Technology Lessons from Wall Street for Nonprofits:
Why Best-of-Breed is Better Than All-in-One

By Leo D'Angelo

About 15 years ago, while working as a technologist for Fidelity Investments, I was asked to help build the firm's new equity trading floor – a mammoth technological undertaking involving software, hardware and networking.

Up to this point, most major investment bank trading floors had been all-in-one solutions provisioned by the same company that provided the software, hardware, etc. The building process was usually excruciatingly painful, outrageously expensive and enormously disruptive to the core business of the investment banks. Although the end-result was integrated, it often lacked the specific features that brokers, managers and executives needed to be more effective at their jobs.

Recognizing the shortcomings of the typical trading floor, Fidelity Investments’ Chairman and Founder, Ned Johnson asked us to build one that would do the following:

• Cause no disruption to the daily business of money managers and investment brokers (meaning 0 percent downtime);
• Meet 90 percent of the current requirements and provide a foundation for implementing future requirements; and,
• Give Fidelity the flexibility to “own” its future by being able to add “plug-and-play” solutions for specific needs in a modular fashion in any area (including as-yet-unforeseen areas of the investment banking business).

At first, it appeared that Johnson’s directive was going to make my job very difficult because it almost certainly eliminated all of the existing single vendor solutions. However, by selecting a flexible foundation and utilizing the promise of object-oriented (plug-and-play) technologies, we were successful in integrating the best features and functionality of multiple vendors to provide a highly integrated, infinitely scaleable, world-class, best-of-breed trading platform.

The Fidelity project turned out to be a huge success and even revolutionary in the investment banking world. Not only was it completed in less than 12 months for less money than any single quote we had received from the all-in-one vendors, but we also were able to: 1) deliver deep levels of functionality to each department; 2) own our solution as opposed to being held hostage by an all-in-one vendor; and 3) receive superior support from our vendors because of their depth of knowledge in specific areas. In the long-run, Fidelity has thrived with this modular model and, over the past decade and a half, probably has added or replaced 30 percent of the total floor solution to meet new and shifting needs of the business without having to go through a “fork-lift” change or a single minute of down-time.

How does this example from one of the world’s leading investment banks apply to the organizational and relationship challenges that nonprofits must solve? Just like an investment bank (or really any business), a nonprofit implements software and technology solutions because “time is money” and automation of business processes improves efficiency, saves time, and/or generates more revenue. Systems help achieve those results – and the three most likely areas where most nonprofits have (or should have) systems are accounting, constituent relationship management and online tools.

It is vital to the continuity of a nonprofit that those systems are integrated. In today’s multi-relationship and multi-channel world, nonprofits have to manage donors, customers, volunteers, subscribers, listeners, attendees and friends across direct mail, telephone, Web sites, email, radio/TV, events and personal contact. A nonprofit can’t afford to have meaningful giving history about important donors trapped in an online database – where it is inaccessible – at the same time that the organization is sending event invitations to constituents, including those donors, through the mail.

But there are two types of integrated solutions – tightly coupled and loosely coupled – and choosing the right one is critical. Tightly coupled solutions, referenced above, are built and owned by the same company, have strong integration, and are just like they sound – “all-in-one,” meaning “all-or-nothing.” Although they provide an integrated solution, they do not allow an organization to pick the pieces of the solutions it needs and integrate them with other best-of-breed options.

In contrast, with a loosely coupled solution, a customer selects the individual components that meet the specific needs of different areas of the organization and then integrates them to form a “best-of-breed” solution. In this scenario, an organization must be careful to select solutions that have a history of integrating and use industry standard integration technologies. Best-of-breed solutions provide deep functionality to each area of the organization, are easier to replace in a modular fashion as needs change, often cost less than an all-in-one solution, and put control in the hands of the customer, not a single vendor.

These were all keys to the success of the new trading floor at Fidelity and they are the same reasons that MPower partners with selected vendors serving the nonprofit market such as Convio. MPower’s market-leading constituent relationship management (CRM) solution is very strong at multi-relationship and multi-channel communications, marketing, and fundraising. A couple of years ago, the company thoroughly evaluated whether to build and add online tools to its solution – specifically Web site content management, email marketing, and ecommerce functionality. Understanding both the needs of nonprofit organizations in these different areas and the power of Convio’s online solution, MPower quickly realized that it would be much wiser to partner with Convio to offer a best-of-breed solution than to try to replicate the online firm’s offering. That decision also has helped MPower remain focused on building out its core CRM functionality.

After Fidelity, as CTO of eFax (subsequently J2 Global Communications), the world’s largest online fax services company, I learned another important lesson about why loosely coupled systems are preferable to those that are tightly coupled. eFax likewise employed a modular strategy that incorporated best-of-breed products in a loosely coupled implementation with all the same benefits. Our successful system wasn’t simply due to integration of superior products – our vendors’ company structure and culture were significant factors, as well.

Whereas the all-in-one companies tended to be closed and proprietary, the vendors that were best-of-breed typically were open in their business practices and interested in solving problems in the easiest ways for customers. They provided more options for developing around their products by giving access to their: application program interfaces (APIs); other customers; and, in some cases, data model. Customer empowerment was their mantra – consistently, their business models were based on solving the customer’s most pressing problems, even if it didn’t mean direct revenue to them.

Although these days there is a lot of talk about “open” solutions, it’s important to keep in mind that there are degrees of “open.” Providing application programming interfaces (APIs) is technically the minimum requirement for claiming to be ”open.”’ However, truly “open” solutions provide APIs, documentation and a support and maintenance structure. While APIs are a good first step, if a company doesn’t provide support structures, its claim of being “open” is marketing spin, not a reality.

So, consider whether your organization needs to solve the same problems with technology that Fidelity and eFax successfully tackled:

• Cause no disruption to the daily business;
• Meet 90 percent of the core business requirements of each department; and,
• Own the future by being able to add plug-and-play solutions for specific needs in a modular fashion in any area.

If so, pursue a loosely-coupled strategy using best-of-breed solutions from companies that are fully committed to partnering with customers – companies that provide truly open tools and solutions that meet your organization’s needs.

About the Author

Leo D’Angelo is CTO at MPower, which provides the only full-feature, truly open source CRM software specifically for nonprofits. To learn more about MPower, please visit www.mpoweropen.com