How stable are core upgrades? I've used Joomla in the past and found that some upgrades and modules have created havoc for stability? The security risks also seem greater with OS CMS solutions.
Regarding this item, I would say that for the most part the core upgrades are fairly smooth. There are always a few glitches here and there, as I know with 4.5.1, 4.5.2 there were a few recently and the same again back in the 4.4.0 release times, but for the most part that is to be expected. As for the imact of third-party modules, yes that is a risk with DNN as it will be with ANY system that allows third party modules to be installed. I typically mitigate this risk by running test upgrades on backup versions of my sites before running the actual upgrades, this is a business practice I recommend to EVERYONE as it is the only really safe way to upgrade.
How important is it to have a strong IT team to help build modules, templates, CSS, etc. We have a small IT team (of 1) and while he can program various things what kind of learning cuve is he facing?
To build skins, containers, and CSS I don't think it takes anything too special, I work with many graphic designers that do not have any .NET experience and they are some of the best skin creators out there in my opinion. Building modules is something where a familiarity with .NET is going to really help, but I also know of programmers that have used DotNetNuke as their entry point into the .NET world as well.
We are wanting a system that can be used out of the box with tight integration with other features without needing to go to outsite sources. What issues are typical when adding 3rd party extensions? What measures are in place to ensure compatibility and how is this monitored?
When installing modules there is some checking for compatibility, however, once installed you will quickly identify if a module is not compatiable with your version of DotNetNuke. Typically module developers are VERY specific about which versions are supported and other dependencies of that nature. DNN does have a good "Module Definitions" section where you can add/update/remove modules from the system and it does a good job of providing feedback. Skins are slightly different, there is a "preview" function that allows you to test your skin if you have an improperly built skin and you accidentally apply it to the entire site you can end up causing a site wide error, luckly there is an easy way around that issue that you can find blogged many places on the internet including at my website http://www.mitchelsellers.com
I guess to summarize the above, DNN does have some facilities in place to "protect" the site from third party modules, but really the best defense is good business practices on your side to test all modules before deploying them to a live site.
Most project teams I've interviewed use an OS CMS when there is a very limited budget or the project is driven from the IT department and not when there is money to spend or when it is initiated from Marketing. Why is this typically the case? I am also using these forums to guage that impression as well. Very little discussion about marketing focused topics.
In my experiences the main reasons I see individuals leaving DNN for a paid solution is when they are looking for something with solid work-flow processes and approval queues for content deployment. DNN is an Application Framework and does not have those work flow items built into the core, you can get some of that functionality using third party modules, but then you encounter costs there as well. I also find that typically in the business world many people, especially those in marketing believe that is something is "Free" that it isn't worth their time, at least that has been my experience when trying to pitch DNN as a solution for a few marketing departments. The common argument is "It is free it must not work" and that is just not true, but it is a common thought among business people. Is DNN perfect, no it isn't but by leaps and bounds it is improving with every version. The only other reason I have noted my clients desiring a different solution than DNN is if they are also looking for a solid CRM solution as well, for their client managment, this is another thing that third party companies offer as modules for DNN, but some are looking for DEDICATED CRM solutions as well.
That is at least my $0.02 on the topic...(ok maybe this was more like $0.04)