History tells us that the UK voluntary sector and American fundraising packages are not compatible. But Niroo Rad, chief executive of the latest firm to take its chance on British shores, tells Ben Cook that things are set to change.
It seems appropriate that Niroo Rad has chosen the Institute of Directors in London's Pall Mall as the place to launch ASI Europe's assault on the UK not-for-profit software market. The paintings of navy admirals, army generals and RAF marshals adorning the walls give the occasion a distinctly military flavour. As chief executive of ASI Europe, Rad knows that, like those battle-hardened heroes of yesteryear, he has a fight on his hands.
ASI Europe was formed in April 2004, when the US company ASI Inc acquired the Suffolk-based firm Caspian Software, of which Rad was managing director.
Since then, ASI Europe has invested £1.2m in improving its capacity for product development and consultancy services in preparation for its drive into the UK market.
"ASI started with expansions into Canada and Australia, but, strategically, the UK is the most important," Rad says. He views it as a particularly lucrative market because he sees the British as especially ardent when it comes to supporting charities. "Great Britain is great at generosity," he adds.
Rad is under no illusions about how difficult it will be for ASI Europe to crack the UK market, however. "The UK is a graveyard of failed US firms," he says. "But we're determined to provide a local product for a local market, with a local culture that supports it."
US products have struggled to become established in the UK - the Computer Software Group's difficulty in introducing fundraising software package TIMMS being a case in point. However, Rad believes ASI Europe's independent user groups - which give feedback on the company's fundraising software package IMIS - ensure the company is well aware of its UK clients' needs.
"We will succeed because we are tuned into the UK market," he says.
Rad is confident that IMIS will prove a hit because, he argues, the package is affordable - it will cost each charity between £12,000 and £20,000 - and easily serviceable. "With IMIS, you can put information on the website without 'techies' getting involved," he says. "This solution minimises the demand on services." He adds that an easy-to-use software package is important because of the not-for-profit sector's high level of staff turnover.
Another of the system's strengths, according to Rad, is that, along with what he calls "bread and butter" features such as fund and donor management, the package is able to create e-communities in which charities develop more personal relationships with their donors via the internet.
Rad believes this will become an increasingly important software function as more charities enable donors to contribute funds online. "The bottom line is that you want to raise more money for your cause," he says. "When you allow people to donate online, you're competitive."
ASI Europe currently has 52 not-for-profit sector clients - the ASI Group has 2,500 worldwide - and users of IMIS in the UK include the British Pharmacological Society and the Quilters' Guild of the British Isles.
But ASI Europe is gearing up for further growth. Rad says: "Since the merger with Caspian Software, we've been building a larger infrastructure - we're recruiting more people to provide consultation and development capacity."
He insists that ASI Europe has made a long-term commitment to the UK market, and is not here on an opportunistic whim. "Although we are pursuing the latest technology, we're not a fashionable company and we don't jump in with both feet," he says.
Rad admits it is difficult to assess how much more charities could raise as a result of using IMIS, but he estimates that it could lead to a 30 per cent increase in productivity. "A lot of charities spend time doing necessary but unproductive work," he says. "With IMIS, charities can spend more time pursuing causes rather than, say, putting a mailing together."
He believes charities in the UK are failing to fully exploit the potential of IT in their efforts to raise funds, and that they should be using the internet more effectively to reach donors. "Small charities have not looked at IT in a strategic way," he says. "The problem is that charitable organisations don't have the technology to reach their donors through personalised information via the web."
Rad says many charities could increase their fundraising potential by using better software. He is confident that IMIS will solve many of the IT problems faced by UK charities and that, consequently, ASI Europe will thrive in a market that has seen the demise of other US products.
"The reason we are making a significant financial investment is because we are confident that we will be able to provide better solutions to organisations and have more of them as customers," he says. "IT is an enabler. It can help the sector achieve its goals, and shouldn't be a chain around its neck."
