NFPs: review business model and embrace digital transformation or face “apocalypse”

Posted by  Jeroen Figee

NFPs might face an “apocalypse by 2030” if they don’t start reviewing their current business models and embracing digital transformation, writes Jeroen Figee, Unit4’s solutions architect for not-for-profit, in a report from NetHope summit 2018.

I’m in Dublin, Ireland, at the NetHope Global Summit 2018, an event about technology solutions for NetHope members. This year’s theme is digital transformation. And one thing Oxfam International’s chief information officer, Michael Duggan, said on this theme struck me.

Take a step back

In the seminar with the working group on Enterprise Architecture, Michael advised that, before choosing a new technology, not-for-profit organizations (NFPs) should step back and review two things.

First, they need to properly define and review their business model. Second, they need to define their enterprise architecture based on the defined business model to see how this new technology will fit in.

Only then can a new technology that suits the business model and enterprise architecture requirements be embraced.

Increasing collaboration

He added that, in a world with rapid, dynamic changes in the way not-for-profit organizations get their funding, collaboration with multiple stakeholders is increasing. (By multiple stakeholders he meant multiple, private and institutional donors; local partners and agencies, fundraising offices, beneficiaries, staff and suppliers.) As a result, reporting and accounting requirements are changing continuously.

Redefining revenue streams

Alongside this, revenue streams are changing. Millennials and the latest generational cohort, Gen Z, are redefining the way NFP organizations get their funding — they are tending to donate directly to beneficiaries or to specific programs from their phone, rather than directly sponsoring specific NFP organizations.

And, with the rapid growth of social enterprises comes another trend: the shopping result for footwear brand, Toms, for example, results in an equivalent gift being shipped directly to people in need.

“Apocalypse” by 2030

Michael warns Nethope members that, if they don’t start reviewing their current business model, embrace digital transformation and choose the right technology to support that model, they “might face an apocalypse by 2030.” Funding streams can dry up when not making the right move and adapting the business model to the changes. A disruptive paradigm shift, such as in the taxi and hotel sectors with new players like UBER and AIRBNB, is lurking as well.    

Michael adds that, with the major investments that non-governmental organizations make in technology, it is obvious that changes in the business model affect their systems and that they only have a single chance to choose the right technology to support them.

A system to cope with change from within

The way I see it, in order to get most value out of this investment, and to avoid expensive redesign and re-implementations, it is therefore crucial that any system used by an NFP is capable of coping with the internal and external changes that affect their business model.

The list of these changes is a long one. It includes changes in organization structure, deployments to new countries, amendments in workflow processes and approvals; adding new reporting needs and reporting requirements in currently used reports; changing thematic, organizational and geographical reporting structures and adding objects/entities.

Every single one of these changes should be actions within an NFP’s control. They should all be changes they can make within their solutions and without disruption, and especially without the need for skilled, technical IT people, whether they are inside the organization or from a software provider.

Return on investment

My point is that in order to ensure a good return on the investment in a new system, NFPs need the system to be able to cope with all these changes so the organization can adapt to ongoing transformation. Incidentally, this is a point made in the Eval-Source Market Comparison Report.

Unit4 has been recognized as a provider of a functional, agile solution for NFP organizations, where 96 percent of the amendments can be done via the user interface. This is due to the origin of the system developed for service-oriented organizations where change is constantly eminent.

So, I have to agree with Michael. The point he makes about defining business models before defining enterprise architecture and technology is a valuable one. However, it doesn’t necessarily require a change in technology or system if the existing system is able to cope with change.

In the end, an apocalypse would be really harmful for the sector, and a real shame considering all the good it work does (and still needs to do) for its beneficiaries.

Jeroen Figee

Unit4 Senior Solution Manager for Nonprofit