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Outsourcing talk takes over Pines software meeting

A larger than expected crowd gathers on Tuesday during an Ocean Pines Budget and Finance Committee meeting about new software systems that was largely derailed by suggestions of outsourcing.

By Josh Davis, Associate Editor

(June 7, 2018) An Ocean Pines meeting Tuesday took about an hour to get to the point that new software systems probably would not save money, but could vastly improve management processes and boost productivity.

Before that point could be made, however, the meeting, hosted by the budget and finance committee, was derailed by the notion of outsourcing.

The issue partially dates back to a motion on March 29 made by Director Tom Herrick to issue a request for proposals “for HOA financial management and accounting software … as a turnkey project.”

Whether to outsource specific parts of Ocean Pines operations is also part of a larger debate that has waxed and waned within the association for years – or perhaps decades.

Director Slobodan Trendic was among the first to raise the issue, and was one of five board members present during the meeting, including Association President Doug Parks, who participated by phone.

Trendic said the technology working group, which has spent the last two years evaluating Ocean Pines systems and ideas before recommending Northstar Technologies, did a “phenomenal job.”

“However, I have a number of questions and concerns,” Trendic said, adding those included a lack of analysis of current industry trends and a recommendation he called a “one shoe fits all” solution.

He asked why so-called “back-office” solutions from Microsoft and Oracle were not considered, said Northstar systems were designed for hospitality and club management as opposed to management of homeowners associations, and wondered about professional references and customer reviews.

“I believe that the board is nowhere near the point to even entertain the decision on awarding a contract to [Northstar],” he said. “What I will do is ask the board to instruct the group to go back to the drawing board to start with some of the fundamental business decisions that need to be evaluated … then we can decide on a best course of action for the association.”

Trendic said the deeper evaluation needed to also consider outsourcing as an option.

“This is a hospitality solution – a club-management solution. We are an HOA. We are not in the hospitality business,” he said. “Just imagine if we outsource the golf course, if we outsource food and beverage – we would eliminate 95 percent of out [point of sales] transactions, yet we are basing our business decision on a solution that’s precisely designed for that instead of focusing on our core business needs.”

Resident Joe Reynolds said he would like to see “the same good work” done by the technology group on software evaluation put toward “looking at outsourcing before we make any decision.”

“I hope that this meeting today is not just a way to avoid doing that important second step,” Reynolds said.

Len Hall, from the budget and finance committee, added, “From a membership standpoint if we don’t address [outsourcing] … you’re going to have an awful lot of people in the community that say you all haven’t done the complete job of evaluation.”

Director Ted Moroney said people needed to understand the definition of outsourcing in this instance.

“What you’re really talking about … [is] looking at an HOA management firm’s computer systems to use those, just as you would with NorthStar or ABC or Microsoft or anybody else, to see if they would work out a deal for us to be able to use their systems,” he said. “There’s a confusion between grabbing the functional product, versus the management piece of that.

“That’s different than saying, ‘hey, we’re going to outsource the management of Ocean Pines,’” Moroney added.

To that point, General Manager John Bailey said he contacted the local firm Legum and Norman to see if such a deal could be made to use their systems. As of Tuesday he was awaiting a reply.

Association Vice President Cheryl Jacobs clarified the technology work group was “never tasked with looking at outsourcing.”

“We started from a point where we were beyond that by having a permanent GM and a permanent director of finance,” she said.

Budget and Finance Committee Chairman John Viola, who several times tried to pull the meeting back onto the track, said the purpose of the assembly was simple – to vet the cost analysis for the Northstar systems.

“Everything else that’s come out here – and I’m not saying it shouldn’t – those are all discussions … that should’ve been addressed before today,” he said. “My intent today was to review the financials and to sign off from [the committee] that I was comfortable with what we received with Northstar.

“The word outsourcing, that whole situation definitely needs to be addressed in Ocean Pines right now,” Viola said. “It has to be addressed [because] it’s creeping into these other projects.”

Finally, on the subject of software, estimates provided during the meeting showed a $1.01 million cost to run current systems over the next six years, versus $893,300 plus perhaps a 5 percent contingency to switch to Northstar.

“It’s basically going to cost us, in general, what it costs us today with a way better system, way better controls [and] reporting,” Viola said. “In no way was this committee looking to save money on this. We want the right system.”

Bailey said costs were “about the same, but you’ve got a whole different world of productivity and efficiencies with a new software system.”

“Even if these [costs] come equal, you’re going with a new system. It’s not even a question,” Viola said, adding he would follow up on the findings of the meeting with a formal letter to the board.