Archive for June, 2012

The Business Case for Software Charity Licensing

Written by Nick B. Nicholaou on . Posted in Articles

© 2012 by Nick B. Nicholaou, all rights reserved
President, Ministry Business Services, Inc.
Reprinted from Christian Computing Magazine

There are more than 985,000 charities in the U.S.[1], with more than 13 million employees.  Charities make up a large percentage of the U.S. economy[2].  Some software companies, knowing only that, have a difficult time justifying charity licensing discounts.  But there’s more to the story, and knowing it proves that offering charity licensing discounts is smart business.

Our firm has been consulting with charities in the U.S. for twenty-six years.  We help them with CPA and IT services, and continue to be impressed with the complexities of managing their operations.  In addition to typical for-profit management challenges, charities have the additional complexity of managing volunteers– 61 million of them!  Volunteers aren’t there because it’s their job and because of their need for a paycheck, and this adds a layer of management that is challenging and rewarding.

For software solution providers, knowing who those volunteers are and why they’re there offers great insight to the opportunity available to those willing to take the extra steps necessary to reach this important sector.  Add that to the foundation of helping those who help others, and it’s a win-win!

Who Are These Volunteers?
It’s the volunteer component that is the strongest business reason for offering charity licensing discounts. 

Many volunteers, whether in a tactical role (usher or other kind of helper) or in a management role (serving on the board) are in decision-making and decision-influencing positions in their regular paid jobs.  Couple that with the fact that charities are voluntarily funded, and you have a set of watching eyes that are sensitive to how technology helps their charity’s efficiency and productivity.  What volunteers see work for their charity does get noticed, and does get talked about in their regular workplace.

For instance, a charity board member is part of the discussion on whether or not to implement a certain IT solution.  (Boards in charities tend to get involved in more tactical matters than do boards of large corporations.)  Board members are usually chosen based on their kinship with the charity and on their ability to lead an organization; often seen by their role in their regular job.  That means influence that is tied to passion for efficiency and productivity.  When a board member agrees that it would be wise to invest in a certain technology in their beloved charity, they watch the results closely.  After all, it is likely their contributions helped fund the initiative.  If the solution does well and improves operational and tactical efficiency and productivity, you can bet it will get talked about in the board member’s workplace.

Low Cost Marketing
How much does charity licensing really cost a technology company?  Not much; certainly a lot less than advertising and marketing campaigns.

Because charity budgets are donation driven, they are reluctant to spend money unless necessary.  And because they are mission-focused they try to put as much funding as possible towards programs that further their purpose.  Thus they tend to have efficient spending models, though some of their decisions can be unwise.

I’ve seen many charities look for free or cheap solutions just because they didn’t think they could afford better, often more appropriate solutions.  That means this large sector of the economy will often not use a product that might be a best fit to save a few budget dollars.  Charity licensing is a great way to help those organizations, and often is the only reason why charities decide to purchase good software rather than piece together cheap or free applications.  From a software company’s perspective charity licensing can be a very effective marketing strategy.  And because charities would have tended towards free or cheap solutions, the discounts don’t mean money lost; they mean sales gained.

A Leader Who Agrees
In his best selling autobiography, Lee Iacocca said the auto industry has grown to love the rental car industry.  The reason?  He said as an auto executive he was always thinking of new ways to try to get people to test drive their cars.  But then he realized the public was actually willing to pay to test drive them through the car rental industry!  By partnering more closely with that industry the manufacturers were able to increase the number of “test drives” dramatically!

Getting software into a charity has the same effect.  If it does well in making the team more efficient and effective, board members and other volunteers will notice and will likely influence their organizations to follow suit!

Some software and hardware companies get this.  Those that do benefit from the soft marketing accomplished by achieving success stories in charities watched by their many volunteers.  They also benefit by contributing to the process of helping many. It is a win-win!

[1] 335,000 churches, according to the Hartford Institute for Religious Studies, and 650,000 nonprofits other than churches according to the Nonprofit Quarterly.

[2] Nonprofits represent $1.5 trillion in revenue according to the Nonprofit Quarterly.

Wise Cloud Strategies

Written by Nick B. Nicholaou on . Posted in Articles

© 2012 by Nick B. Nicholaou, all rights reserved
President, Ministry Business Services, Inc.
Reprinted from ECFA's Focus on Church Accountability

Church and ministry leaders are being tasked with making Cloud decisions, but need to know whether their decisions are good or bad, wise or unwise.  This brief article will give you a framework for working through Cloud decisions.

What Is The Cloud?
There are many ways to define the cloud, which makes listening to most IT experts challenging when they talk about this topic.  Some refer to accessible data and applications (apps), some refer to datacenters (warehouses full of servers), some say it has to do with types of processors, and some say it’s all about being green.

All of that may be true, but what a church or ministry manager needs to know is that The Cloud refers to the fact that data and applications are hosted on a server that computers and mobile devices can access via the Internet.  Technically the server can be in an off-site datacenter, or it can be in your building.

