When we purchase a piece of software – even as a service – we tend to think that the major expense is finished with the purchase price. But it’s not true. Whether you buy, build your own, or rent software, it always costs more in ongoing expenses than the initial price. Why?
Developing software is an expensive proposition. Not only do the people cost a lot, but they use expensive tools, and they always seem to need more time than was estimated at the front end of the project. So we should not be surprised that software sells for a lot of money, even when the vendor is selling a lot of copies.
But why does maintaining that software cost so much? Here are some of the reasons:
Software by its nature is constantly evolving. Not only do users ask for new and modified features, but the systems on which the software runs keep changing, so the software has to be modified to fit new environments. These factors guarantee that updates have to be released several times a year to keep things current.
Just because you bought the software doesn’t mean you – or the rest of your staff – know how to use it well. So you need people to study up on the software’s functions and then teach others how to make the best use of it. If you don’t, you won’t realize the full benefit that the software offers.
The worst thing that can happen to a software user is to learn that the vendor has gone out of business. So you want the vendor to do what it takes to keep making those updates and upgrades available. This means that the vendor also has to keep a stable of specialists assigned to the software product, even if it is no longer the mainstay of the vendor’s business. And those specialists have to aware of how customers are using the product, and what kind of support they need. So you’re willing to pay for that support, if the product is of great value to you.
When things go wrong, you need someone to call. If you’re a big enterprise and the software is integral to your operations, you’ll want that someone to be nearby – and on your own payroll. Otherwise, the person will not feel the urgency that you do when there’s a failure. So you, too, have to maintain a staff of specialists who keep up to date with the software’s features and failings, and know how to work around any problem that comes up.
Furthermore, when something fails, you typically don’t know whether it was caused by a software bug in the application, a system failure or something gone haywire in the infrastructure (such as the network). So you need IT specialists who can diagnose failures and then pursue the solutions no matter where the failure originated.
Can you avoid all of these expenses by using software in the cloud? Not so fast. You may save money by renting software that runs in the cloud, but you have to be ready to accept a standardized version of the software that everyone else is running, too. Or you’ll have to pay extra for customization, which leads you right back into the ongoing costs of maintenance.
You’ll also have to endure the changes that come when the cloud-based software vendor decides to upgrade the system – on the vendor’s timetable, not yours. So maybe you need those specialists in IT after all? And the cost savings of the cloud are not completely one-sided.
About John Levy
Excellent post, John
mvh
Thanks, Mike.