Microsoft Making Strides with Nonprofit CRM Strategy

 In Constituent Relationship Management (CRM), CRM Technology

Microsoft is starting to make strides with nonprofit CRM strategy. As I wrote in April 2018 after the Nonprofit Technology Conference (#18NTC) in New Orleans, Microsoft indicated it wants to support the nonprofit sector in an entirely different way. One year later, Microsoft is still acting on that vision.

Leadership that gets nonprofits

What’s happening at Microsoft today is a radical change from decades of simply donating licenses to nonprofits. New CEO Satya Nadella’s Microsoft hasn’t been afraid to tear up the old Microsoft playbook and work in new ways. One of those new ways is the formation of their Tech for Social Impact (TSI) team.

TSI has led the effort to tailor Dynamics for Sales to nonprofits, and is supporting independent software vendors (ISV’s) in building solutions for nonprofits on Dynamics for Sales. Additionally, they are donating pro bono consulting services to support these implementations and have been working to clarify and standardize discounts on Microsoft software for nonprofits.

I cringe every time I have to say “Dynamics for Sales” instead of the discontinued ”Dynamics CRM” name. Dynamics for Sales is such a limiting name for something that is used at nonprofits for everything except sales. Microsoft TSI should get permission from the Microsoft mothership to use the Dynamics CRM name again with nonprofits.

TSI was formed in late 2017 to “accelerate technology adoption and digital transformation in the nonprofit sector.”  Early on they hired a CTO, Erik Arnold, who came from the nonprofit sector, as opposed to sales or product management or a software vendor. I wonder if this speaks to more philanthropic intentions than we expect from other nonprofit software vendors, and how that might translate into value for nonprofits.

The common data model

Microsoft has a fully open data model posted on GitHub. The Common Data Model for Nonprofits provides a foundation for Microsoft, partners, and nonprofit tech staff to build upon and integrate with. Microsoft has built the Dynamics 365 Nonprofit Accelerator, which is a suite of sample apps, templates, and connectors pre-mapped to the Common Data Model. There’s also an Accelerator for Higher Education that will interest some nonprofits.

Consider the fundraising “flavors” on Salesforce. As multiple vendors—Convio, RoundCorner, CauseView, Affinaquest, Salesforce.org—built solutions on the Salesforce CRM, competing data models emerged. These multiple “flavors” of Salesforce translated into

  • a steeper learning curve for end users;
  • integration complexity;
  • adverse ramifications for third party software, resulting from the complexity of models.

While still preferable to Blackbaud’s historically closed approach, I know many in the Salesforce nonprofit community wish fewer flavors had evolved. Salesforce has changed course in recent years by pouring resources into the Nonprofit Success Pack, which is thankfully becoming the de facto nonprofit common data model on Salesforce.

Microsoft has taken the “flavors” lesson to heart and is beginning with a more standardized foundation. Those organizations building on Dynamics for Sales will have a clear and consistent starting point, which should translate into solutions that are easier for users to understand and less expensive to administer.

Why should nonprofits care about an open data model?

Value. Customers of cloud software, including nonprofits, expect transparency and flexibility. They expect to own their data and have easy access to it, whether that’s within the application, by exporting to spreadsheets, or via an open API for accessing that data from another application.  Nonprofits expect a cloud software vendor to retain them as a customer by providing sustained value, not by locking them into contracts or locking their data behind proprietary, closed data models. Vendors who don’t do this will feel more and more out of the mainstream. Blackbaud made this mistake and Salesforce has been taking business from them for the past decade.

Implementation. Another aspect of Microsoft’s new approach is that Microsoft engineers provide pro bono services to ensure that Dynamics is implemented in a way that leverages the Common Data Model for Nonprofits. The program is called the Early Adopter Credit (details forthcoming here).

Standards for third party vendors. Third party solutions tailored to nonprofits have been emerging on the Dynamics platform from such vendors as Sparkrock (including Finance, HR, and fundraising) and Mission CRM. Will third party vendors utilize the Common Data Model, and how will they do it? This is a key strategic question for any vendors building solutions for nonprofits on the Dynamics for Sales. At the time of this blog, Mission CRM confirms they are “aligned with v2 of the Accelerator.”

