For a long time now, the non-profit technology marketplace has been primed for consolidation. Lots of little vendors splintered the customer community. The normal confusion of a world of increasing technology complexity was made worse by competing vendors’ "walled gardens". Then the consolidation started.
Convio, a leader in online fundraising, bought it’s nearest competitor GetActive. They are conquerors in the online realm, but missing a back office solution that can be used across many mediums, not just the online channel. Most large nonprofits, which are "must-have" customers for a product firm like Convio , have to have a database to house cross channel data that come in from their phone, canvassing, and direct mail operations. The Blackbaud and Target products fill this niche.
Blackbaud, a leader in offline customer relationship management for nonprofits, bought Target, it’s nearest competitor. Blackbaud/Target owns the back office market space of most sizable nonprofits but has lagged in the online fundraising space.
Both entities have geared up for a fight with each other. Convio knows that many of their clients have either the Blackbaud or Target products in their back office.
Blackbaud looks at the market it has been losing to Convio in the area of online execution and produced a set of online tools dubbed "Net community." Net community, started so many years after the race with Convio, was going to have to work hard to catch up.
Then this week, Blackbaud bought eTapestry, one of the larger and most direct competitors to Convio to date. Though my clients have had a mixed experience with eTapestry’s products, it’s a widely used solution that directly threatens Convio’s offerings. Much like Blackbaud’s lead in back office, Convio is many iterations ahead of eTapestry in terms of ability to scale and richness of features. But eTapestry now has some real notable advantages:
- Existing Blackbaud customers can expect eTapestry to seamlessly integrate a rich online feature set into their existing investment in the Blackbaud product.
- Existing Blackbaud customers are going to get financially advantageous deals to purchase Blackbaud with an integration eTapestry service offering.
- eTapestry will now get access to Blackbaud current marketing machine, IPO money, and existing client base.
One of the dirty secrets in this the nonprofit technology business is that many product selection endeavors go from "What is the best product?" to "What is good enough?" If, as I expect, eTapestry positions itself as "just as good, but cheaper, and integrates with Blackbaud" in the marketplace, then Convio is going to have a hard road going forward. The brief period of heaven they had when they took out GetActive, their nearest competitor, is going to seem idyllic compared to the bloody ground war they’re about to fight with Blackbaud, a bigger competitor with deeper pockets.
What should nonprofits do now?
My firm, Mindshare, does product selection for many small and large nonprofits. Let me review a few pieces of basic advice before I explain what you should do with regards to your current nonprofit needs:
- Don’t sign a contract longer than three years. Ever. Do two years if you can stomach reviewing the products in the market every 18 months. The marketplace for products you are playing in changes radically in those eighteen months. Sometimes faster. Even if you intend to re-up with the same contract, the three year expiration allows you and the vendor to re-evaluate your relationship. You may need more features, and they may need to up their prices. Take this opportunity for everyone to step back and re-create the relationship so it works for both parties. Note that the experience is painful, time consuming, and expensive for the vendor, so don’t be a jerk about it if you want to have a good relationship later. (Note that this isn’t the same way I’d recommend you’d evaluate service or marketing companies)
- Always ask for an API. The "walled garden" problem of nonprofit technology is set to blow open in the next eighteen months when the first APIs trickle out of Convio and Blackbaud. The access to an API will change everything about the marketplace, and you want to push your vendor to get there first so they are the most competitive offering. If that happens, then you can buy yourself security in using that vendor longer, which will lower your overall technology costs.
- When evaluating your options near the end of the contract, evaluate two other options. I’ve been recommending that people evaluate upcoming products from stable vendors (like Blackbaud’s NetCommunity) even though it’s not on par with the Convio product. Why? Because you need to see what’s coming, even if it’s not there yet. You can save the third slot in your eval as a "free look" at something more competitive.