What do all the software acquisitions mean?

I had an interesting exchange with a reporter from the Chronicle of Philanthropy recently (she's writing an article about changes in the fundraising software marketplace, so keep an eye out for that). She asked me what all the consolidations in this market - for instance, Convio's acquisition of GetActive, or Blackbaud's buying spree - mean for nonprofits. It's an interesting question. While sometimes I feel like we all might as well be reading tea leaves to find meaning in this stuff, here's a few thoughts I had on the topic.

I think there's both positives and negatives here. On the up side, it means that a number of companies see the field of nonprofit software as one in which it's possible to make money, as a profitable business. This is a good thing - while we as nonprofits don't really like to think of businesses making money off the nonprofit world, if software vendors can't make a profit, then we don't get new software. A healthy marketplace results in a healthy set of options.

On the other hand, all this consolidation indicates a market that isn't yet mature, and isn't as stable as it could be. So when choosing software, it's important to look carefully at the viability of the vendor as one of your considerations - do their revenues cover their expenses? What's their long term plan?

But at the end of the day, it's quite hard to judge if a software is likely to be acquired (in fact, a more profitable tool could be a more attractive acquisition target). So it's important to try to not put all your eggs in one vendor's basket. Like in disaster planning, it's worth thinking through what would happen if one of your vendors no longer supported the software you're using. What would you do? Would you be able to get your data out? Would you be able to use the software package even without the vendor around (as is true of many installed and open source solutions)?