Raiser’s Edge CRM potential. Are we going to see Raiser’s Edge, which has long been the nonprofit fundraising leader, finally integrate with a CRM? If it did so, and leveraged the Common Data Model, that would immediately be a solution worthy of serious consideration for many nonprofit organizations.  It would address many limitations of the Raiser’s Edge, while providing Dynamics with an application that supports fundraising better than any of its Salesforce-based competitors. Blackbaud and Microsoft have announced the Integrated Cloud Initiative to address this integration.

Salesforce is currently out ahead

Despite the possibilities, Microsoft has a long climb ahead. Microsoft’s main competitor, Salesforce, is everywhere in the nonprofit sector, continues to expand, and seems to believe everything is a nail and they have the hammer. Will a seemingly philanthropic strategy at Microsoft run up against the wall of Salesforce’s sales-driven approach? Will the presence of other Microsoft products such as Office 365 and Dynamics ERP/finance solutions at so many nonprofits make Dynamics for Sales a compelling option?

One way in which Dynamics for Sales is far behind Salesforce is in the community of independent software vendors (ISV’s) that have either built nonprofit-focused solutions on the Salesforce platform or integrate with Salesforce. Plus, there are numerous solutions in the Salesforce ecosystem, such as Apsona and Conga, that aren’t specific to nonprofits but have extended the capabilities of Salesforce. Initial indications for Microsoft’s solution are positive, with companies like Classy (online and peer-to-peer fundraising) and others integrating with Dynamics. Both Salesforce and Dynamics typically require additional, third-party software to provide the full functionality nonprofits need.

Yet another way in which Dynamics trails Salesforce is the extensive community of system integrators—companies that help organizations to implement the software—that work with Salesforce. Numerous companies focus exclusively on implementing Salesforce at nonprofits, and many more companies have nonprofit-focused divisions. There are only a few systems integration firms working in the Microsoft ecosystem who have both a national footprint and some focus on nonprofits. Any sizable implementation of a CRM requires the support of a system integrator that knows the product well—and having options gives a nonprofit leverage, as the vendors compete against each other.

Another way in which Salesforce is far ahead is the community of nonprofit staff, including Salesforce admins and power users, who are not only familiar with Salesforce but participate in the Salesforce extensive user community called the Power of Us Hub. Many Salesforce users see this as a key resource for getting answers, especially for those organizations on limited budgets who lean more heavily on a “do it yourself” approach with Salesforce. For Dynamics to compete, it will almost certainly need to build a similar community—but it will take years to gain enough nonprofit end users to build one that is similarly robust.

Finally, Salesforce is ahead in a core need for most nonprofits: fundraising. Within the Salesforce ecosystem, the Nonprofit Success Pack (NPSP) provides fundraising capabilities and has now been in use for over a decade, while alternatives to NPSP such as NGO Connect, CauseView, Affinaquest, and Luminate CRM from Blackbaud have had years to develop. Fundraising apps on the Dynamics platform are still in their infancy.

But Microsoft has some advantages too

Despite all of this, Microsoft has some strategic advantages that may help to make Dynamics for Sales a strong contender:

  • Microsoft’s ownership of LinkedIn is widely perceived as a strategic benefit for supporting next-generation CRM capabilities.
  • Integration with Microsoft’s various ERP and finance solutions is an asset, although Intacct’s growing presence in the nonprofit sector combined with its frequent integration with Salesforce serve as a hedge against this.
  • Microsoft already has a huge ecosystem of partners, though these ISV’s and SI’s will need to learn more about the nonprofit sector to serve it effectively.
  • Microsoft is big. Big enough to get the attention of firms like Classy to encourage integration with Dynamics for Sales.

Meanwhile, Salesforce.org is dealing with an acquisition by Salesforce.com, of which I am highly skeptical—particularly its benefit to nonprofits. I’m not alone in my skepticism. Salesforce must sell at the discounted license price they have touted as “charitable” in order to be competitive in the nonprofit space. In enterprise fundraising implementations, my experience is that Salesforce is comparable to the cost of other enterprise solutions. So as the nonprofit business unit at Salesforce gets pressure to achieve higher profit margins, and the cost of Salesforce increases for nonprofits, will this provide an opening for Microsoft? What about other mid-market and emerging nonprofit CRM solutions?

The Bottom Line

If your nonprofit is looking for a future CRM, you should keep an eye on Microsoft as the company continues to make strides in nonprofit CRM strategy. Dynamics for Sales is probably not yet what you’re looking for if you have complex fundraising needs, but that platform is getting much more interesting for a wide range of other CRM-supported nonprofit needs.

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