The National Association of Realtors recognized that in order to implement their vision to create an environment that promotes growth and cross selling of services and products between their Members, Member Associations and current and future business partners within the Realtor Organization, improved technology, centered around eCommerce, was required.

The Association’s goals for this effort were to:

• Preserve member and local board relationships
• Reduce administrative efforts, costs and errors
• Capitalize on the economies of scale possible through a centralized payment clearinghouse
• Provide better service to the organization’s members

The solution was to build an electronic application platform, titled "The Realtor eCommerce Network". This application platform consists of several components:

1. Membership Authentication – This is handled through a central database on the national server known as National Realtors Database System (NRDS). NRDS provides a secure repository of membership information accessible by all members and associations and was built as a platform upon which future NAR systems can be added.
2. Central Payment Clearinghouse – A central, national clearinghouse for authorizing and accepting payments with a wide variety of payment options, including on-line, automatic and in-person transactions.
3. Electronic Funds Transfer – Provides support for electronic transfers between the member Realtor organizations and can be used by modular applications.

While there are many benefits to the new systems, this study focuses on the benefits of processing "Membership Dues" utilizing the eCommerce system.

• The scope of this study was limited to the processing member invoices and payments for annual dues for the Vermont State and Local Association’s eCommerce system.

• The study looks at savings in both time and costs associated with processing dues and compares it to the cost of ownership to measure return on investment using traditional capital budgeting performance measurements.

• Additional State and Local benefits of electronic membership, such as the cost of mailing newsletters and on-line registration for education, were excluded.

• Benefits and expenses at the National level were also excluded.

Dynamically created Invoices

• Each Association can set-up fee tables and assign business rules.
• Uses membership information from a centralized National Database (NRDS).

Payments made via the Central Payment Clearinghouse

• Scheduled creation and delivery of member billing notices.
• Members have the option to receive their notices via regular mail, fax or email.
• EMail includes a link to the on-line system where the member can view and pay their dues.

Funds transferred to billing associations through the Electronic Funds Transfer System.

Vermont has approximately 1400 members assigned to 550 offices. 65% of it’s members have responded to the electronic membership program. This success it is felt is due in part to the fact that Vermont passes the savings along to its members who sign up for electronic membership. Requirements for membership include on-line billing, on-line registration for educational courses and material and an e-mail address. The following is a summary of key benefits:

• In addition to the National database (NRDS), membership records are now kept on local board servers. New records and record revisions are batch uploaded weekly into NRDS database. This provides much faster processing of new records and changes to existing records than the old MBM system kept on the state server. In addition, the researching of record discrepancies is also much faster.

• The creation of invoices for outstanding current year dues for new members who chose the electronic membership option is now performed automatically by the system.

• All activities associated with the processing of invoices has been reduced by 65% due to the number of electronic members. Answering invoice inquiries from electronic members has also been reduced since electronic members can now view their invoice and billing details on-line and local POE has faster access to records on their server.

• Processing and reconciling national payments by the State and Local associations has also been reduced due to the fact that national payments for electronic members are sent automatically. This activity must now be performed only for manual checks received.

The following worksheet summarizes the identified benefits for processing dues using the eCommerce Membership Invoicing Module. The findings compare improvements in expense items, typically found on the Income Statement, to the cost of ownership. These items provide the basis for calculating Payback, Return on Investment (ROI), Net Present Value (NPV) and Internal Rate of Return (IRR). Indicator definitions are:

• Years Payback – measures the length of time required to recover the amount of an initial investment. It is determined by dividing the Cost of Ownership by the annual Cash Flow.
• Return of Investment (ROI) – simply highlights the percentage of profit made on an initial investment.
• Net Present Value (NPV) – is the excess of the present value of cash flow generated by the project over the cost of ownership.
• Internal Rate of Return (IRR) – is generally defined as a percentage equal to the interest rate on a bank account that would give you the same total return on your investment.

Each indicator as looked at over both a 3 and 5 year period which is consistent with software application life cycle.

This worksheet summarizes the estimated savings for the one State and 14 Local associations which make-up the Vermont Board of Realtors.

The savings come primarily from reductions in the amount of time spent processing member invoices. There is approximately a 75 hour reduction at the State Board resulting in a $1,579.68 savings and a 430 hour reduction resulting in $10,552.20 savings for the 14 Local boards. For a detailed analysis of these reductions for each activity refer to the Process Analysis Worksheet in the Appendix.

In addition, there are $2,062.34 of savings associated with reductions in copying, mailing, and invoice form printing expenses at the State Boards.

Ownership costs are basically limited to marketing the program to members which is considered an on-going cost. In the Vermont Association’s case, an additional one-time cost was incurred by both the Local and State boards to develop a program to maintain and update it’s membership. The cost for the local database program was excluded since most boards have the option of using the NRDS run-time program which would result in no development cost. Most boards chose to use either the run-time version or the State developed program. This program resides on each board’s server and is batch uploaded to the NRDS database weekly.

In addition to the costs incurred at the State and Local levels, there are costs incurred at the National level. These costs are for maintaining the NRDS database and server and the cost for processing payments. These costs, however, were excluded from the scope of this study primarily because it was felt that the benefits of receiving payments sooner at the National Association and the deceased cost of credit card transaction offset any increased cost to support the system at the national level.