Posted tagged ‘Blackbaud’

A Bad Economy Forces Good Decisions

August 20, 2008

Let’s face it: times are tough. This economic slowdown has seen giving slump more dramatically than in the past. The explanation is obvious…just drive by your local gas station, go pick-up groceries or look at the unsold homes in your neighborhood. Donors have less disposable income and are anxious about the future.

So, is there any good news? Actually, I think there is. The economy will recover—economies, like history, are cyclical by nature—and oil prices are already beginning to stabilize and drop from record highs. In addition, in recent days, we’ve seen a remarkable rise in the dollar’s value, making imports and goods, including food, more affordable. These are all positive signs.

Positive, macro-economic signs, however, do not change the amount of money in a donor’s wallet, at least not for a while. The reality is that we will see lower levels of giving at least into 2009 (remember, even when things get better, donors are cautious for a while) and maybe longer. There are no guarantees, and nonprofits doing their budgeting should not bank on year over year revenue increases.

Until things really turnaround, however, there are some creative and tangible things you can do to operate your organization more efficiently and effectively. Start by finding the most obvious place to cut costs without losing effectiveness or capabilities and if you follow the example of today’s most savvy companies and governments, that means focusing on IT costs.

Most IT spending today is incredibly inefficient. It relies on an outdated model of paying huge up front costs and ongoing license fees to lease software over which you have little to no control.

For example, how much do you pay Microsoft for desktop applications and back office applications (like Exchange)? The City of Washington, DC saved millions of dollars each year in licensing fees by switching to free (Google Aps) and Open Source (Open Office) solutions for their desktop applications. All of these are fully compatible with Word, Excel, PowerPoint and other Microsoft standards. How much could you save by doing the same? How many more lives could your nonprofit improve with the funds you’d save and have available for programs and services?

This is a large part of the reason that Orange Leap made its mature and full feature constituent relationship management (CRM) solution available as an open source offering earlier this year. You have all the functionality (and more) of a product like Blackbaud’s Raiser’s Edge®, but your cost of owning and operating the software will be 40-70 percent less. Plus, you don’t have to pay huge up front fees and you are not beholden to us. It’s open source. It is as flexible and customizable as you want it to be.

Hopefully, the silver lining to these difficult economic times is that nonprofits will find ways to creatively cut costs so they can focus more dollars on the people they serve. Software, including but not limited to CRM solutions, is a great place to start.

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What exactly do you mean by “Open”?

July 24, 2008

While some words and terms have multiple meanings, that is not the case with “open software.” So it’s very troubling to see the scores of nonprofit CRM software vendors who, in recent months, have been parading around the term “open” to describe their respective products, with each company using its own definition.

While it’s encouraging that the open software movement is forcing vendors to adopt this posture, there’s simply too much creative marketing spin with little substance. The result is a lot of messaging clutter and – no surprise – confusion about what open means, why it matters and what a nonprofit should do vis a vis its CRM solution.

To try to help nonprofits sort through the clutter, I recently wrote an article (it was featured on NTEN’s Blog, on Fundraising Success and PNN Online) on the three levels of “openness” currently available for nonprofit’s for CRM. Not all solutions touted as “open” are equal in their functionality and benefits for nonprofits. In fact, some definitions of “open” are complete misnomers.

For example, Blackbaud has been talking a lot recently about their new “open” initiatives. They point to new user forums, podcasts, blogs and “sample code” for downloading as evidence of being “open.”

I enthusiastically applaud Blackbaud for finally beginning to try to listen to customers. Engaging in a dialogue with customers can only help Blackbaud – really any firm – become a better company. (It is something we at Orange Leap learned that we cannot live without over the last seven years and I suspect that Blackbaud will wonder why they didn’t do it earlier.)

But, while forums, podcasts, demo sites, etc. are excellent communication tactics and a smart use of the Internet, including social media — they are not features of open software. The reality is that this vendor’s products and services still remain a “walled fortress”, lacking integration, access or collaboration outside of the company with the very community of nonprofit users it serves.

For any company serving nonprofits, an authentic move towards being “open” would involve:

  • Eliminating large, up front and version upgrade license fees. If we really believe organizations should be able to ‘try’ before they buy, then we should do away with license fees that cause vendor lock-in. An organization may quickly discover, once they are using a product and not being shown a ‘demo’ that it does not meet their needs. However, when a vendor has extracted huge fees up front, a nonprofit feels held hostage. That is good from the vendor’s point of view, but not for the charitable group.
  • Openning up its source code so users truly own the code in which they’ve invested. Open source makes sense for all non-profits, whether or not they ever read or develop a line of code. This is fundamental for transparency, vendor accountability, and innovation and, at the end of the day, makes the product better for everyone. It ends the idea that a software vendor knows more about your mission and needs than you do. And, it allows you to reap the benefits of incorporating other nonprofits’ innovations into your software.
  • Freely giving away application programming interfaces (APIs) for all products to allow innovation and creative problem solving by nonprofits and the entire marketplace. This is eOrange Leaping nonprofits and a true sign of “openness”.
  • Creating a partner and product ecosystem to provide services. Now customers are not restricted to using only that vendor’s services or products. Choice is power for nonprofits, so vendors should integrate with other products (like accounting packages, Web applications, etc.). Currently, nonprofits and potential partners have to blindly brute force many systems with little or no support from their vendor. Coercing customers into all-in-one software and services solutions meets the vendor’s needs, but not those of nonprofits.

So, let’s applaud the moves by all vendors to embrace an open posture. But let’s also demand that if they are going to call themselves “open,” they eschew the marketing spin and truly live up to that promise in their products and services.

Stock Prices of Vendors to Charities Getting Battered

May 12, 2008

Yesterday I read an article in the Nonprofit Times about the stock prices of several public companies who work with nonprofits that are struggling. Ostensibly they are struggling because of the meltdown in the subprime mortgage market. Actually, except for the possible exception of Blackbaud, I think many of the companies listed might be struggling regardless of the present economic woes.

Blackbaud is another story. They clearly took a hit a month ago when Jefferies & Co. analyst Ross MacMillan speculated that because of the recession, nonprofits would be spending less and therefore Blackbaud would close less business, etc… “Given the outlook for more potential weakness in giving, we think non-profits are slowing the rate of spending on technology.”

Obviously, it’s a complicated issue. I’m not sure that our clients are seeing giving slow down that much. But assuming nonprofit giving does slow down, I agree that overall technology spending would decrease (especially spending on technology infrastructure) but I would hope that technology spending on fundraising and relationship building tools would not slow. After all, these are the tools that an organization needs most in a difficult economy.

Of course, this is just another reason why open source is such a beautiful model for nonprofits in any economy. Admittedly, open source software is not “free”. For instance, an enterprise class open source CRM like Orange Leap needs implementation services and ongoing support in order to get the greatest value from it. But, because an organization doesn’t have to write that big up front check for license fees, they can spend the money needed to implement software correctly and still save 40% to 60% over comparable closed and proprietary software.