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Narratives

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Formation:
The Tessitura Network is comprised of organizations that use Tessitura Arts Enterprise Software, a powerful technological solution that is unique to the arts and cultural sector. Tessitura Software was created by the Metropolitan Opera of New York (“the Met”) in the mid-1990s in response to their internal need for a fully-integrated database for ticketing, fundraising, marketing, reporting, customer relationship management, web transactions and other functions necessary for the successful management of a performing arts organization. At that time, arts organizations around the world were struggling to find an integrated, customizable and robust system to provide needed infrastructure, but a viable solution was unavailable. The leadership of the Met undertook the project and built a system based on experienced user-defined specifications and input, and the new Tessitura Software went into use at the Met in 1998.

Gradually other arts and cultural organizations assessed their own infrastructure needs and became aware of the superiority of this new solution, and in 2000-2001 the Santa Fe Opera, Kennedy Center, San Francisco Symphony and Seattle Opera also implemented Tessitura. Licensing to additional non-profit arts and cultural organizations was initiated based on demand, and the number of organizations using Tessitura grew rapidly over the next several years. The scope expanded beyond performing arts to include a broad and diverse spectrum of the arts and cultural sector such as museums, university arts departments and entertainment organizations.

In 2001 the early adopters determined that a separate organization was needed for the support and development of Tessitura Software, and after exploring several corporate models decided on a non-profit, Member-owned business that could collaborate to provide excellent service without being under the umbrella of a corporate entity. This non-profit structure allowed for the Network to make decisions to best benefit the Members, instead of being motivated by commercial gain or investors. Operations began immediately, and in 2002 the Tessitura Network, Inc. was established and granted 501(c)(3) status the following year.

In less than a decade Tessitura Software has become the industry leader and the Tessitura Network continues to grow in both size and strength. Today thousands of individuals use Tessitura to advance 320+ arts and cultural institutions in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States. (Please note that the majority of Tessitura Network Members are located in the United States, and for the purpose of this application we will focus on US-based organizations only.) Tessitura Software is the key infrastructure tool—it serves as a living repository of all patron and prospect information, plus processes ticket and admission sales, handles memberships and philanthropy, powers web transactions, manages customer relationships and creates reports—and the Tessitura Network fosters an open and productive environment where Members can openly share ideas, concerns, methods and tools to raise organizational productivity.

Management:
The Tessitura Network is governed by an elected Board of Tessitura users. Per Network bylaws that were put forth by the Membership, the Network governing Board is a diverse group of leaders from Tessitura Software licensee Members. We strive for full representation within the Board with individuals representing organizations of various sizes, genres, geography and people with varied functional and leadership skill sets. Each year a Board nominating committee initiates a process to solicit nominees from the Membership, and after careful due diligence, the Network Board recommends a slate of Directors for a member organization vote. Board members, per the bylaws, must be employees of member organizations, thus ensuring congruence of purpose between Board interests and Membership interests. Continuity of Board service is important as the Board is responsible for providing governance, financial oversight and strategic guidance to represent the interests of the Members and to fulfill the bylaws of the corporation.

Challenges:
Due to the diversity and breadth of arts and cultural organizations that use Tessitura, the Tessitura Network staff and Board leadership have a unique vantage point on the needs and trends of arts and cultural organizations. Our main challenge is that the environment in which we do business is constantly evolving, and as business needs change, enterprise software and services must change to accommodate those needs. Also, because Network activities are Member-driven, we are challenged with addressing all the needs of our organizations in ways that are most beneficial to them. We address these challenges by staying on the forefront of the industry trends and constantly soliciting input and feedback from our Membership base via online forums, groups, meetings and other channels.

Impact:
A diverse spectrum of the most respected arts and cultural organizations in the world has something in common—They are Members of the Tessitura Network. Cultural anchors such as Carnegie Hall, the Kennedy Center, San Francisco Opera, Oregon Shakespeare Festival, Guthrie Theatre and the Tech Museum of Innovation count on Tessitura every day for their operational excellence, as do innovative organizations such as Woolly Mammoth Theatre Company and Hubbard Street Dance. The community of theatres, orchestras, performing arts centers, festivals, dance companies, opera companies, museums and university arts affiliated departments represents a large spectrum of artistic excellence.

The collaborative nature of the Tessitura Network Members fosters a non-competitive, productive environment where Members can openly share ideas, concerns, methods and tools to raise organizational productivity. Our Network website, www.tessituranetwork.com, includes tools behind a Member log-in including online learning resources, discussion forums in all functional areas, Facebook-style messaging and group collaboration. We encourage our Members to communicate and learn from each other, which is truly unique in our industry.

We have not specifically tracked the outcome of these tools, however we constantly seek feedback on how communication tools are utilized and ideas for improvement.


