The Dilemma of Database Budgeting
Along with Eric Leland of Leland Design and Matthew Scholtz, an independent consultant who is also on staff at ONE/Northwest, Laura participated in a discussion of the current database options convened by the Fund for the City of New York. We created a transcript of the conversation, and the participants were kind enough to let us publish some excerpts – this is the first of four excerpts.
Fund for the City of New York: How often does a nonprofit simply pick the product or platform that is best for them, forgetting completely about finances? Or do you think that finances do make a difference for some groups?
Matthew: I think finances make a huge difference for every group. I have never worked with one where it wasn't a big, big, big factor.
Eric: It's definitely a big factor. The range of costs can sometimes be fairly wide, but most of the time it’s actually fairly narrow. "I can afford from $2000 to $3000."
Matthew: Even when it seems to be a broader range, there’s often a specific perception. They may have a wider range, but if it's going to cost two times what they are thinking, then no way.
Eric: I'd say you’re looking at, a most, a 10 to 20 percent spread in the price they feel comfortable with. You know, "I can see being in this range." It's not necessarily always what they end up with, because of other factors, but it's a top level concern.
Matthew: I feel it's one of the most important services I offer my clients – helping them to understand the financial implications of the various choices they could make. It's really hard to understand that.
Fund for the City of New York: Do you feel that a lot of groups shoot themselves in the foot by defining an arbitrary price range – though obviously it doesn’t feel arbitrary for them - for a database system before they really define what their needs are and what the market price for an appropriate platform would be?
Laura: I think that there are certainly many organizations who are under-investing - who ought to be taking their constituent database more seriously and spending more money on it. I don't know whether that's a reality that we can change. I don’t know if we can do much more than just very slowly and incrementally try to educate people about what they would get for their money.
I think right now it's hard to know. It’s hard to understand what the implications are of spending a particular amount of money. If you’re getting a free database, well, what could be wrong with free? It’s also hard to understand the implications of moving from the realm of three thousand dollar databases to the realm of fifteen thousand dollar ones. Why would I voluntarily choose to spend twelve thousand dollars?
And of course, in the real world, there are organizational priorities other than databases. In an ideal world, you would plan exactly what is needed and then define a budget for your entire organization all at once based on exactly the best allocation of funds. But no one is ever really doing that. So in reality people budget based on their perceptions of what they should pay for a database.
Eric: I would underscore that last phrase, because most of my clients actually don't budget at all. Sometimes they have a number in mind, but most of them haven't thought of a formal or even an informal technology budget. So when I give them actual costs, they might seem high or low but not based on any kind of logic.
I do run into some clients that do indeed shoot themselves in the foot. Early on, when I was much more involved with eBase and free databases were a shining star in the non-profit world, it was a bigger problem than I think it is now. But it’s still a problem - when folks see something is free they immediately think that there’s no point in paying for something, because all databases are the same and there’s a free one available.
Matthew: I would agree with all that. I think the people who are really shooting themselves in the foot probably aren't talking to us at all - we try hard to stop organizations from making bad decisions, but I get lots of clients who shot themselves in the foot five years ago and are now trying to correct the problem. For instance, they got a volunteer to build something in Access four years ago, and now it's a complete mess. A lot of people are still working on correcting those things.
Fund for the City of New York: How often does a nonprofit simply pick the product or platform that is best for them, forgetting completely about finances? Or do you think that finances do make a difference for some groups?
Matthew: I think finances make a huge difference for every group. I have never worked with one where it wasn't a big, big, big factor.
Eric: It's definitely a big factor. The range of costs can sometimes be fairly wide, but most of the time it’s actually fairly narrow. "I can afford from $2000 to $3000."
Matthew: Even when it seems to be a broader range, there’s often a specific perception. They may have a wider range, but if it's going to cost two times what they are thinking, then no way.
Eric: I'd say you’re looking at, a most, a 10 to 20 percent spread in the price they feel comfortable with. You know, "I can see being in this range." It's not necessarily always what they end up with, because of other factors, but it's a top level concern.
Matthew: I feel it's one of the most important services I offer my clients – helping them to understand the financial implications of the various choices they could make. It's really hard to understand that.
Fund for the City of New York: Do you feel that a lot of groups shoot themselves in the foot by defining an arbitrary price range – though obviously it doesn’t feel arbitrary for them - for a database system before they really define what their needs are and what the market price for an appropriate platform would be?
Laura: I think that there are certainly many organizations who are under-investing - who ought to be taking their constituent database more seriously and spending more money on it. I don't know whether that's a reality that we can change. I don’t know if we can do much more than just very slowly and incrementally try to educate people about what they would get for their money.
I think right now it's hard to know. It’s hard to understand what the implications are of spending a particular amount of money. If you’re getting a free database, well, what could be wrong with free? It’s also hard to understand the implications of moving from the realm of three thousand dollar databases to the realm of fifteen thousand dollar ones. Why would I voluntarily choose to spend twelve thousand dollars?
And of course, in the real world, there are organizational priorities other than databases. In an ideal world, you would plan exactly what is needed and then define a budget for your entire organization all at once based on exactly the best allocation of funds. But no one is ever really doing that. So in reality people budget based on their perceptions of what they should pay for a database.
Eric: I would underscore that last phrase, because most of my clients actually don't budget at all. Sometimes they have a number in mind, but most of them haven't thought of a formal or even an informal technology budget. So when I give them actual costs, they might seem high or low but not based on any kind of logic.
I do run into some clients that do indeed shoot themselves in the foot. Early on, when I was much more involved with eBase and free databases were a shining star in the non-profit world, it was a bigger problem than I think it is now. But it’s still a problem - when folks see something is free they immediately think that there’s no point in paying for something, because all databases are the same and there’s a free one available.
Matthew: I would agree with all that. I think the people who are really shooting themselves in the foot probably aren't talking to us at all - we try hard to stop organizations from making bad decisions, but I get lots of clients who shot themselves in the foot five years ago and are now trying to correct the problem. For instance, they got a volunteer to build something in Access four years ago, and now it's a complete mess. A lot of people are still working on correcting those things.
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