Technology requirements for shared services are rarely the first thing Not for Profits consider when contemplating such business model changes.
However, a few weeks ago, two clients asked me the same question, “Can we use our CRM to offer shared services to other Not for Profits?”
If you want to know my answer to this question, keep reading!
Why Not for Profits consider Shared Service models:
It’s no surprise that Not for Profits are concerned about their budgets right now. As mortgage rate rises are increasingly hurting stakeholders’ discretionary spending, more charities and professional organisations are wondering how they will attract and keep their stakeholders.
And when revenue becomes less dependable, it’s normal for organisations to consider ways to reduce costs and perhaps spread their IT investments to others.
As a former charity CEO and a consultant that’s seen the inside of many Not for Profits, I believe that shared services can be a good idea for organisations to achieve cost savings.
Financial benefits include:
- If you are a larger organisation with capacity, you can possibly generate more revenue with the same resources.
- If you are a smaller organisation, it’s a practical way to reduce your overhead costs. After all, why have a staff member for Accounts Receivable and another for Accounts Payable when you can outsource both roles to another org that has an entire Finance Team with capacity?
- If there is a consolidation of systems, it can also reduce IT operational and investment costs.
The challenges lie in the delivery model:
- How much should the servicing organisation charge the other one for these services?
- How do both organisations ensure their needs are met when competing resource priorities exist, like during audits or at the end of the financial year?
- And will the technology (aka tech stack) that the organisations have support a shared-service model?
It’s this last point where Not for Profits typically ask for my advice. And to provide it, I need to do a deep dive analysis into their collective tech stacks.
What’s included in my technology analysis for shared services?
- Shared service goals: What are both parties trying to gain from this relationship?
- Functional requirements: Are they considering shared services for bookkeeping services, HR or IT security monitoring as an example? What are the unique or mandatory functional requirements for each organisation within this functional area?
- Process differences: How different are the processes in each organisation? Can the system accommodate those differences? Can the orgs adapt to what the shared service system is already configured to do?
- Data storage: Will data be migrated or managed separately? Do the orgs have different types of data to store?
- Security role requirements: How will we segment roles to ensure that users only see precisely the information they need for their jobs?
- Happiness with current systems: Is the system(s) currently meeting the needs of the host organisation?
- Integrations: Are there different integration requirements for each org? This can get very tricky.
- Willingness to Change Systems: Are one or more parties willing to adapt another system to make the shared services model work?
- Willingness to Add Systems: Sometimes, the existing systems don’t meet the future needs of the shared service model, or they lack a system for a function to be successful. In these cases, I may need to recommend a new system to meet their needs.
Other considerations for your technology requirements for shared services:
While shared services can reduce costs in the medium and longer term, there is usually a cost to implement the model initially. I typically provide clients with indicative costs to implement any IT recommendations I make for them. So, it’s okay if the client doesn’t have a budget initially.
However, if you can’t afford the implementation costs once known, you shouldn’t consider a shared-service model. Instead, outsourcing back office functions to a private entity or an actual merger with another Not for Profit may be more appropriate as initial costs may be shared differently.
Last question: Sharing a CRM
As for the “sharing a CRM” question I mentioned at the beginning of this article, my answer is usually NO!
Why?
There are three reasons why I wouldn’t usually recommend a shared CRM:
- To make this work, you would likely need to merge the data into the same system. However, security segmentation can be difficult, especially knowing someone will still have the “god admin” view across all data.
- Most Not for Profits have other technology integrations with their CRM, and doing this in a shared data model is hard (i.e. expensive) if the integration requirements differ.
- And most importantly, your CRM holds the most mission-critical data your org has and is likely supporting most of your income-generating activities. Do you really want to trust someone else to do this for you?
Personally, I’d recommend trialling an easier function like Finance or HR first.
Please let me know if you need any advice about technology requirements for shared services or an organisational merger.
Tammy Ven Dange is a former charity CEO, Not for Profit Board Member and IT Executive. Today she helps NFPs with strategic IT decisions, especially around investments.
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