Modern unions buy in so many different types of services. At the Australian union federation ACTU’s Union Innovation Hub we’ve looked across a huge range of them to try to save our unions money. In terms of digital tools, that’s included things like CRM, websites, survey tools, event tools, campaign tools, learning management systems, membership fee processing, you name it.
We do this predominantly through collective bargaining. That should hardly sound revolutionary to unions, but too often we preach it and train it, but we don’t do it ourselves. We buy the same thing many times over within the movement. Even within unions, we sometimes find each branch or region will purchase separately, as it’s not being co-ordinated.
Our driver for developing this work has been members’ money. It may be difficult and slow to deal with the political or organisational implications of better co-ordination between unions or between teams in the union. But it’s worth doing because, simply put, we hate wasting members’ money.
So how do we achieve it? The biggest driver has been getting together. The more people buying, the better the price. The higher the level of collaboration, the better the deal. But you can do this at any level – two unions, a group, or a whole movement. And you can do it for a broad range of services or just one. The process is the same – you just need to form a hub around whatever you’re interested in.
We’ve got 15 unions together on core software, with another 20 currently joining. That means 960,000 members. It’s hardly surprising that sourcing a tool for all those at once will come in cheaper than 35 unions going individually to the supplier. And it’s got easier and faster as more unions have come on board.
Quality and quantity
It’s important though that the emphasis can’t only be on price. You can get a benefit from hubbing together to achieve the best possible product or service as well.
At the ACTU, we’re trying to help the due diligence process, to help unions pick the best option. And that’s always made easier by working with more people.
We get together an initial group of unions to gather requirements. This doesn’t need to be exhaustive – it’s possible to waste loads of time looking too deeply. But it should cover off the key aspects that you’ll need.
So for example if we’re looking at a new SMS/text provider, we’ll consider the cost, but also criteria like whether there’s an API to integrate with existing systems, and the speed of delivery. And then we might have some questions about the company as well. What support levels are, whether they’ll sign a contract for a longer period of time, or guarantee limits on price rises.
Once we’ve gathered our requirements, we need to also consider our weighting on each feature. Which are the things we need as a red line, and which we have as wiggle room.
We share these requirements lists openly with unions as they’re a good starting point for other union procurement. We see ourselves as disrupting this whole game, to get the best deals possible for unions. And one of the ways we disrupt it is to improve the speed of the due diligence assessment process. Unions often think their requirements are more unique than they are – in my experience, 90% of the requirements for most tools and systems will be common across unions. You need to be aware of what’s genuinely unique of course, and make sure the supplier understands it, but you can get most of the way to a requirements document by preparing it as a group.
We can get bogged down at this stage trying to get everyone to comment and chasing them for their thoughts. And if you’re involving external consultants, it’ll just burn through more of their time and costs. But putting key people in one room will flush it out quickly.
Consultation
In seeing through a change project, you’ll roughly have a third of your staff who are positive about engaging, a middle third and a third who are resistant to change. Try to involve people who directly know the work, and where possible focus on those who are “early adopters”, who will help bring other colleagues along with them.
Get as many of your likely early adopters stakeholders together as possible, and just run through with them all the use cases that the new tool needs to consider. So if you’re looking at a payments system it’d be things like running at scale, the member having multiple jobs, waivers, payment plans, fee increases, and so on. We don’t have the luxury of giving the ‘why you can’t’ brigade time to slow down our progress.
Finding suppliers
Then it’s time to get your quotes from suppliers. To do this, we’ll ask around and see what unions are currently using and if they’re happy to tell us the price they’re paying. Failing that just Google suppliers in the area you’re interested in.
Once you’ve got a list of potential suppliers, we send out the RFP document (the Request For Proposals). This details the requirements you’ve worked out, and lets the supplier know how to respond and by when, if they want your business. Importantly you entice them with the potential size of the market. We use an Excel form that we ask them to fill out, where they can indicate if their solution offers that feature out of the box, with customisation options, or not at all.
This does several things. We’re getting like-for-like answers from each supplier, and clear ticks against functions, rather than flowery language. That will really speed up your time in evaluating the different options.
It also shows where the hidden costs will come. Once you get into customisation, the costs really rack up. But the supplier can technically claim their tool offers that feature, even though it’s a hidden cost if you want to use it. This is where having a thorough specification helps too, because lots of suppliers won’t tell you if something is missing until after you’ve signed. It’ll be seen as a variation on the initial contract, which is a way for suppliers to additional revenue.
