Lots of people have already weighed in on Blackbaud’s purchase of Convio (two of my favorites: http://www.frogloop.com/care2blog/2012/1/18/blackbaud-buys-their-rival-convio-now-what.html and http://nonprofit-force.org/2012/01/20/the-convio-blackbaud-merger-one-customers-perspective/). Here my perspective. Disclosures: I have clients that use both companies’ products, as well as products from their competitors, open source products, and homegrown solutions. I don’t invest in these or other companies that I advise on. I have no inside knowledge about what the merged company will look like.
Mostly I have lots of questions and concerns that the firms won’t be able to address until the merger is completed — if then. My main questions are about product strategies. (How) will this affect Convio’s online marketing suite? Common Ground? Luminate? NetCommunity? Sphere? Raiser’s Edge? eTapestry? (How) will this affect Blackbaud’s plans for, or ability to build, implement, and support Enterprise CRM? Will Blackbaud continue to develop on both the Salesforce and Infinity platforms? Will they really be willing and able to maintain all of these products and codebases?
While I generally think vendor consolidation is bad for the nonprofit world (unless the vendor being absorbed wasn’t a strong player to begin with), I’m less concerned about the impact on small nonprofits. There are tons of choices out there for small and mid-sized organizations. Idealware’s Consumer’s Guide to Low Cost Donor Management Systems reviewed 30 systems, the majority of which don’t come from Convio or Blackbaud. I’ve also been compiling a list of every donor database I come across at https://socialsourcecommons.org/toolbox/show/1661
I’m more concerned about the top end of the market. There were few full solutions designed for large nonprofits to begin with. Blackbaud has already bought Team Approach and PIDI, and (assuming this goes through) Luminate will join that club. On the recent NTEN community call someone asked the panel to name 5 vendors (other than Blackbaud and Convio) to whom we’d send a CRM system RFP for a $100 million nonprofit. It’s a real struggle to come up with five that can handle:
- Millions of records and hundreds of users
- Complex family, social, business, corporate, and financial relationships
- Provides robust, flexible support for all forms of fundraising, membership, marketing, and communications
- Support advocacy, volunteer management, complex events, electronic communications, content management, online payments, and merchandise sales
- Provide strong reporting and analytic tools
- Has an intuitive user interface for casual users
- Supports streamlined, high-volume data entry tools
- Provide data integrity tools to keep the data clean
- Has an open API and flexible import and export tools
- Has strong role-based security as well as strong protection against hackers
- Supports multiple locations or chapters, multiple currencies, multiple languages, and multiple character sets.
In addition, the vendor or consultant needs to understand nonprofit best practices, workflows, reporting needs, fund accounting, and unique requirements like giving societies, membership benefits, fair market donation values and tax benefits, soft credits, gifts that are split between funds or sources, auction gifts and purchases, and how to provide donor recognition credit for gifts that have no tangible value. Finally, the system needs to be backed by strong implementation practices, training, and ongoing product development and user support. Software alone seldom gets the job done.
I’m also concerned about the confusion this will cause in the industry. I’m currently working with clients that are considering Blackbaud and Convio’s database products (among others). They don’t want to choose a product that won’t get the full resources of the merged company, or could even be killed off. Some independent consultants who implement Common Ground have questioned whether my clients even want to consider that product until the dust settles. (I’ve also heard from competitors that are expecting to pick up new clients because of the confusion).
And I’m concerned about confusion at Blackbaud. My experience with past acquisitions was that it took months or years for sales reps to figure out where their products stood. Sometimes they would pitch competing Blackbaud products against each other. Other times they would refuse to show us a product that a client was interested in because of an internal decision to promote product A over product B.
Although Blackbaud has bought companies and immediately killed off their products, (e.g., Fund-Master and GiftMaker Pro), of late, they’ve acquired companies and kept their products going (Team Approach, eTapestry, PIDI, Kintera). However, in most cases I haven’t seen evidence that they have invested in the future of these products. In some cases (like Team Approach), clients have been told that there won’t be any future product enhancements.
I expect that it will be many months before we have any clarity about what this merger will mean and years before anything significant happens. But it’s hard for me to believe that Blackbaud will be able to support all of these products. I expect that some clients will be given notice that they should make other plans. It’s also hard to imagine that established products will be killed off — at least not any time soon. I’m more concerned about newer products, or those with smaller customer bases.
I do expect that this will create opportunities for existing systems. If nothing else, many nonprofits won’t be able to wait for months or years to see which products will survive. But those companies will need to be able to provide the tools and support that nonprofits need, and have the marketing muscle to get the word out.
It could also open the door to an open source project. During the NTEN call we discussed Tessitura, the performing arts fundraising and ticketing system as an example of a successful effort. But that product started out with development and support from a major organization (the Metropolitan Opera). The Met was able to form a separate company to invest in and support the product, and it’s been a huge success.