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Tough decisions

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Selecting internet vendors takes time, attention.

By Michael Stein and Tom Subak

[06.30.04] — The Internet software vendor landscape for nonprofits has matured considerably during the last few years.

Many companies have closed, some have merged, new ones have been born, and e-solutions have evolved technically.

Whether a nonprofit needs to accomplish a specific task, like online credit card processing, or email newsletter distribution, or is seeking an integrated solution to a communications, fundraising or advocacy strategy, the choices are daunting.

Leading vendors offer complex tools with what can be an overwhelming amount of functionality, and it will take some time and resources to make the right decisions.

Solutions offered by some vendors now offer literally hundreds of different ways in which a nonprofit can tweak their interaction with their constituents – whether it’s by way of personalized email forms, personalized Web pages, surveys, or other engagement methods.

The process of understanding what all that functionality does, and how it might help your organization is one that will take time and the careful attention of the appropriate stakeholders at your organization.

The tools also are more powerful, and potentially more useful, than ever, but can be used to produce dramatic successes.  It will take careful planning and execution.

When selecting a vendor, all nonprofits also will need to wrestle with the fundamental choice of integrated or stand-alone solutions.

Some say the integrated online software solution is the only way to go.  The flipside is that each vendor has a few outstanding core-competency tools, but weaknesses that in wrong places can seriously undermine success.  The challenge is figuring out the core needs of your organization and finding the vendor or combination of vendors that best match those needs.

Market reorganization and consolidation also is a reality of the Internet vendor space.

Some firms have been acquired and others have closed.

How should all this affect a nonprofit’s decision about its online software vendor selection?

It is unlikely that nonprofit decision-makers are going to be able to predict which vendors are here to stay, and which are not, and which ones are going to do the gobbling and which ones are going to get gobbled – without a tremendous amount of work, and even then, it’s questionable how much this knowledge will help advance your strategy.

A saner approach is to understand the risks involved in dealing with any online software vendor and then make an educated decision about whether the benefits of deploying an online vendor outweigh those risks.

Nonprofits also should be prepared for sticker shock and read the fine print.

The pricing and contract terms put forward by online vendors are extraordinarily complex. Don’t understand them at your peril.

Most organizations will be surprised, and not in a good way, by the final cost of an online vendor’s solutions, and all too many organizations do not understand the impact of add-on costs to the up-front costs associated with online vendors.

There is extreme variability in how the leading vendors pitch pricing to their prospective customers, and that variability makes it hard for any given nonprofit to easily understand exactly how much their solution is likely to cost.

Setup and monthly fees are just a piece of the puzzle. Once you add in transaction costs, training costs, support costs and additional staffing costs, the final costs can be much higher than originally anticipated.

Online software vendors can make a positive difference in the quantity and quality of work that nonprofits can accomplish.

Understand that the tools are complex, that decisions in selecting a tool should be done carefully, and you’ll be on your way to a successful decision and deployment.


Michael Stein and Tom Subak are partners at The e Organization, an Internet consulting firm that works with nonprofits and political campaigns.

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