The RFP should be the main channel of interaction between suppliers and the union. We regularly find suppliers don’t want to fill out the RFP. Instead, their salespeople will ring you. They will want a meeting. It’s totally legitimate for them to have questions, but these can be answered by emails. The aim of a meeting from their perspective is rather to strike up a positive sales relationship, and tell you their grandmother was a union rep or some such story! That’s all nice but it’s a distraction from knowing the basics, so we insist on submitted proposals only at first.
After that, we often need meetings to clarify the proposal features and price, and a demo. We check references. And then we negotiate a deal. This is where it’s helpful to have a sense of features and prices, so you can go back to suppliers to get them to improve initial costs.
References
Demos are important. You need to see any areas of critical functionality working in practice. But beware of relying solely on a vendor demo, which isn’t a real-world situation. Try to get references for the product, and follow up with them as well as the supplier.
Try to get the most comparable customers possible for references, so that you are actually seeing something that feels like it’s similar to your own use case and your own scale. You don’t want to see it working nicely at a small organisation and then find it falls down when you put more of a load on it.
It’s also worth seeing how any integrations, if relevant, perform.
Negotiation
In our experience, there’s plenty of fat in tech pricing. On text messaging services we achieved a price literally half off of the best deal any union was currently paying. There were also huge savings for payment processing for direct debits.
When you’re buying services, in many cases you’re becoming another customer on something they’ve already built. So if they don’t need to do extra work to accommodate you, then the marginal costs for the supplier aren’t that actually that much, and they do have room to cut deals and still make money.
But the golden rule here is that if you don’t ask, you don’t get. It’s worth haggling as the worst that happens is that you have to pay the price you were considering paying anyway.
Look out too for added extras. You may find other costs coming in for things like additional features or implementation. It’s worth double checking all the quotes to spot this.
Integrations are sometimes what racks up the bills. If you’re the first client who wants to link a service with another tool or system you use, then you’ll likely need to pay them to build and maintain an integration.
This can cost a lot. For example, we built a SharePoint Outlook integration that lets us store documents and emails to a members record, an employer record, or a case in our CRM. It cost around £40,000. That’s prohibitive for an individual union, but as we had a hub of interested unions, the most it cost any one of them was about two and a half thousand.
But sometimes you might find that a supplier wants you to pay for an integration that’s already been built for another client. They won’t tell you they’ve already built it, just give you a big bill. But if you know from your research and references that others are doing this already, then you’ve got scope to get that cost down.
License terms
Think about when your new service is going to commence, and when you’ll start using it at volume. Try to avoid paying too early for capacity and for licenses that you won’t be using until you’re ready.
I generally try to push for a per-member deal with limitless licences rather than basing it on a count of individual licenses in the union. There are pros and cons, but we are aiming to give functionality and features to workplace reps, rather than just staff. It’s easy to get a good deal for staff that suddenly looks terrible when you want to bring in access for reps.
Look at how long you can get a licence for, and what you can specify about costs on renewal. You don’t want to end up with a good first deal and then when it comes up for renegotiation, they ramp up the price.
When we were negotiating our CRM platform, I got the contract fixed for three years at the first rate and then I made sure at the end of those three years that it couldn’t go up more than CPI inflation.
Ongoing contracts
When you’re buying tech, the sale is rarely the end of the relationship. You need to consider what will happen in the coming months and years.
What will it cost you on implementation, and ongoing maintenance? What are the service levels you will be able to expect? How long is your warranty on the product you’re buying or having built, and will that realistically be enough for you to have evaluated it and found all the bugs, whilst the supplier still has to pay for the fixes?
The actual contract terms are often boiler plate things that apply to all customers. If you’ve got enough weight you can sometimes get things changed, but it is generally hard.
Where next?
Kicking off with group buying has been some work, but with every product and service we’ve negotiated, then our coalition has grown and it’s easier to get a good deal on the next one.
In the ACTU we’ve been able to make this sustainable as a programme between unions, which pays for itself many times over.
And if you’re interested in our flagship deal with CRM platform iMIS, and how we’ve worked together to build a shared CRM tool for Australian unions, you can check out this case study & demo.
Chris Walton is CEO of the ACTU Union Innovation Hub.