Tuesday, August 12, 2008

Manatees of the Tech World: The End of Best-of-Breed

Part of the fun of nonprofit technology is that you always know where it is headed with 100% certainty. Just look at the small & mid-sized enterprise (SME) technology market 5 years ago... that is where nonprofit tech is heading today. [note: that time gap is closing, but is still pretty significant]

You'd think you could make some money with that insight, but I digress.

There are a few great debates in the software world client server vs. SaaS, best-of-breed vs. platform. Nonprofit technology is finally getting its head around SaaS being better than client server. A year or two ago, it became pretty clear that SaaS was the way to deploy applications even though the cost advantages were not what were once pomised--in the SME world. In a couple of years, nonprofits too will just accept SaaS is better than client server-- actually the adoption gap here is far smaller since SaaS addresses a bunch of challenges nonprofits have... the least of which no tech staff.

And now no less a luminary publication than the Wall Street Journal has published the truth, "The End of Best-of-Breed," noting best-of-breed software companies have been bought at fire sale prices.

Such software vendors became known as “best-of-breed,” reflecting a belief that specialists in automating certain business tasks can provide customers with a competitive advantage—at least over companies that use multifunction suites of programs that come from a single vendor.

But there was a problem with this approach: It is hard to get different pieces of software to exchange data, which is necessary to understand everything that is happening in a business, said George Lawrie, an analyst at Forrester Research.

So what does this mean in the nonprofit software space? Be very afraid of Blackbaud Infinity if you are a vendor. Find lots of money to buy Infinity if you are an NPO. Since infinity is the closest thing to a platform we have in the sector.

For the small charities, as always, technology will be a harder nut to crack... yet things like CiviCRM, Wild Apricot and others are approaching the world as a platform so eventually something complete might be avaliable. And then there is Salesforce and NetSuite... if they could release a set of applications on their platform, the smaller organizations would have a pretty fantastic resource.

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