So, What’s The Big Deal About The Cloud?
The Cloud
is a game-changer for those who use computers and mobile devices.  It’s as big of a game-changer as was the PC, Windows, and the Internet.  It will impact how you and your team do ministry, and how you budget for IT in your organization.  The good news is that, implemented strategically, it will save your organization time and money, and will help you focus on your mission.

What Should Go In The Cloud?
Most already have websites in The Cloud, many have social media sites, and some are putting their email and data in The Cloud.  And while the answer to that question may seem obvious to some, it’s important to understand that there are basically two halves to The Cloud, and to understand what should go in which half.

Public Cloud.  When most of us think about The Cloud we think about its public side.  The public cloud refers to servers and services that anyone can access, and it’s where we put our websites, where we engage in social media, and share photos and videos.  It includes services such as Google Apps and Dropbox.
Private Cloud
.  The private cloud refers to servers and services the general public cannot access.  These are usually servers and services one must be pre-authorized to access and are usually not discoverable by the general public.  This is where corporate email, VoIP, and data servers should be.  As corporate America is moving into The Cloud it is doing so in the private side to protect sensitive data and communications, and that is what churches and ministries should also be doing.

The Challenge
Many are advising and recommending that organizations put what should be in the private side of The Cloud into the public side.  For the most part they don’t understand the fiduciary responsibilities associated with managing a church or ministry, and the risk of being in the public cloud.

For instance, there is a movement by many to use Google Apps and Dropbox because of their low cost.  The problem is that the data put in the public cloud can be less secure than it should be, and not as secure as a corporation needs it to be.  Those may not be the right places for a corporation’s sensitive data and communications.  Consider, for example, what could happen if the following types of data were available to the public at large:

  • Congregant or donor database information (contact info, contribution info, etc),
  • Sensitive inter-office communications about personnel, constituents, etc,
  • Data files such as minutes, HR files, etc.

If an organization is going to adopt cloud strategies, these types of data must be kept private.  Thus they are best held in the private side of The Cloud.  That means seeking out a hosting vendor that can keep your private data private.

How Do I Know Our Data Is Safe in The Cloud?
Corporate America is a good place to look for this answer because those leading large corporations usually have a good grip on their fiduciary responsibility to protect their company’s data.  When I researched what their trends are, I found that they are moving their own servers to The Cloud rather than relying on generally available services (public cloud).  That doesn’t mean data in the public cloud can’t be safe, but it takes extra measures and, unfortunately, leans heavily on the users’ work habits.

If you choose to move your servers into The Cloud, the data on them will be at least as safe as if they were in a server room on your premises– probably more so!  Using best practices on those servers like those you would if the servers were local (strong passwords, good firewall, etc), your data should be safe.  If you choose to use public cloud services, have a conversation with your IT person and check with the service provider to make certain all appropriate safety measures are in place.

So, What’s The Cloud’s Advantage?
That is a wise question!  Adopting cloud strategies can reduce personnel costs and the need to make large capital investments in hardware, software, and engineering.  Though the cost will likely be the same as a well implemented network strategy over 3-4 years time, it outsources the cost of buying, engineering, supporting, and maintaining the servers and services at the core of your local area network.  It reduces– and often eliminates– the need to employ IT staff above simple help desk functions.

In a January 12, 2004 Fortune Magazine interview Peter Drucker, the father of modern management, said, “The inefficiency of knowledge workers is partly the legacy of the 19th-century belief that a modern company tries to do everything for itself. Now, thank God, we’ve discovered outsourcing, but I would also say we don’t yet really know how to do outsourcing well.”

The Cloud, strategically done, is wise outsourcing.  It helps churches and ministries focus on what they’ve been called to do, and eliminates the distraction that having unnecessary IT responsibility brings.

Choosing a Private Cloud Vendor

When looking for a private cloud vendor, focus on these three things:

  • Expertise.  Look for a vendor that is already providing the services you’re looking for.  If a vendor wants to charge you to create the technology you seek, look to see if there is someone already providing a similar solution so you have a sense they can deliver.
  • Vendor sensitive to your mission.  As a church or ministry you won’t typically call for support yelling, screaming, and threatening lawsuits.  But if you’re considering a vendor whose primary focus is for-profit organizations, that is what you’re competing with.  Find a vendor who will prioritize your softly spoken requests.
  • The datacenter.  Datacenters boast various ratings.  Redundancy and security are the hallmarks of a good datacenter.
    • Tier 1 has no redundancies (statistically, up to 28.8 hours of downtime annually)
    • Tier 2 has partial redundancy (statistically, up to 22.0 hours of downtime annually)
    • Tier 3 has full redundancy (N+1, up to 1.6 hours of downtime annually)
    • Tier 4 is completely fault tolerant (2N+1, up to 2.4 minutes of downtime annually)