Wednesday, May 14, 2008

We should be lowering the costs of CRM implementation

I read this fine post on the Costs of CRM Implementation by an NPower consultant, Anand Sethupathy, and I started to wonder why we in the NTAP (Nonprofit Technology Assistance Provider) community are drawn up-market like regular commercial consulting firms. The costs of CRM implementation were more about organizations with 20 seats rather than organizations with 2 seats.

To define terms, I look at the charity sector like this:

  • 80.8% of registered nonprofits have budgets under $100K per year
  • 50.9% 990 filers have budgets under $100K
By any measure, the majority of the sector is tiny and cash poor.

Long agi there was Techrocks and Ebase. In 2002, I was at a retreat in Montana where we mapped out the move from Ebase 1 to Ebase 2. Ebase 1 was in the "simple to use" category. Ebase 2 became more flexible and powerful because Ebase users and consultants needed more. Eric Leland reviewed Ebase 2 back then this way:
While ebase 2.0 is a great improvement, it should still not be considered a “ready-to-use”product. Any users considering ebase should carefully evaluate what ebase can do for their organization without any extra work configuring the product, and what ebase can do for them if they are able to configure it.
A perfect example of a solution moving up-market from v1 to v2... getting used by larger organizations with more complex needs and losing its footing in the grassroots.

IMHO, Npower, Salesforce and ONE/Northwest have seen a march up-market among charities as well.

The only groups I can think of that keep a tight focus on the smallest organizations are Mission Research and the Organizers Database (I'm sure there are others, but those come to mind).

What is the determining factor?

As soon as you have a human providing services to charities, you are forced to move up market. Consulting is expensive and only charities with bigger budgets can afford them.

If you focus on a product that "just works" without the consulting component, you don't have to move up market (you also probably aren't going to make any money either).

The hard part is building the ecology that can deliver the entry level product (Giftworks / ODB /Ebase 1) AND provide enough flexibility and tools to allow the consultants to do what they do as well.

Monday, May 5, 2008

DonorPerfect getting nervous about the cloud...

[note: I run NetSuite Giving]

I read this little tidbit in the Techsoup forums and began to think about all the various implications for the traditional charity software vendors.

SalesForce is also a good example of where 'Free' doesn't mean it's the best choice. I'm glad to see you've seen what others have seen in its limitations as a fundraising system.
This quote from a DonorPerfect vice president is fascinating. My thoughts:
  1. DonorPerfect is clearly feeling the pinch of a free option for the bottom of the market. My impression of DonorPerfect is it plays just above Mission Works, below Raiser's Edge, and head-to-head with etapestry. They probably all are feeling the same pinch.
  2. There are real and significant limitations to a cloud-based, business-focused solution like Salesforce. Primarily, the solutions are not "productized" ... they require consulting and generally a lot of work to get running. A good illustration is the case of a LYBUNT report (donors that gave last year but not yet this year). In a cloud-based solution you plan the data model, implement the fields, build the report and it works great 40 hours latter. With a purpose built solution, you click the LYBUNT button.
  3. Productization of cloud based solutions will eliminate many of these vendors. If NetSuite releases a fundraising bundle (which includes the datamodel, fields and reports) with a LYBUNT button, many of the limitations of the cloud based solutions evaporate quickly.
  4. There is not much clarity on whether fundraising software is transactional (i.e. really an ERP rather than a CRM problem). Solutions like DonorPerfect straddle the ERP/CRM line and Raisers Edge/Financial Edge seem to cover both sides.
If this four point story does come true, then vendors like DonorPerfect will be in serious trouble. They can't match the R&D spend of the big boys, but they still have ultra-valuable expertise... sales, marketing and domain skills. If others offer cloud-based solutions on top of Salesforce and NetSuite, they are likely not to be able to compete because their cost structures are too bloated. They need to disaggregate their business and focus on the high margin stuff.

What does that mean in practical terms? Basically DonorPerfect needs to join someone's ecology. They could take their domain expertise and build a solution on top of something like NetSuite Business Operating System.

They then become a sales, marketing and support shop with a small R&D line item. They are able to deliver far more functionality to customers and potentially more flexibility on price, yet still run a high margin business.

I sometimes wonder if there isn't a project running to rebuild etapestry on the Blackbaud Infinity platform. That would be the ultimate proof of concept for Blackbaud becoming an ecology player like Salesforce or NetSuite, except focused in the public/ charity sector. Blackbaud has an escape route, I suspect DonorPerfect does not.