How Nonprofits Can Thrive Amid Technology Industry Consolidation

Imagine you're leading a nonprofit that has just received news that your key technology vendor is merging with another company. The immediate concerns? Will service levels drop? Will costs rise? How will this impact your mission? If you’ve found yourself asking these questions, you’re not alone. Mergers and acquisitions (M&As) are becoming more frequent, driven by a need for operational efficiency, technological advancement, and mission realignment. But how do you ensure your organization navigates these changes successfully?

What Is the Impact of Mergers and Acquisitions and How Can Nonprofits Prepare?

M&As in the technology sector often lead to the consolidation of products and services, bringing both challenges and opportunities. While these changes cause operational disruptions, they can also enhance functionality and innovation. To prepare for these transitions effectively, nonprofits should develop a comprehensive change management plan. A change management plan is a well-documented strategy designed to guide your organization through transitions smoothly and effectively. This plan typically includes:

• Change Description: A clear outline of the change being implemented.
• Context and Background: Comprehensive background information and context to explain the reasons behind the change to all stakeholders.
• Impact Areas: Identification of the areas and functions that will be most affected by the change.
• Team Members and Responsibilities: A detailed breakdown of the roles and responsibilities of all team members involved in the change process.
• Budget and Resources: A thorough account of the required budget and resources to ensure successful implementation.
• Timeline and Process: A step-by-step timeline and process for executing the change.
• Goals and Outcomes: The final objectives and desired outcomes your team aims to achieve through this change.

This approach ensures that all stakeholders are prepared for the changes ahead, mitigate risks and capitalize on the benefits of newly integrated offerings.

What Are the Financial Implications of Mergers and Acquisitions?

When technology companies undergo M&As, pricing models and licensing agreements often change, significantly affecting your nonprofit’s budget. Beyond immediate financial implications, these organizations encounter indirect costs from reallocating resources and adjusting staff. Such changes will require increased budgets or force nonprofits to seek alternative solutions. The perceived reduction in competition due to mergers can exacerbate the situation, enabling price increases that exceed industry norms. Consequently, nonprofits with tight budgets face the challenge of funding these changes while maintaining operations and fulfilling their missions.

How Can Nonprofits Ensure Vendor Stability and Service Reliability During M&A?

New procedures and staff changes can disrupt customer support services. Expect your technology vendor to restructure. Shifts in account managers are frequent after a merger or acquisition, which can cause temporary instability or reduce satisfaction. However, M&As also result in improved services in the long term, including enhanced support processes and systems.

What Strategies Can Nonprofits Implement to Navigate the Complexities of M&As While Maximizing Long-term Value?

• Proactive Vendor Management: Establish multiple contacts within vendor organizations to stay informed and access important information. Engaging with vendors early lets nonprofits proactively assess potential impacts and develop contingency plans. Early discussions can also offer leverage for negotiating better pricing and support agreements.

• Invest in Technology and Training: Conduct audits every quarter or every few months to assess technology needs regularly, even when mergers and acquisitions are not expected. A solid understanding of the organization’s tech stack will help nonprofits plan for changes, understand dependencies and avoid technology debt.

• Financial Planning: Beyond investing in technology regularly, anticipate and budget for potential cost increases. Organizations that rely on vendor sponsorships should also be mindful that M&As may impact incoming revenue by consolidating potential sponsors. Organizations should proactively explore grants and alternative funding to address the gap between their current budgets and future needs.

• Workforce Development: Organizations must establish company-wide usage policies and documented workflows for all systems. Staff must be trained and up to date on system upgrades and new features to ensure optimal productivity. Nonprofit leaders have a responsibility to provide employees with the tools and systems to do their jobs effectively.

enSYNC’s Role in Supporting Nonprofits

Many nonprofit organizations struggle with technology debt (i.e., not investing enough resources into updating technological systems and processes). enSYNC partners with nonprofits to help them adopt strategic, proactive approaches to their technology. enSYNC helps identify system needs, staffing, and process improvements through expert consultation and planning. “As industry leaders, we are positioned to help our clients thoughtfully and systematically address challenges. We strive to anticipate changes that could affect our clients and share best practices for identifying comprehensive and scalable solutions,” says Janet Davidson, President of enSYNC Corporation. 