ASI Europe faces stiff competition in the sector, from a number of well-established software providers:
Key not-for-profit sector product: Raiser's Edge
Clients include: British Heart Foundation, WaterAid, ChildLine, Intermediate Technology Development Group
Chris Todd, vice president of sales, is not surprised that ASI Europe is looking to expand into the UK market. Blackbaud's experience shows that US-based not-for-profit software providers can thrive here. "ASI's entry is a reflection of the attractiveness of the UK market," says Todd.
"The greatest challenge is to make sure you understand the unique needs of the market - fundraising is different from country to country."
Todd says direct marketing has evolved much further in the UK than in other countries. "At a basic level, we see a different emphasis on the type of gifts," he says. "The UK market is much more sophisticated." Todd says this is demonstrated by the fact that, in comparison to charities in other countries, UK charities receive donations from individuals more frequently. "There is a lot of emphasis placed on the internet as a fundraising vehicle," he adds.
Although Raiser's Edge is the primary software product Blackbaud offers the not-for-profit sector, the sophistication of the UK market has prompted the company to develop other products to meet its clients' needs. NetCommunity, a product designed to enable clients to build more personalised relationships with their donors via the internet, was created in response to the demands of the UK market.
Blackbaud, like ASI Europe, sees significant potential for expansion in the UK. Todd says: "There is room for considerable growth in the UK, and we are continuing to invest in our UK operation. It's an evolving market - some players are leaving and some, like ASI, are coming in."
COMPUTER SOFTWARE GROUP
Key not-for-profit sector product: Charisma
Clients include: RNLI, Battersea Dogs Home, RSPCA
Simon Fowler, not-for-profit division managing director, is not worried about the entry of ASI Europe into the UK market. London-based CSG's own experience in trying to establish a US product, TIMMS, leads Fowler to believe that ASI Europe will face an uphill struggle to win a decent market share.
"It's hard to get US products off the ground in the UK," he says. "We tried it with TIMMS, but you don't have the flexibility. The people who control the product are sat in the US."
Fowler believes UK charities will be reluctant to take a chance on a new piece of software when there are a number of more established products in the market. "The not-for-profit sector is conservative and risk-averse," he says. "Why would they risk buying an American fundraising system when there are half-a-dozen really good UK-based ones?"
Fowler sees plenty of opportunities for his company to expand in the UK. "Our policy is to continue to look for acquisitions as the market needs consolidating," he says. "The potential for this market is very big - some charities don't use IT in the best possible way. Web-integration is under-utilised."
Key not-for-profit sector product: Progress
Clients include: Mind, Action for Blind People, Sight Savers International
Robin Fisk, managing director of UK-based Fisk Brett, welcomes the entry of ASI Europe into the market, and argues that it benefits the sector as a whole. "There will be competition around," he says. "It's good for the market, because no one wants limited choice.
Can an American company make it in this market?
Well, Blackbaud was one. There's enough room for several successful players."
He adds that, although many IT companies would not find the not-for-profit sector appealing because of the smaller-than-average size of the deals, software providers that focus solely on the not-for-profit sector are able to flourish.
He says: "The industry at large would not see the sector as attractive enough - in terms of the number of zeros on the end of a deal - but there is enough room for specialists."
Fisk says the not-for-profit sector is becoming more astute when it comes to acquiring software: "Often the reason that a system fails boils down to a bad purchasing decision. But charities have got better at buying, and there are improved invitations to tender."
ASI EUROPE: THE FACTS
- Formed in April 2004, following the acquisition of the UK-based Caspian Software by the US company ASI Inc
- Chief executive is Niroo Rad, who founded Caspian Software in 1990
- IMIS is ASI Europe's product for the not-for-profit sector - the software includes features for fund management, donor management and the creation of e-communities
- The company has a total of 52 not-for-profit sector clients, including the Women's International Zionist Organisation, the British Pharmacological Society, the Institute of Management Services, the International Psychoanalytical Association and the Quilters' Guild of the British Isles.