Small pieces loosely joined part II

In my previous post I talked about how venture capitalists see the next generation of technology investments. Others share a common view of the future:

"Connective and pervasive technologies are enabling new forms of human and machine interactions and relationships; they will present business [& nonprofit] institutions with a host of new possibilities for organizing people, processes, relationships and knowledge." (Institute for the Future)

In a Social Source world, the participants (vendors, consultants, customers) define new possibilities for organizing people, processes, relationships and knowledge with the goal or improving their own organization, and as a by-product, make their innovations available to a broader community, accelerating the adoption of their innovation. This is a function of open source licenses and open, modular architectures based on standards.

The key here is that organizations pursue their own interests. The Social Source ecosystem and licensing structure, which enable organizations to pursue their own interests better, faster, cheaper, makes it easy and automatic to share innovations with no action on the part of the "customer." The customer just needs to pursue their own interests.

The second notable issue is the critical nature of CRM to this vision of a new world-- organizing people, processes, relationships and knowledge.

This is why our fist piece of software is CiviCRM, a constituent relationship management engine. It is all about providing a common, open framework for organizing people and relationships. We fully expect other software will use CiviCRM as a common CRM repository.

Ultimately, this makes interoperation and compatibility between a CiviCRM-based knowledge management system and perhaps a CiviCRM-based donor database easier and more powerful.

The Big Idea

The Institute for the Future observes that we are in the middle of a collision of different forces:

1. "Companies in emerging high-tech industries have learned that working with competitors can build markets and help avoid costly standards wars."
2. "The open source movement has shown that world-class software can be built without corporate oversight or market incentives."
3. "Outsourcing has turned competitors into common customers of design firms and contract manufacturers."

Put these ideas together and you begin to see how far behind the curve the nonprofit technology sector is. Sure, where NPO technology and the broader technology market intersect, we see these themes -- computers, operating systems, groupware -- but in the nonprofit-specific technology sector, we see a market lagging behind. I'm talking about things like donor databases, advocacy platforms, membership management, etc.

Leading firms don't work with one another to build markets, but focus on building proprietary software platforms that seek to be all things to all people (Kintera and Blackbaud illustrate this point) or focus on a small little niche (membership management & case management software). Nonprofits still see open source as "iffy,"built by volunteers and not a viable option compared with proprietary commercial solutions. And finally, the nonprofit technology market makes little use of contract manufacturers/ design firms, instead vendors tend to follow a vertical integration strategy, providing customers with all the services related to their market -- installation, training, support, customization, etc.

A Social Source world actively embraces these themes and put them to work for the customer.

Social Source encourages competitors to work together and build standards that enable customers to switch from vendor to vendor without barriers. Imagine buying advocacy software from Kintera and deciding that you would prefer a consultant and technology support staff based in your city so you can get face to face treatment. Perhaps GetActive has staff in your city. Could you imagine switching from Kintera to GetActive with little pain and trouble? This starts to become possible if the two companies used the same open source technologies & software and agreed to the same standards. If both companies used the open source CiviCRM constituent relationship management core, the migration of basic CRM data would be relatively simple.

In a Social Source world, the software options are not created by a nonprofit staffer with little time and no formal software engineering training. Instead, very robust core software is built by qualified software engineers with the support of a broad open source community. Intermediaries like the Social Source Foundation and Aspiration provide governance, guidance and community building for the open source community.

Social Source means that when customers hire vendors, the project contributes to the whole community through the magic of open source. Competing vendors have an incentive to share innovations and employ the same software engineering organizations to create solutions to their customer needs. Doing so, they can deliver the functionality customers need at a low cost to the vendor.

But this Social Source vision requires a new ecosystem of integrators, hosters and developers to evolve. It requires customers and consultants and intermediaries to start understanding the dynamics that shape the new, new economy. And it requires imaginative and inventive people, funders and intermediaries to take the lead.

"Apps on top of apps on top of apps": small pieces loosely joined

From the pages of Business 2.0

Fred Wilson was a VS at Flatiron Partners during the bubble. He has recently started Union Square Ventures after asking the hard question, "Is profitable VC investment in technology innovation dead?"

His answer: "The reality is that core technology investing- everything from chips to enterprise software to communications equipment, all the stuff that big companies buy- has been on the wane for five to 10 years. So what's the next wave? The next wave is what we're calling applied technology. The Internet is a computing platform built on top of the core technology. Applied technology is what gets built on top of that: It's Web services."