How Can Nonprofits Effectively Partner With enSYNC to Maximize Support During Technology Transitions?

• Strategic Assessments: Regularly audit your technology and business processes. Many organizations have outdated processes that rely on unnecessary system customizations. enSYNC partners with your nonprofit organization to thoroughly evaluate existing processes, identify vulnerabilities, define realistic requirements, and identify opportunities for improvement.
• Association Operation Services: Important missions require focused staff. enSYNC helps supplement association staffing. For example, enSYNC assists with operational tasks such as event and database management so your nonprofit can focus on technology changes.
• Ensuring Technological Stability: enSYNC advocates for you by fostering strong relationships with technology providers and encouraging regular solutions reviews. By understanding your existing technology infrastructure and potential vulnerabilities, your nonprofit can proactively address changes and ensure a smooth transition during M&As. “Clients who understand their existing technology and process infrastructure are poised to weather technology transitions with less stress and better results,” Davidson says.

How to Effectively Engage in Long-Term Technology Planning

Organizations should look for solutions that fit their requirements today while setting them up for success in the future.

• Be sure the technology can scale with growth or changing needs.
• Look for vendors that regularly update their products.
• Consider how technology integrates with existing systems and offers APIs that adhere to open standards.
• Visit online marketplaces to review available system extensions and add-on products.
• Verify that vendors comply with relevant data and industry standards, such as the General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA).
• Ensure pricing accounts for all potential costs, including implementation, training, and ongoing support. Consider additional fees that may be required.

What Other Future Trends Should Nonprofits Prepare for Outside M&As?

• Anticipate Challenges and All-In-One Solutions: Consolidation within the industry leads to fewer choices but often results in more comprehensive solutions that combine the best features of multiple platforms. For nonprofits with less robust requirements, these enhancements may be rejected for budget-friendly solutions. Forward-thinking nonprofits will plan for price increases and find opportunities to improve efficiencies with these advanced features.
  Standardized Solutions: Expect a move towards more standardized technology as larger vendors develop and promote best practices. Customizations, if available, will come at a higher price. 
• Subscription-Based Services: More technology solutions are shifting toward subscription-based services as they typically provide more frequent updates and increased data security, improving the user experience. Your nonprofit must identify who will deploy these changes internally and externally. For some smaller organizations that have not stayed up to date with technology, this change will require them to increase their budgets.
• Embrace AI: For long-term success, nonprofit organizations must actively adopt AI, learn to adapt to AI trends and develop AI usage strategies in their operations and policies. By leveraging AI, nonprofits can streamline processes, enhance decision-making, and showcase innovation, making them more appealing to potential partners or members. Integrating AI can also lead to more efficient operations, a key factor during evaluations.

What strategies can your nonprofit implement to stay ahead of these future trends and remain competitive in a consolidating industry?

Transform Challenges into Growth 

M&As bring both challenges and opportunities for nonprofits. Your nonprofit can navigate these changes by proactively managing vendor relationships, investing in technology and training, maintaining financial flexibility, and leveraging the expertise of consultancy services like enSYNC. 

enSYNC is committed to supporting your nonprofit through these transitions, ensuring you continue to thrive in an evolving landscape. With the right strategy, your nonprofit can transform merger challenges into growth opportunities. A proactive approach is essential for long-term success. Start preparing now — contact enSYNC for expert guidance on your technology stack to thrive in an evolving landscape.

Resources:
Community Brands is now Momentive Software | Community Brands. (2024, July 9). Community Brands. https://www.communitybrands.com/company/news/community-brands-is-now-momentive-software/