NP Times / Nonprofit Software: Vexing Technology

By John Covaleski

Getting value from application resellers

For small and medium-sized nonprofits purchasing software, the biggest concern is not paying too much, but rather not buying the right technology.

Software vendors, value-added resellers that represent them in local markets, nonprofit executives, and representatives of organizations that help nonprofits handle technology, agree on one point: The biggest buying issue for nonprofits is the attraction to solutions that do not match immediate or long-term requirements. They also warn nonprofits to make sure that they secure the proper support and training.

"When it comes to technology, nonprofits' eyes are often bigger than their wallets and their stomachs," said Barbara Chang, executive director of NPower NY, the New York City affiliate of the national NPower network, which provides nonprofits with consulting and technical help on technology. "They have wonderful aspirations when they buy, but they're often not prepared to use the technology to its maximum."

Tim Mills-Groninger, associate executive director of IT Resource Center in Chicago, added, "One of the big issues is they're buying stuff that they don't use, and do not grow into." His organization also assists nonprofits with technology and helps develop strategies to pay for the systems.

Another issue is that many smaller nonprofits lack personnel with expertise in technology who can help direct buying choices. "It's been a struggle because we usually have others tell us what we need in technology," said Susan Blackwell, executive director of San Antonio Urban Ministries in Texas, echoing the sentiments of other small nonprofits that lack technology expertise on their staffs and boards.

Wrong decisions can be particularly infuriating when today's rapid technology development could mean finding the right solution might be a matter of just looking further or waiting longer.

Who's hawking what

While nonprofit sector specialist software companies are enhancing their applications, commercial business developers are expanding into this market, such as Intuit Inc., which recently purchased American Fundware, a longtime nonprofit software specialist. In a separate move, Intuit, Inc., developed a nonprofit edition of QuickBooks, an entry-level accounting software.

In mid-September The Chicago Bar Foundation was trying to decide whether to replace its fund accounting software system, which cost $5,000 to $10,000 when it was installed two years ago, because a new fundraising system the organization is installing has made the accounting system less desirable.

The foundation had installed one of the most powerful fund accounting systems from one of the nonprofit industry's best-known software companies because it had already been using that vendor's fundraiser software. However, the foundation's Web site developer custom designed an Internet-based fundraising system that the organization prefers compared to the current software.

That's left executive director Bob Glaves to decide if the foundation, which has only two to three fundraising system users, should switch to a less costly fund accounting system. "The maintenance contract is coming due (in January) and we're doing our evaluation now with that in mind," said Glaves.

Glaves did not criticize the functionality of the more expensive software, which is generally considered a top fundraising product on the market. But, he said it was too complicated when it came to training people. Glaves said the new Internet-based fundraising system, custom-designed by PS Technologies, in Chicago, is easier to learn and has some interesting features. "The issue with us is not cost. It's one of training and the annual maintenance," Glaves said.

The nonprofit edition of QuickBooks, which costs about $3,500 for an enterprise edition that allows 10 or more users and less than $1,000 for smaller operations, is being considered. "It would certainly cost a lot less to maintain, but we question whether it will be workable for us five to 10 years from now," Glaves said.

Chicago-based Catholic Guild for the Blind recently completed an evaluation that brought it to Blackbaud's Financial Edge from a commercial market accounting software that lacked some key nonprofit-specific functions, such as the ability to track grants. "I knew there would be headaches and costs in making a move, but we were not getting what we needed," said Kathy Firak, the Guild's director of operations. She said she chose Blackbaud's Financial Edge after reviewing five different market-leading products.

"We just began using Blackbaud, and it's already providing more meaningful distribution to the development side. We're tracking grants real time," she said. "I'm very satisfied because I have been able to figure this software out for myself, and the support from Blackbaud has been great."

The system, which the guild used before Firak joined the organization, also might have been bigger than needed. It had been using Accpac International's Advantage Series, a commercial market software installed at middle market businesses that could have 100 or more system users simultaneously. Firak said her organization has just two users simultaneously inputting data.

