So I’m looking at Blackbaud’s 2/28 EDGAR filing… That’s what I do when I’m up due to jetlag.
Did you know that Blackbaud’s services revenue as a percentage of Blackbaud’s total revenue has stayed pretty much the same over the last three years? Yet, consulting services now represent 60% of that revenue line item? Here’s what consulting services are:
“Consulting, installation and implementation services involve converting data from a customer’s existing system, assistance in file set up and system configuration, and/or process re-engineering.”
So this is what is happening:
A nonprofit uses a direct mail vendor or has an internal direct mail system. However, they now want to switch to Blackbaud. Blackbaud comes in and all they have to work with is a crappy .csv file or in my org’s case, fixed width which is even worse. Blackbaud now has to assign a DBA to the nonprofit and a business analyst to go in and parse what that .csv file is and how the data is supposed to go into Blackbaud. How long will this take? Who knows? However, I know that for my org it cost tens of thousands of dollars. Basically, that’s the pay to play fee. This is what happens when you don’t use open APIs in our sector. You end up paying for more and more services.
Is this Blackbaud’s fault? No. It’s ours. We’re the ones who insist on systems that are closed without looking at other vendors or demanding an open API as a feature set. And by continuing to stay with Blackbaud, we continue this pattern of sticking with proprietary systems. Blackbaud made $61.2 million (roughly the operating income of six medium size homelessness organizations in New York City) off of our sector in 2006 because we had crappy proprietary systems and they’ll continue to make even more money because we switched to them. And if we switch off of Blackbaud, that’s more money to the next vendor. Unfortunately, those of us with Blackbaud will now have to pay thousands of dollars to convert. And no one I know has ever done a Raiser’s Edge to salesforce.com conversion. If YOU know of someone who did, please have them comment below. I’d love to know how it went.
Folks, we can’t continue as a sector giving tens of millions of dollars to our vendors like this. And ultimately, this is the one of the reasons that Blackbaud finds it difficult to move to an open API. They’re assuming that an open API would lower the cost of conversion so that people could more easily move out of the Blackbaud family and into their other competitors like salesforce.com or SugarCRM. Their business model is predicated on the conversion of other people’s closed systems to their closed system. That one line alone has gone from $42.8 million in 2004 to it’s current $61.2 million figure. Why should Blackbaud implement an open API when it’s so clear that as a sector we haven’t done our homework and continue to stay on the proprietary systems merry go round?
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