Trends in Nonprofit Software Buying
Do nonprofits really need software? How does software help nonprofits anyway? Well, I can think of a few off the top of my head: improve communication, manage donor relations, streamline processes to mention but a few. There are more advantages of course but the bottom line is; software helps nonprofits to focus more on achieving their missions. So, when buying new software, what should your nonprofit take into account? A recent research study conducted by Software Advice, a company that assists small nonprofit organizations choosing software solutions, gives us some insight into what really affects the nonprofit software buying decisions.
In 2013, Software Advice analyzed 2,313 interactions with nonprofits that were evaluating new software. The findings of this research form the basis of this blog post.
1. 51% of software buyers want to improve efficiency
There are many facets to improving organizational efficiency but I believe that the most important ones are to seek ways to reduce wastage of resources and improve communication.
49% of buyers currently use manual methods (spreadsheets, paper and pen)
Reducing the amount of paper we use is not only environmentally friendly, it is cost friendly too. Some statistics to propel you to use less paper are:
The average office worker uses 10,000 sheets of copy paper each year and wastes about 1,410 of these pages. (Source)
With the average cost of each wasted page being about six cents, a company with 500 employees could be spending $42,000 per year on wasted prints (Source). If this calculation is applied to a nonprofit with 10 employees, the cost would be around $846.
It costs $20 to file a document, $120 to find a misfiled document, and $220 to reproduce a lost document. (Source)
7.5 percent of all documents get lost; 3 percent of the remainder gets misfiled.
The average document is photocopied 19 times. (Source)
Professionals spend 5-15% of their time reading information, but up to 50% of their time looking for the right information. (Source)
Miscommunication can cost an organization 25% to 40% of its annual budget, estimates private investment firm Manchester Companies. (Source)
It's estimated that 14% of each workweek is wasted as a result of poor communication. (source)
Based on the numbers above, the costs multiply quickly and for nonprofits, it is too big a risk to take.
There are different types of software that help nonprofits to improve their organizational efficiency but some of the tried and tested ones that we use at Webserves are in a previous post on bridging the internal communication gap.
2. 49% of buyers prefer web-based applications to on-premise
While both forms of deployment have their advantages and disadvantages, Web based applications are more suited for organizations that don’t have the infrastructure and resources to operate and maintain the software.
Take Software as a Service (SaaS), for example. SaaS is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the Internet. (source)
Blackbaud released a white paper on the advantages of SaaS which are summarized below:
All in all, an analogy from Blackbaud sums up the need for SaaS;
"People in need of phone service, water, electricity, or cable aren’t responsible for the entire infrastructure needed to deliver those services; they just order monthly service and pay for what they use. Similarly, software as a service puts comprehensive software functionality within the reach of nonprofits."
3. 52% of Buyers prefer best-of-breed applications
According to PC Magazine, Purchasing best-of-Breed applications refers to buying applications from different vendors in order to obtain the best-of-breed for each application area; for example, a human resources package from one vendor and an accounting package from another.
Having this kind of a model in place ensures that the nonprofit gets the best software.
4. 52% of Buyers request fundraising management most often
Donor information is not just about collecting contact details; it’s about building long-lasting relationships.
Donors should receive frequent information on how their donation is being used, personalized emails (for example on their birthdays) and in general, how the nonprofit is faring on. All this can be done using a good fundraising management system that will help nonprofits understand each of their donors, segment, analyze and communicate to them.
5. 56% of buyers were small nonprofits with less than 10 employees
The size of the organization influences decisions like the cost of training the employees. In addition, nonprofits usually have volunteers donating their time to the service of the organization. In some cases, there is a high volunteer turnover rate and in such cases, the nonprofit should consider the recurring cost of training new volunteers
6. 91% of buyers reported an annual revenue of less than $5 million; 69% reported less than $1 million.
As we know, nonprofits have to work with limited resources and deciding on how much to spend on new software is greatly influenced by the budget
7. 37% of buyers work in the human services sector
The results of the study cement the fact that nonprofits are increasingly recognizing the need for software and are seriously considering the factors that shape their software buying decisions. What other factors did you consider when buying new software?