Model:
Due to our non-profit, collaborative company structure, the Tessitura Network can exist to best serve our Members according to their needs. Our competitors are public companies or are backed by investors, and thus are obligated to make as much money as possible to satisfy shareholders. Frequently they change focus to find or serve new customers and historically have left arts and cultural organizations in the lurch. The Tessitura Network non-profit business model allows us to focus on the needs of our Members and provide them with the tools they need to succeed.

Efficiencies achieved:
Historically, traditional for-profit technology companies operating in the arts and cultural sector have sought to maximize revenues by developing multiple fee streams and charging for them; at times it was difficult to determine what service or benefit to the organization or its customers was provided for those fees. The Tessitura Network broke that traditional paradigm with a non-profit collaborative business model designed to lower costs and increase revenue for users of the technology, a proprietary enterprise management software developed specifically for arts and cultural organizations. The user organizations become members of the collaborative cooperative company. From the inception of the Tessitura Network collaboration, there was a desire to avoid excesses in cost for its member organizations, provide better service and more knowledge-sharing among its users, and provide services with low and fair costs and with complete organizational transparency.

Historically, arts and cultural organizations have operated with silos of information using systems that were separately maintained. Each department was protective of its data and each user ended up not viewing the “whole” constituent (patron, member, ticket buyer, subscriber, etc.) thus ensuring that business operations were not optimal and that customer relationships were not handled in a manner to build lifetime value. The Tessitura Network broke that paradigm with a customer relationship based, enterprise-wide application that enables fully integrated operations in a single database for ticketing, fundraising, memberships, marketing, reporting, customer relationship management, web transactions and other functions. Actions taken anywhere automatically update related records so there is considerable time saved and service improved. The benefits for arts and cultural organizations are more efficient operations and improved customer service resulting in greater retention and more revenue.

The Tessitura Network is funded through member organizations’ payments for software support and related services (“dues”), on a sliding scale based on each organization’s operating budget. Thus, smaller arts and cultural organizations have a much lower cost than larger organizations, but for the same software product, services and service level. Over the 9 years since inception, costs to our member organizations have remained flat or decreased, except for one year, thus resulting in reduced expense for using the Tessitura software over time. During the same period, the software functionality and capabilities have been greatly expanded based on member organizations’ input regarding their business needs. Decreasing the costs charged to customers is not the model for commercial companies, one of the factors explaining why over 330 arts and cultural organizations have chosen to join the Tessitura Network collaborative and use this unique enterprise tool. In addition, in contrast to the model of the Tessitura Network, traditional technology companies develop new functionalities based on the potential for the largest revenue streams, not on specific business-need input from their customers, large and small.

While the Network is established and operates as a 501(c)(3) non-profit corporation, its member-funded financial base has resulted in a surplus in every year of operation, enabling the organization, based on Board direction, to extend dues credits to members, invest for future technology development, preserve a contingency fund for special needs, and, as noted above, reduce or maintain flat member dues levels. Additionally, the Network has never incurred debt or required outside funding thus establishing solid financial stability for its member organizations, during a period of economic downturn when a number of competitor traditional companies serving this sector have gone under or experienced significant stress.

The mission of the Tessitura Network is to “enable and inspire arts and cultural organizations of all sizes to achieve their goals by providing continually innovated technology and comprehensive services that improve their efficiency and effectiveness, and by fostering learning, knowledge sharing and community collaboration between peers and organizations.” The Network operates continually with this mission as a guide, improving efficiency and effectiveness for all members. This is accomplished by gearing solutions to the business needs of our member organizations, rather than to the business and profit needs of an investor-owned company. The Network has multiple processes in place whereby users of our software provide input and guide the development of a technology “roadmap” for their business, communication and audience analysis solutions. As noted in our original application, leading arts organizations developed the Tessitura software to address their own business needs; now, all participating arts and cultural organizations have the benefit, and provide new ideas which are reviewed by all members, voted on and implemented, providing solutions to the most critical business needs as identified by the members as a whole.

The technology has been adapted so that collaboration breeds more collaboration; an example is the many consortiums of arts and cultural organizations, whose coming together to share a single instance of Tessitura the Network has facilitated. In consortiums, members further benefit by sharing a single database, while security settings and other privacy parameters secure each organization’s data and business processes. This model provides significant efficiencies in the form of reduced organizational investment in hardware, license fees and member support costs.

An additional example of the benefits of this collaboration are the resources available to members via the member website, where users collaboratively share tips, techniques, methodologies, learning resources, and best practices on a daily interactive basis. Thus arts and cultural organizations large and small are learning from each other how better to establish vital long term relationships with their donors, patrons, and customers.

The founders of the Tessitura Network were driven to create a new paradigm business model to serve the arts and cultural sector, as noted in our original application, because commercial companies did not serve our sector well, and served it with high costs and low service levels. Our new business model provides the social good of providing arts and cultural organizations with the leading enterprise software tool to enhance their relationships with customers and donors. At the same time, organizations can increase the bottom line and take advantage of current technology and marketplace trends, such as the widespread movement to web-based ticket sales and contributions, print-at-home ticketing, and customer ability to select-your-own-seat, which are critical to today’s arts organizations’ success.

