Navigating Pre Go-Live Software Licensing Fees: A Shift in Approach Is Needed

For many nonprofit organizations, the task of implementing new Customer Relationship Management (CRM) or Enterprise Resource Planning (ERP) software is a significant undertaking requiring time, energy, and, most notably, a heck of a lot of money. As anyone reading this knows all too well, configuring and testing a new system before it's fully functional often extends to nearly a year or longer.

A key financial challenge for these projects is the practice of software vendors requiring nonprofits to start paying license fees from the day the contract is signed. This means that during the first year, much of a nonprofit's licensing costs seemingly vanish into a black hole, yielding no benefit. The typical implementation only requires a handful of licenses, and although there are occasional opportunities to negotiate these initial licensing costs, most software vendors maintain a rigid stance – some more so than others.

This raises the question: wouldn't it be more beneficial for vendors to adopt a pay-as-you-go or usage-based billing approach, especially for nonprofits? By charging only for licenses used during the implementation process, vendors could alleviate nonprofits' financial strain, thus encouraging more organizations to upgrade their systems and ultimately reaping the rewards of enhanced capacity and capabilities.

One vendor, Microsoft, is a leader in this area. Currently, I'm involved in a large-scale nonprofit CRM and ERP implementation project with Microsoft's Fundraising & Engagement, Business Central, and Dynamics 365 Marketing applications. Microsoft's procurement process for enterprise applications is exceptional, as the project only pays for licenses we need during the implementation and not for the additional 250 seats required post-launch. The savings are substantial, demonstrating Microsoft's commitment to providing solutions as needed, when needed.

Moreover, Microsoft's nonprofit pricing strategy offers genuine value. The overall cost to my client for state-of-the-art CRM, ERP, and marketing functionality is significantly lower than the pricing for any comparable suite of nonprofit solutions.

What surprises me is that Microsoft doesn't highlight their licensing strategy more prominently in its marketing efforts. Their approach sends a powerfully positive message to the nonprofit community. By publicizing it more effectively, they could assure nonprofits that they are not just another software vendor but a partner committed to empowering organizations to maximize their resources and mission impact.

If other software vendors had the same approach to nonprofit pricing, it would allow these organizations to better serve their cause without being bogged down by the financial strain of premature licensing fees.