Gretchen Barry, Director of Marketing for NonProfitEasy.com, has done some very important research about the hidden costs of “free” software for nonprofit organizations and has come up with some very useful information to warn these organizations about potential hazards to avoid. She used the following sources to derive her data from: http://www.salesforcefoundation.org/get-started/ and http://www.idealware.org/articles/true-costs-free-and-low-cost-software.
Gretchen states in her research that nonprofit while it can be tempting for nonprofit organizations to “save now and pay later,” it is worth your time, now, to do your homework, test drive software, and calculate the full cost of “free” and paid software solutions. Free often comes at a higher cost in the long run.
Let’s just say that when it comes to purchasing new software, many organizations will do so to increase their efficiency rates, to save time, and to reduce potential costs. This is predominantly true where nonprofit organizations are concerned since that oftentimes have limited staff combined with busy schedules.
When nonprofits seek to save money by using “free” software, it may not be a simple, cost-effective solution. “Free” does not always prove to be “free.” It is often too late by the time that nonprofit executives learn and learn the hard way, by incurring costs from implementation, consultants, ancillary features, support and ongoing maintenance. By the time that they fork over the cash to cover each of these expenses, they could have saved over the long-run by anteing up in the first place.
There are some pitfalls Barry has suggested nonprofits avoid. She has even included tips to help the organizations find a better fit for the handlers of the nonprofits, for the actual organizations and for their budgets in the long run.
Many times the sales pitch for “free” software does not allude to the fact that the product only provides a bare-bones solution; that it only has limited functionality. The sales staff combined with the low purchase prices and the robust “communities” of users is enough to convince nonprofit executives that the software is highly customizable. This is enough to get them to jump at the opportunity. Unfortunately the initial bare-bones software is all that is free; the customization is what contributes to the overall cost that stays with the nonprofits for the long-run.
Another consideration one must have when implementing “free” software is that consultants will never tell you not to implement it because they are the individuals that one will call once the software needs customized for their own efforts. Nonprofit organizations typically have to use consultants because they are small and don’t have an IT Department of their very own. The more complex the features that need to be implemented, the greater the cost to implement those features. What consultant in their right mind would turn that down – especially when their fee could be up to $150 per hour?
After the software has been updated for the individual effort, next comes the training process; teaching the staff how to use the specialized software. Since there will be limited documentation, software trainers will need to step in. Yet, once again, additional fees will be assimilated. Now the nonprofit has a specialized one-of-a-kind type of system in place that requires outside people if it has trouble, is difficult to understand without outside help and needs to be maintained by outsiders. Wouldn’t it have made more sense for the nonprofit to have paid a higher up-front fee for an all-inclusive software solution and kept their costs to a minimum?
As opposed to falling into the “free” software black hole, nonprofit organizations should do their homework upfront; look for an all-in-one software solution that is easy to install, understand and does not require outside consultants to implement and maintain. All-inclusive CRM solutions typically provide many of these costs in their total pricing package. This way the software is able to be budgeted for correctly; up-front before the organization is even up-and-running.
To make certain that your nonprofit organization is getting what they expect, Gretchen Barry recommends that you ask providers the following questions:
• How many of their clients require consultants or trainers during implementation?
• What is the price per hour for any consultants?
• What is the average cost of total implementation for most of their clients?
• Could we please have a detailed price breakdown of:
- purchase price for the software
- installation and implementation costs
- customization options
- migration of your data from the old to new system
- ongoing monthly fees
- staff training
- ongoing product support
If your nonprofit organization makes decisions carefully based on the results of detailed research, they will most likely conclude that implementing “free” software is not the best idea because “free” does not always mean “free.” It is best to research beforehand than to be stuck in the long run with more fees than initially budgeted for.