CiviCRM is a great example of this. It is both built on top of core technologies (Internet, PHP, MySQL, Apache), but it is designed for others to build on top of it. Apps on top of apps on top of apps.

While the commercial world tries to figure out how to extract maximum profits at each layer, the Social Source approach is to build the core layers and let nonprofits pay consultant to fill in the blanks. As those blanks are filled in with contributed software, the entire sector gets better, more efficient and more affordable tools.

Effective, affordable and ubiquitous nonprofit technology

Social Source is a vision and practice of software development that specifically meets customer needs. Social Source changes the institutional and systemic incentives that govern the behavior of actors within nonprofit software development.

It starts with a simple idea:
Software customers need effective, affordable and easy solutions.

Commercial vendors in the proprietary world say they provide effective, affordable and easy solutions, but their definitions of those terms may not match the customers'.

**Effective**
Vendors tend to provide effective solutions for the problem that drives the purchasing decision. I buy effective fundraising software today, but in five years my needs have expanded and when it hasn't been upgraded because the vendor needs to maintain their profit margins and cannot afford to expand R&D, it might no longer be so effective.

Social Source uses open source development methodology to deliver effective solutions across the life cycle. CiviCRM, the Social Source Foundation's new nonprofit-centric contact and relationship management solution, can remain effective over the entire software life-cycle IF an social source community of volunteer and paid developers, consultants, vendors and users embrace the platform.

Commercial vendors only provide an effective solution if it is profitable. Blackbaud's Raiser's Edge was recently criticized by the transgender community because their demographic profile only included male and female. With an open source solution like CiviCRM, if the maintainers of the software won't change their software, you can hire someone or do it yourself without violating licensing agreements.

**Affordable**
Affordable to a vendor means the highest possible price that the market will bear. We call this in economics profit maximization. Customers clearly get value... they are willing to pay for it.

With open source software, there is a natural competion among vendors. You can only buy Kintera Sphere from Kintera corporation. With an open source solution like CiviCRM, you can buy the solution from any developer/integrator/consultant that understands how the software works.

The dual upside/downside is that this provides a large variation in vendor quality from college students on summer break to major corporate systems integrators. The customer will need to choose the best providers, but they can choose from a wide variety of price points and service levels so that the customer's specific needs are met. If you want Kintera Sphere, you pretty much only get Kintera Sphere at Kintera's price point and service level.

We call this the ecosystem around a piece of social source software.

**Easy**
Proprietary vendors tend to make using software easy. Getting, installing, modifying, customizing, understanding, etc. are all too often difficult in order to generate additional fee income that supports profit margins.

Social Source vendors have incentives to deliver "easy" in all aspects of their services. As they compete in the marketplace, they can't afford make any stage of the process difficult... the competition will acquire customers by making what was once hard, easy.

So how does this Social Source idea work all this magic? We'll take a deeper look in the next few days.

Building a Social Source Paper

Seems like all good ideas have a white paper... Network Centric Advocacy, Movement as a Network, Three Pillars of Social Source.

But I don't have that kind of attention span. So I thought I'd try to build a white paper from component ideas. A blog seems like a reasonable tool.

Have you ever read something that resonated so deeply with your own ideas it gave you new energy? The paper "Toword a New Literacy of Cooperation in Business" from the Institute for the Future, did it for me.

Plus it provides an organizing principal for my Social Source white paper.

Now every white paper needs a title, so here are some I came up with:

Social Source: An opportunity for nonprofits to be on the cutting edge of global change.
Social Source: Visioning a new model of nonprofit technology.
Social Source: Catalyzing a new model of social purpose technology.

I'll tell you what the paper is about tomorrow.

Open Source and "White Label" Applications

Long ago I made the arguement that all these nonprofits that build custom applications really need to get together and form a consortia to lower the costs of application development. Yes, there are many logistical hurdles, but two nonprofits with the same needs can get a custom application by commissioning the work as a consortia than each building a seperate custom application.

As CiviCRM begins to take shape (we released 0.1 and are working on 0.2), it is becoming easier and easier for nonprofits to band together and build "white label" applications on top of CiviCRM. Mark Sherman at the Progressive Technology Project has a problem... his members, grassroots organizing groups, have a common database need which they have all solved in different ways. By banding together they can commission a grassroots organizing platform that will serve their collective needs?

This works really well when the underlying technology is open source. No one owns the technology and everyone owns the technology. As a practical matter, it means a group of nonprofits is not locked into a single vendor and can be assured that they have the rights to do whatever they want with the technology that is produced.

What other unbuilt applications are out there that NPOs could collaborate on?