Evolution:
The founders of the Tessitura Network formed their collaboration to avoid the high fees, inefficient multiple applications, and poor service that many commercial companies offered. The collaboration began under the auspices of the Metropolitan Opera, which had developed the software and, along with a number of early adopters, decided to facilitate the formation of a separate company to continue development of the software and provide technical support and other member services. As noted in an industry article about the Network, “in these times of failed business models, unobtainable bank financing, and revenue maximization on the backs of consumers through service fees, one company is bucking the trend with a very unconventional approach. Over the eight year history of the Tessitura Network there has been no investor funding, no bank debt and fees for services have been reduced over time.”

The governance model and operating objectives of the Network are totally in sync with those of its member organizations/beneficiaries. The management structure is a Board of Directors elected by members and totally comprised of employees of those member organizations; this ensures that the direction and oversight of the collaboration is totally congruent with the needs of its members. Bylaws and policies were put into place to ensure the Board is diverse and represents all sizes, genres and geographies of the member organizations. Outside parties and investors do not have a governance seat at the table, which would tend to divert the collaboration from its primary mission and purpose. At the same time, the governance and operating structure avoids bureaucracy and provides the services needed via a staff of over 50 professionals, all of whom have extensive experience in the arts, cultural or non-profit sectors.

The road to a successful business model was a path of discovery and overcoming challenges through pragmatic and sensible collaborative decision making. There were seven founding organizations and it took 18 months of meetings and collaborative document and idea sharing between the firms and their respective counsels, an appointed leader of the company, and a retained experienced nonprofit expert counsel, to finalize the organizational structure. Multiple corporate and partnership forms were considered and counsel helped founders choose a corporate form that fit, and guided the organization through an Internal Revenue Service review to achieve 501(c)(3) charitable business certification. The company was competing for clients against well -funded aggressive companies and the company initially had no track record and a promise of a business model that was hard to explain and understand. Growth was achieved by establishing credibility one organization at a time.

By year three the company was viewed as having the best application in the industry and the company doubled in size each year for multiple years. When the company started, the web was in its early stages of being used for business transactions and the company had no web interface to link the technology to organizations’ websites. The initial contracted staff of two people carefully reviewed options and selected a technology that led to the most flexible web interface capability in the industry. When the company started there was no staff and selections were made one by one to add skills that could bring about additional growth and provide great service. Staff retention since inception has been over 90%. When the company started there was no office and thus low overhead. A decision was made to maintain that virtual environment and establish practices and install tools that enable daily interaction and collaboration among and between staff and customers. The best people were hired and they could live where they wanted as long as there was internet and phone access. The company was ahead of its time in being virtual as the business world has now moved this way. In addition, planning was pragmatic; bureaucracy was kept to a minimum, management levels were installed as needed but each manager is hands on and stays close to the clients.

Through collaboration, the member organizations have been able to achieve
•     Expense reductions through one-time perpetual software license fees rather than multi-year contracts with annual fees and uncertainty about future software licensing costs
•     Flat or reduced annual support costs in every year since inception except one
•     Ability to 100% retain any online fees they charge with orders which, as the web has grown as a sales channel, have become a major revenue source
•     More control over the business processes which drive their critical relationships with customers, donors and other constituencies
•     Lower-cost purchasing opportunities, as vendors are willing to provide discounted products and services to the group as a whole, which they would not provide to individual organizations purchasing alone
•     Collaborative processes and tools for idea-sharing, software development enhancements, solutions and business methodologies to raise organizational productivity.

The Tessitura Network acts as a true community. Ideas and best practices are shared and group input is carefully considered for plans and direction. The business model has eliminated the “friction factor” that typically exists between vendors and customers, since with the non-profit member-owned and governed model, the objectives of the customer/member are congruent with those of the company. In the Network, the company is the community and the result is a virtuous circle of good ideas and business practices breeding even better practices. Arts and cultural organizations improve their operations and customers get better service and loyalty increases. Client retention for the Tessitura Network has been over 99% since inception and user satisfaction is strong. Arts and cultural organizations benefit, consumers benefit and society benefits.

The Tessitura Network collaboration should win the Collaboration Prize because it provides a visible and successful example of the many concrete benefits of the collaborative business model. Without the Tessitura Network, arts and cultural organizations would remain in their departmental and organizational silos, continuing to struggle in a difficult marketplace with outmoded tools designed for very different markets. As members of the Tessitura Network, small and large organizations are using the premier technology tool designed specifically for their business needs and practices, sharing ideas and best practices with colleagues who understand their business, and doing so with reduced costs and higher service levels than ever before.




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