Joan Fanning, executive director of NPower Seattle, said nonprofits often buy the wrong software because they fail to plan before buying, "Unfortunately, too many nonprofits are reactive when it comes to buying technology," she said. "They need to be more strategic."

The NPower national organization Web site features a software selection guide that covers all the critical pre-purchasing planning steps. The guide, at http://www.npower.org/tools/directory/ consulting/functional+ req+project+outline.pdf, specifically covers client-tracking software, but applies to buying any application.

"Information systems are driven by details -- the more details during planning, the more likely the system will meet the real day-to-day needs," the guide notes.

Consultants and software vendors say that proper product selection is more problematic than obtaining a fair price because of the widespread availability of pricing information. Upon obtaining a salesperson's price quote, the nonprofit can verify its fairness by visiting the product developer's Web site or by checking with competing salespeople or with support groups like NPower or IT Resource Center.

Moreover, some say the market is too competitive for resellers to gouge nonprofits. "Resellers now, more than ever, are looking for long-term client relations that result in recurring revenue," said Dawn Westerberg, vertical marketing vice president for Best Software, whose Nonprofit and Government Division produces the Micro Information Products (MIP) line.

Just the same, nonprofits can haggle pricing with resellers. Firak noted that through negotiations, she cut $7,000 from the original asking price on her organization's Blackbaud system.

While Firak said she is satisfied with the support she is receiving, post-sale service and training are key concerns. "The real money for resellers is with the services after the software sale," warned Mills-Groninger. "You have to be careful with those two and three costs. It might cost you every time you call for service."

Training is particularly critical. "Nonprofits tend to have turnover in personnel, so while they need software with powerful reporting capabilities, they also need something that's easy to use and learn," noted William Spann, chief executive of fund accounting and fundraising software developer Executive Data Systems, Inc., in Marietta, Ga.

Nonprofits must also ensure that the reseller can deliver the services promised. "When it comes to service, you are really at the mercy of your reseller, regardless of what contract you write," said Art Nathan, president of Solution Strategies, a Cranford, N.J.-based reseller of MIP software.

He said that nonprofits should be especially wary of small resellers, who might lack the resources to respond to service calls when they're overwhelmed with calls from other clients. "This is particularly the case at year-end reporting times," Nathan said.

The Catholic Guild for the Blind gets its Blackbaud services from the vendor's Chicago-area reseller, the technology consulting practice of Clifton Gunderson, which is one of the nation's largest CPA firms, with more than $130 million in 2002 revenues. Clifton Gunderson's Technology Director Michele Scheffki said nonprofits should expect a 1-to-1 ratio for the costs of the software and the services. "If you get a quote of $5,000 for the software and $15,000 for the services (training and implementation), I would say something is out of whack," she said.

Few are more aware of the technology issues that nonprofits face than the companies developing that technology. They are increasingly reaching out to help their clients deal with technology and other operational concerns.

While some smaller vendors, such as Executive Data Systems, are enhancing the information available on their Web sites, larger vendors are reaching out personally.

For several years Blackbaud has hosted two well-attended annual client conferences that provided training on industry best practices and the effective use of technology.

Blackbaud also established local/regional user groups, in which clients share thoughts and gain insights on working with Blackbaud's products. It has 90 user groups in North America.

"In an era of increasing accountability, when everyone wants to be more efficient, user groups are a great way for nonprofit professionals to share best practices on how to best apply technology," said Blackbaud Sales Manager Steve Dettor.

This past August, Best Software held its second "Nonprofit Excellence Conference," a three-day event that combined speakers and training on technology and on key practice areas such as development, marketing, governance and personnel matters. Its most recent conference's sessions included one called, "Harnessing technology to advance your mission."

Among the many attendees was Blackwell of San Antonio Urban Ministries, a user of Best's MIP fund accounting. "The combination of training there gave me something I had not gotten at other conferences," she said. "The meeting was an affirmation that instead of having others tell us, we need to be able to tell technology people just what we want when we're looking for a technology solution."