For the millions of Star Wars fans out there please forgive me for borrowing a title which might lead to a few more readers of this blog post. I am not writing about that wonderful series of films, but to share some insights and my opinion on what is the best option for the hundreds of stranded Common Ground customers.
First, let me be clear in expressing my condolences for what every Common Ground customer is about to go through. I have witnessed this happening first-hand on multiple occasions, in both good and bad directions. Let me share the truly awful experience first. In 1997, I was CEO of a company called Master Software, who provided the leading fundraising application of the market called Fund-Master. We had been purchased in 1987 in one of the best acquisition deals ever! We flourished and grew rapidly under the reins of Epsilon and their leader Tom Jones. Our rate of growth and customer adoption thrived. More importantly, those customers loved our product and our service.
This story, however, did not have a happy ending. Ten years later a new CEO of Epsilon sold our company without our knowledge to Blackbaud. I watched over 100 employees lose their jobs (including myself) and thousands of customers being forced to switch systems long before they were ready to, or had the budget to do so. (Remember back then, NPO’s were not paying for systems in a “Software as a Service” model like today, but as a total upfront capital expenditure. Ouch!)
My next first-hand experience was much better. When eTapestry was sold to Blackbaud in 2007, I was again CEO, but fortunately I was involved in selecting the company who purchased us. After much discussion about the future after the sale, we felt comfortable with our acquirer and the executive team involved. Now five years later our customers are still being served, the product has been enhanced and there are more employees than before.
So you can see, not all such transactions are bad, and there are many such acquisitions which generate positive synergies. I wanted to share my background to perhaps enlighten you on my perspective. What follows are my insights and an opinion on a few of the key factors influencing Blackbaud’s decision to stop selling, and supporting, the Common Ground product.
In some cases, the major value of a technology company is its intellectual property (IP). This makes for a somewhat confusing situation regarding the recent purchase of Convio and the resulting consequences for their core products. A portion of Convio’s products were built with Convio IP and a portion with another company’s IP, namely Salesforce.com. (BTW, the IP of Salesforce.com is outstanding in its own right and is such a huge part of their overwhelming financial success and current market capitalization.)
I fervently believe the reason the former eTapestry product is still being sold and enhanced by Blackbaud is based upon two facts. First, the IP was our own and was sound. Second, the cost of goods sold and pricing of eTapestry was not at the mercy of a third party (such as Salesforce.com) changing the number of “FREE” seats being offered at any point in the future, and thereby drastically affecting the future margins and sustainability.
I am not privy to actual information regarding my next point, therefore I am merely offering up a few strategic (and speculative) questions.
What if Salesforce.com at some point in the future considers Blackbaud to be a worthy competitor and elects to stop offering the 10 free seats and heavily discounted additional seats to 501c3’s in general, or in some manner, not to those served by Blackbaud?
What would it mean to those customers of the product if this extremely generous subsidization was reduced or disappeared? Who is the bad guy? Blackbaud for passing on those increases so they have the same margins and sustainability? Or Salesforce.com for making such a drastic change?
Is it written anywhere that this incredible offer of free and reduced price seat license fees will continue forever? What happens, if by some strange twist of fate, Salesforce.com is purchased by Oracle or Google or Microsoft or the future new Facebook-like juggernaut with a market capitalization bigger than Salesforce.com?
I am hoping this post catches the eye of a knowledgeable consultant, industry expert or, better yet, an employee of Blackbaud or the Salesforce.com Foundation who can answer the questions above. My gut instinct is the executives at Blackbaud asked many of those exact questions before making the decision to sunset Common Ground. I am guessing not only would the former Convio customers love to see the answers, but also that the nonprofit sector in general is waiting. I know I would love to know them!
My next post will further explore this hot topic from a more product related viewpoint versus the business and economic viewpoint expressed here. I am also anxious to hear your thoughts on the above points and questions.