Glenferrie,
34 Linda Crescent, (PO Box 52) Hawthorn Victoria 3122

Tel: (03) 9816 2225
Email: robe@hawthornfc.com.au

  • Document ID: 18349 |
  • Last modified: 6 February 2008, 10:28am