By now you know that there are so many nonprofit software options on the market today. So, when reviewing different software for nonprofits, a key starting point is narrowing down the field of options. One criteria which may help to do just that is making the distinction in what I refer to as “Built on Top of Software” vs. “Proprietary Operating Software”. In this article, I outline the nitty-gritty details on both options which may help you align appropriately your options.
The Architecture Decision In
I believe that most CIO’s (Chief Information Officers) would agree that it is imperative to discuss what constitutes success in terms of the technology architecture of your organization before embarking to find the “Best Fit”. And, in many regards the core software for nonprofit database will set the tone for the technology direction in most nonprofit organizations. In other words, your technology strategy is likely tied to the master database (whether it’s called CRM Software, Membership Software or Fundraising Software).
In terms of architecture options, the core database software may come in several architecture flavors; Open Source, Built on Top Software (Platform), and Proprietary Software (Closed Source). In a previous article, I went into the consideration with regards to “Open Source” architecture, so let’s carry on with the other two architecture philosophy’s and their respective approaches below.
Built on Top Software (Platform) for Nonprofits
Built on Top (BOT) Software, often referred to as Platform based software, is software that leverages an existing base platform to develop within the system customizations that address the needs of a specific vertical such as nonprofit organizations. For example, a software company will develop their code “within” existing platforms such as Salesforce.com, NetSuite, Sage or Microsoft CRM.
Pros of Built on Top Software (Platform Based)
- Proven platform that typically provides a robust foundation of features. Eg. Customer Relationship Management (CRM), integration with many popular solutions such as native integration to Outlook, Gmail, or Microsoft Productivity applications.
- Ecosystem with many add-on solutions available for particular needs or challenges, potentially minimizing development time. Ex. App store, User groups, 3rd party integrations, etc. This is a big advantage which can’t be overstated today. In fact, in my opinion, it is the reason I personally don’t have a Microsoft phone anymore (despite it being free). I enjoyed the Microsoft Phone but it didn’t have all of the platform benefits of an Apple or Android ecosystem. This is a good argument for platform choices in the membership and donor database circles.
- Massive technical support capabilities. In short, with a large platform provider you will have a much larger pool of developers which understand the underlying architecture and can help address issues. It’s easier to learn the industry than the underlying platform it’s written within.
- Some proponents purport that larger platform providers have fewer bugs due to the large pool of developers and clients testing, reviewing, and resolving issues.
- With platform options like Microsoft, Salesforce.com, & NetSuite etc., there is simply much more money to spend on continually updating the system. I encourage you to check out the financials for Microsoft and Salesforce.com. Each spent millions and millions on improving the platform of each respectively. This is disproportionate advantage in the R&D area.
- The mere agility of the platform to continually be driven to incorporate more mainstream features will ensure that the platform will accommodate the needs of parties who use it. The point here is extensibility, security, scalability and innovation along with industry uniqueness.
Cons of Built on Top Software (Platform Based)
- Many pundits of proprietary software make the claim that “Built On Top” platforms offer limited flexibility to develop outside the constraints of the underlying static platform. In other words, there are governors placed on what a provider can and cannot do within the confines of their license agreements alone.
- Software licensing also tends to escalate the software costs (typically there is a cost associated with each user license). Many platform providers provide NP discounts but still something to factor in.
- Software platform at the core not specific to a specific industry (e.g. nonprofits), instead trying to meet the needs of many verticals without largely focusing on any single one which inherently makes for less focused features.
- With this arrangement, platform providers may have fewer capabilities to address technical issues with their product due to the fact they must work with a third-party (eg. Microsoft CRM). Therefore, finger-pointing of issues and technical support leverage may be reduced as the platform serves many, versus just one, companies.
Proprietary Operating Software for Nonprofits
Proprietary Software, also known as Closed Source Software, is software that is developed and owned by a single person or company (typically the one that developed it). Usage of the software is largely, if not solely, limited to a certain company or group of individuals, and its source code is kept confidential for competitive reasons.
Examples of Proprietary Software solutions found in the membership subvertical of nonprofits would be Abila, Noah, iMIS, & Impexium to name several. The majority of solutions on our membership management software list are Proprietary Software solutions.
Pros of Proprietary Software
- Developed entirely for a specific subvertical (e.g. software for associations, museums, theatres, charities type of non-profit organizations), resulting in increased focus on industry nuances.
- Proprietary Software is usually “right” fitted to the needs of the nonprofit market. Eg. Many nonprofits place a high value on having all of their staff using one main database (an all in one). They simply don’t need specific and focused features to perform their mission well.
- While merely a rule of thumb with regards to software for nonprofits, proprietary systems tend to be lower-priced than the alternative.
- Allows the ability for Nonprofits to work with only a single vendor for both development and support of the software solution.
- Greater control over features and options that are developed specifically for the industry from the ground up all the way to continual updates from the community.
- No license constraints (unlimited users may leverage the platform with purchase of the software).
- Technical development support is immersed in one code base, resulting in increased leverage and opportunity to make changes as needed to everything in its control.
- In most cases, there are usually a much larger pool of customers (thousands vs. hundreds in some cases) who use the more prevalent proprietary operating systems which have been around for years in the market. This translates into a tried and true customer base to gain feedback.
Cons of Proprietary Software
- Smaller group of product developers may result in a slower speed to market for new and cutting edge features (such as innovative CRM or Marketing features).
- Due to being closed software, it tends to be more difficult to bring in support replacements who “already know” the platform. In other words, it is harder to fill the shoes of others who leave due to the uniqueness of the solution. Smaller proprietary software players must get support professionals who often times must be trained on the lesser known proprietary software.
- To piggyback on this point, “Top Talent” are often drawn to larger software platform providers because of the ability to have skills which are transferred more easily to other job opportunities. The argument is that impacts ability for proprietary providers to keep up.
- Further, there tends to be a “Sole dependency” on a relatively smaller single vendor for ongoing support, upgrades, and software product vision.
- Wrapping up all of this, is the mere fact that the “Ecosystem” is limited. Smaller pool of 3rd party software providers & customers may limit “Add On” development partners from making the investment to build innovative solutions. Therefore, it may be more difficult to find “Hot” new applications available in the larger commercial market.
For the record, the pros and cons outlined above are not coming from a prejudice or bias on my part. Rather, pulling together insights from others and years of experience in the software industry. To be clear, I believe that both can and do offer solid options for the right nonprofit organization which has been “fitted” correctly.
The key is determining what is the right fit for your organization. Ultimately, the decision on which type of software architecture is right will depend on the specific organization’s strategy, size, budget, functionality, support requirements, usability and need for flexibility. In other words, all the normal and customary areas of alignment. But, it’s important to realize the merits and demerits of each options. And, ultimately “Buy Into” one or the other approach as you concentrate on your current needs now and long-term with regards to database options.
In any software search, there are important and often difficult decisions to make. True, it’s never one thing which determines the correct path for an organization. The platform decision is one of those tough decisions an organization should make early on in the evaluation process. No doubt, this one decision will aid in narrowing down your list of software options.
Our strength is helping you make sense in the cloud of marketing noise. We can become a part of your team in your search process. And, we can help advise you on the best fit for your nonprofit’s needs; please contact us to learn more. Until next time, please keep SmartThoughts in mind.
Articles of Interest related to this topic:
- Don’t Build Products. Build Platforms. by Phil Simon, Inc. Magazine.
- Is the AMS Dead? Chad Stewart, SmartThoughts Blog