Nonprofit Accounting Software – Buyer Beware

Nonprofit Accounting Software – Buyer Beware – An overlooked but important factor to consider when evaluating nonprofit software is: where does this product fit in the company strategy.

There is a thought-provoking article by Xanegy.com that addresses this consideration in light of MIP Fund Accounting finding itself with new owners…again. Click on the link to read ‘What Does the Sale of Abila Mean for MIP Fund Accounting Users’ – they’ve done an excellent job summarizing appropriate concerns.

I’m Getting Old, You’re Getting Old, Software Gets Old

The graph below, from productlifecyclestages.com, illustrates the four phases of a products life cycle:

  1. Introduction
  2. Growth
  3. Maturity
  4. Decline

There’s actually a fifth stage – death, extinction, or discontinued – where a product/service is no longer produced.

Nonprofit Accounting Software - Buyer Beware

Products get old and obsolete. They are built on technologies that are no longer mainstream. I’m sure there are people who still watch movies on VHS tape – but is investing in VHS growth a smart strategy?

If you are buying an enterprise-level software solution that will be in use in your organization for a number of years, you should evaluate where that solution falls in the product life cycle stages.

Opting for a product that is in decline is not a smart investment. There’s likely to be risk in opting for a product that has just been introduced, but a product that is seeing hefty year-over-year growth and adoption is worth giving a bit more positive consideration.

Understand the Importance of the Product to the Company that Owns It

A pop quiz: If you are looking for nonprofit accounting, which company is likely to invest the most in their nonprofit accounting offering?

Nonprofit Accounting Software - Buyer Beware

The answer is probably Company A. Still due diligence is required. Marketing is well-defined for Company A: CFOs and Finance Directors. R&D is well-defined for Company A. It’s possible that they have a singular focus but are making no investment (and that’s a problem). But if they are investing – your best interests and theirs are completely aligned.

Company B might be worth investigating further if I am an Association or other member-driven organization. Any investment being made in the accounting product is being made with associations in mind.

However, if I am a grant-funded organization, I have to look at that division of business (and resources – money and staff) and wonder if this is really the best option in an accounting solution for my organization.

Company C would worry me. My reaction would be ‘jack of all trades, master of none.’ There is a reason’Best in Class is major selling point in today’s technology environment.

Final thoughts on MIP Fund Accounting software

For those organizations that have MIP Fund Accounting installed, they are probably fine in the short term. But if I were shopping for a new accounting system today, and I was the Financial Director of an organization other than an association, I would look for a software solution company that was primarily, overwhelmingly, focused on accounting.