In software systems, as in many other areas of business and life, there is the old maxim, “You get what you pay for.” This maxim wisely advises us not to “cheap out” – to try to get by with less than what we need to do the job. It also warns us of the costs and consequences of making such a choice.
Getting by on the cheap may be a bad plan, but paying a premium price is no guarantee that a system will meet expectations. My book, The Tech Advisor, gives numerous examples of paying too much for a system and failing to get the value expected. In fact, the price you pay to get the same approximate value may differ by orders of magnitude! While the book provides many examples, I will highlight a few of the major ones in this blog.
What are some things to look for, when you want to identify what is really cost-effective?
Make sure your new software is really an upgrade.
All too often organizations spend a great deal of money (sometimes millions) on new software that really doesn’t end up working well. To get an idea of this, consider how you sometimes feel as an end-user, when one of your favorite websites undergoes a facelift, and features you rely on are removed or made very difficult to access. You know the company spent a great deal of time and money on it, but why didn’t they ask you what was important?
Why does this happen? For a number of reasons – but here are three likely candidates:
- The system was designed without adequate representation of all the affected constituents, both inside and outside the organization. An example given in the book was some “upgraded” hotel check-in software that caused numerous problems for the desk clerks resulting in long lines at the counters. The needs of neither the desk clerks nor the guests/customers were adequately represented in the development of the system. Managers, designers, and developers can be truly out of touch with the larger community.
- The software was “sold” to the organization by a vendor or even an internal group, but the purchasers did not fully understand what they were getting — and the implications for everyday process and integration with other systems.
- The bait-and-switch tactics of some vendors and consulting companies can also be a problem. The “heavy hitters” show up only at the beginning of the engagement, but most of the system development is left in the hands of junior people who lack experience and knowhow.
Don’t buy what you already have.
Companies sometimes buy new and expensive systems, without realizing that they already own all or most of the capabilities they are seeking. Operating systems and large packages often come bundled with all sorts of powerful tools. The book gives the example of small firms buying expensive document management systems (which in some cases proved to be nothing more than a big headache) when they already owned Microsoft SharePoint as part of their Windows Server.
Today there are many open source products that are very capable and are free of charge. Spend money on what you really need, not on what you don’t. For businesses, the best software investments will usually involve focused attention on what is unique in their processes, rather than on some grand system. If you need to make a cross-country trip, invest in a plane ticket before you start pricing deluxe motor homes.
Watch pricing in product lines and Software-as-a-Service.
The book covers several examples. Price structures may make it likely you will incur upcharges more rapidly than you might think. Perhaps you are a small company that buys the “small business” edition of a product, only to learn that there is a critical feature only available in the “enterprise” edition, which costs considerably more.
Another example was found in a Software-as-a-Service system (SaaS). The product provides two major services and comes with a low entry price and seemingly a generous amount of online disk space. However, most of that disk space is allocated to one service that is likely to remain relatively small; whereas the other service, where very rapid expansion would be anticipated, is allotted less than 5% of the total disk space. Reasonable additional disk space is far more expensive than the initial subscription, and can never be reduced even if you archive off old data.
Sometimes it is very easy to sign up for SaaS software, but the price structure may be buried deep in a website. When it comes to such purchases, it is caveat emptor.
Software product lines and SaaS can offer excellent value, and SaaS promises tremendous boons. However, you must do your due diligence and check prices carefully. Project your needs forward, and compare them to the price structure. There may be price changes and increases, but if the structure appears sensible, given your current and anticipated future needs, that is a positive sign. Once your business makes a commitment, even if it is only to an SaaS system, it is neither trivial nor inexpensive to make a change.
There is no substitute for good technology planning.
Good technology planning will help you find the best value in software for your organization. A tech advisor may be able to help if you don’t have enough expertise in-house. Regardless, be aware that the software vendors will not necessarily tell you all you need to know. The “wow” demonstrations and the glitzy marketing materials may be misleading. You need to learn the rest of the story.