This week, I was in Sydney, meeting with clients and vendors and speaking at two separate events. As I reflected last night, some interesting themes and questions about IT investments emerged that I thought others might find useful.
Restrictions in budgets are preventing operational improvements:
Undoubtedly, Not for Profits have always been run on lean administrative budgets compared to corporations and the government. I still remember when I first started working as the CEO of a charity, and I asked for some sticky notes. My diligent staff member gave me one tiny pad.
The challenge of underfunding IT operating budgets over time, though, is that it creates a technical debt that eventually has to be paid. And often, that repayment ends up being an emergency that not only forces the redirection of already committed funds that year, but it often requires quick decisions that may not be the best for your future.
I suggest that any Not for Profit set up a Future Fund for these required IT investments. It should be a separate account set up specifically for replacing major systems like your CRM.
So, while you may not be able to make that investment now, you are at least setting aside funds every year for when that time arises. The separate account also allows transparent conversations with your Board and stakeholders about these future needs.
Just be deliberate in actually putting money into the account. Otherwise, an empty bank account is no different from not having one at all.
The business case for a CRM
I was asked about the business case for a new CRM. Usually, the business case evolves around generating more revenue instead of reducing administration or manual processes.
When Not for Profits are already lean, I don’t advise administration efficiencies as your business case because otherwise, there is an expectation that you will reduce headcount to cover the cost.
Instead, think of how much more revenue you could generate if your staff could redirect their efforts towards more meaningful work, like calling members to renew their membership rather than trying to process the renewals.
Or, if you are a charity, wouldn’t it be nice to have more time to promote events or fundraising appeals rather than spend all your time trying to gather data and segment your mailing list?
Mistakes in Transformation Projects
When I was chatting with Chloe Dervin of WebVine, a webinar attendee asked, “What is the biggest mistake that Not for Profits make with Transformation Projects?”
My answer was, “They underbudget their internal costs to support the project or program of work.” I’ll go into more detail in a future article, but essentially – don’t forget to add Project Management and back-fill cost to the vendor’s quote when you submit for budget approval.
Failure to do so often leads to schedule overruns that impact both the cost of the work and can also lead to staff burnout for those trying to perform their normal jobs with the additional responsibilities of supporting the transformation.
AI direction
Several times this week, I heard themes about Board Members either pushing for AI investments or delaying investments until the AI future is clearer.
I am extremely excited about the future of AI because I see so many ways to make the average office worker more productive. However, AI is an enabler, not a strategy in itself.
In the future, most of the major software vendors will be offering improvements to their products with AI. Yet, right now, it’s coming at an additional cost.
I personally think that Microsoft Office will have the biggest impact on productivity for Not for Profits through AI rather than other business applications. Yet this week, Microsoft announced that their new AI-enabled Office suite, Copilot, will be US$30 more per user for commercial organisations (I don’t know the charity discount yet ).
Salesforce also has plans, but they just announced a 9% increase on most of their licenses this week without those AI improvements. So, how much more will it be to adapt their additional capability when it’s available?
The reality is that most Not for Profits are struggling to fully utilise the software they already have. This could be because the technology is not meeting their needs, but frequently I find that the staff have not been trained (or at least not since they implemented the system).
Salesforce Marketing Cloud is a good example where investments may not be worth it depending on the staff’s skills and the organisation’s maturity. In such cases, they don’t fully utilise the functionality of their current system.
So, trying to jump from legacy systems to the next wave of AI-enabled ones may result in more underutilised investments.
My advice is to embrace AI but make sure your team has mastered the basics before buying anything that requires higher skills to utilise it, especially when it comes at an additional cost.
I regularly help Not for Profits make IT investment decisions. Let me know if you need some help.
P.S. If you found this article helpful, you might want to read this one too: When is it time to upgrade your system?
Tammy Ven Dange is a former charity CEO, Association President, Not for Profit Board Member and IT Executive. Today she helps NFPs with strategic IT decisions, especially around investments.