“FreeWare” For $9,000!?
by Alan Lewis on Monday, March 1st, 2010
If you’re managing the selection and implementation of your nonprofit’s or political campaign’s donor database or constituent relationship management (“CRM”) software systems, you are likely trying to evaluate the several “free” applications that are out there. To be sure, some of those offerings offer very powerful tools. CiviCRM and Salesforce both offer powerful platforms. But pretty quickly into the evaluative process, you’ve probably started to ask yourself: “Is free-ware really free?” The answer to that question might surprise you.
First, the good news: for nonprofits and political campaigns trying to watch every dime, managing on ever-tightening budget shoestrings, there are some powerful applications out there that are offered free of charge. However, the old adage “There’s no such thing as a free lunch” certainly remains true in this context as well.
Now, for the bad news: even though license fees or other charges for the software application itself might be waived or nonexistent, the other costs associated with actually using these apps might negate any savings you would see by choosing them. In short, you must evaluate every software offering based on a total cost of ownership (“TCO”) analytical framework. The costs your organization might incur simply to install, configure, customize or otherwise implement these “freeware” applications can be quite significant. Some of the issues that organizations consider in evaluating these implementation costs, can be found here, here and here for example. The fact that the Nonprofit Technology Network offers a webinar to help organizations identify and evaluate these inherent costs, ought to tell you something pretty significant about the “free” nature of free-ware. In fact, at least one outfit I contacted that regularly performs CiviCRM and Salesforce implementations and custom development work related to those apps, explained to me that for the MOST BASIC implementation possible, most organizations would be looking at an initial outlay of $4,000 for the requirements gathering phase, and $5,000 for the implementation/customization. That’s $9,000! Even amortized over the course of your first year on that solution, its still a whopping $750 per month! Of course, for implementations beyond the most rudimentary, you’re likely looking at tens of thousands of dollars.
But a thorough TCO analysis certainly doesn’t stop merely with the costs of implementation. Oh no. If the “free-ware” you are considering is not offered as software-as-a-service (“SaaS”), and therefore is not hosted for you in the cloud, then that means you need to acquire the hardware and other equipment to run the application and maintain it. These costs are also quite significant, particularly for smaller organizations. They may include, for example, the acquisition of one or more servers, operating systems and other third party applications needed to effectively operate the “freeware,” peripherals to backup your data, etc. Combine those costs with the inherent costs associated with having your personnel (or a contractor) manage the process of updating the “free” software, backing up and securely storing your data, the costs of training your people on how to use these not very user-friendly apps, and you get the idea, “free-ware” isn’t really free. We’ve heard pretty routinely, from executive directors and development officers, that one of the biggest costs involved in using Salesforce, in addition to the implementation, are the costs of adequately training their folks on how to use it. It’s a powerful tool, but not the easiest, most intuitive thing to use.
Contrast the uncertain, fluctuating nature of some of these costs, and the inherent insecurity of constituent data hosted on-site, and you can begin to see that, on a TCO basis, paying a relatively small monthly subscription service fee to a trusted software vendor for a reliable, intuitively easy to use, hosted SaaS offering may be a much more efficient use of your organization’s scarce resources.