Investing in Alternative Solutions for Delivering Technology

Below is a summary of key points made by participants in an online discussion hosted by the Morino Institute from November 2000 to April 2001 — with links to the full text of selected messages ("posts"). More information...

"It seems to me that the more we can pull people out of the routine of using duct tape and bubble gum to hold together their IT infrastructure, the more we can be adding value to the real business of their work."
— Bob Xavier, CompuMentor

Computers are such an integral part of the work day for many organizations that it's hard to comprehend how small a role they play in the daily operations of many community-based groups. It's not at all unusual, for example, for a nonprofit to hand write paychecks, to operate without email, and to do without voice mail.

For groups used to functioning this way, the introduction of technology is a big step, not so much in terms of equipment costs, but in the way new technology affects people and processes. Using the computer to generate paychecks, for instance, means changing the way the organization keeps its accounts as well as the skills of the people handling them.

Over the long term, automation frees up time required to keep the organization running. In the short term, however, it almost invariably sets organizations back, given that they're usually stretched to capacity even before they are called upon to absorb and apply these new tools. Jonathan Peizer of the Open Society Institute noted, "Many [nonprofit organizations] are trapped by technical projects that go wrong... The problem is that... they have few extra resources to expend on trying something new in mid-stream. Commercial entities by contrast can make the reinvestment more easily."

To make matters worse, technology tends to have a creeping effect — it starts with an Internet connection or a website, then grows to a local area network or client database. As the organization's needs become more complex, the technology it needs becomes progressively more expensive and complicated to use and implement. "We've arrived at a conclusion that even the maintenance and use of a basic local area network, such as a LAN with an MS Exchange server, not only may be too much for many [community-based organizations] to effectively undertake as they deploy [information technology (IT)] for their organizations, but could even increase their exposure to system failure and hence weaken their organizational effectiveness as their dependency on IT increases," said Mario Morino of the Morino Institute.

We therefore asked the discussion participants whether technology cooperatives or regional technology centers should be established to benefit dozens, if not hundreds, of organizations at a time.

Instead of each nonprofit laboring through the process of developing and maintaining its own technology system, organizations could call upon such a center to meet their technology needs. Ideally the centers would have special expertise in the nonprofit sector and would offer a menu of services, such as web hosting; email; membership databases; technical support; application services; technical training; equipment purchasing, maintenance, and installation; technology planning; and help-desk services.

Nonprofit centers of this type do not yet exist on a large scale. Their counterparts in the for-profit world, however, are well-established companies such as EDS, ISSC, CSC, Exodus, and others whose business it is to manage all or part of an organization's technology infrastructure, including the technical personnel.

The obvious advantage of such solutions is that they free up organizations to engage more directly in activities that fulfill their mission. In the words of Phil Ferrante-Roseberry, executive director of CompuMentor, "The prospect of organizations (particularly small/medium NPOs [nonprofit organizations]) freeing themselves of having to support a tech infrastructure... would be hugely liberating."

Alternative technology solutions

Today's standard is for each organization to maintain and support its own technology. But other options exist, including:

• installing technology in-house but using a contractor to maintain it



• outsourcing the IT infrastructure, with help-desk support provided remotely or on-site



• partial or total application service provider/managed service provider (ASP/MSP)-delivered solutions (ASPs are companies that host an organization's applications on a remote server)



• business-process outsourcing, in which the organization's technology function is completely outsourced

Many members of the discussion group quickly zeroed in on the pros and cons of currently available alternatives, such as subscription computing companies, technical assistance providers, and in particular, application service providers. 

Bob Xavier, a staff consultant for CompuMentor, pointed out the advantages of such alternatives: "The best thing we can do for people is convince them to take a realistic approach to IT costs and systems management. A utility approach turns computing expense into another utility bill that is both predictable and that scales with the organization. And it invests the organization with a full service IT shop instead of one part-time person with a hunch of what to do."

To outsource an organization's technical needs as suggested by Bob Xavier is a frightening prospect for some organizations for a variety of reasons:

• the reluctance of organizational leaders and staff to cede control of mission-critical information and processes to an outside service provider

  Said Vincent Stehle of the Surdna Foundation, "Many potential clients may fear placing their data on remote servers, because of security and accessibility concerns."

• the difficulty organizations have in obtaining funding for technology
  
  "Of course, this approach requires funders to understand and underwrite the cost of technology capacity-building," noted Laura Breeden of the America Connects Consortium.

   

• the lack of information about and awareness of alternative solutions

  "Right now, even if [a nonprofit organization] decided to explore the ASP waters, it would be hard pressed to figure out where to start," said Daniel Ben-Horin of CompuMentor. "This dearth of decision-making tools is often a crippler of nonprofit initiative."

• the uncertainty over whether any of the alternatives will be viable businesses in the long run

  Daniel Ben-Horin noted that "ASPs are sprouting like mushrooms and dropping like flies."   On a related note, Mario Morino suggested that nonprofit organizations would need assurances that the service provider would be able to obtain the significant amounts of capital and technical talent needed to continually upgrade its services and keep up with changing technology.

Carlos Manjarrez of The Urban Institute observed that giving up daily control of an organization's computing needs requires, in and of itself, a certain level of technical capacity and sophistication. "My sense is that there will be a substantial amount of selection bias among the agencies that adopt the ASP model. That is, the organizations willing to accept the risks (real or perceived) of incorporating an ASP into their work routine are likely to be organizational innovators in many other respects, including IT use."

According to the participants in the discussion, nonprofit leaders who do decide to use an alternative solution for meeting their technology requirements should look for the following:

• education, pre-planning, and training components on how to implement new technology

  Jonathan Peizer said that he "couldn't agree more about the support and training model that must go along with successful ASP deployment in the non-profit sector."

• an exit strategy that allows organizations to easily export their information and processes should they wish to use another provider

  "One of the real dangers of the emerging ASP/MSP models is that they will make the client captive to their model and technology... much more thought must go into how an organization will be able to legally and logistically exit such an arrangement," noted Mario Morino.

• an expandable architecture that allows organizations to easily add new features, services, or applications

  Said Randal Pinkett of the Inner City Consulting Group: "Since the switching cost can be prohibitively high to move from one ASP to another, we must ensure that architectures scale easily and are receptive to adding new features/services/applications. This is particularly true with the rapid pace of innovation."

• resolution on legal issues to clarify who — the organization or the service provider — owns the data and applications

 

• the development of privacy, security, productivity, speed, and reliability measures to ensure access and data integrity

With so many factors to consider, one suggestion was for small nonprofits to work as part of a consortium to ensure that their needs are addressed. Mario Morino observed that for smaller organizations, "their size insists that this be tackled not by one organization but through a coalition or cooperative."

Future possibilities

Although the idea we originally floated was for a nonprofit technology center, many of the participants chose to discuss ASP solutions instead. Several participants expressed optimism and support for the ASP called ChangeFrame, now under development by NPower. Said Daniel Ben-Horin, "NPower is exactly the right agency to drive a pioneering ASP project... because NPower has a great track record of understanding nonprofits' needs fully and developing interventions, often on a collaborative basis, to address these needs." Jonathan Peizer also remarked upon the Open Society Institute's support of NPower's initiative.

Because of the efficiency and cost-effectiveness such alternative solutions promise, they are already part of a trend in the for-profit sector away from maintaining administrative and technical functions in-house. Investing in alternative technology solutions could be part of a strategy on the part of foundations and other grant making bodies for helping community-based groups, the underserved neighborhoods in which they operate, and perhaps the nonprofit sector overall.

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