It’s a question of Shakespearean proportions. Buy and licence a commercial application and bend your organisation into it or build your own, one that will be a perfect fit for your current business model and grow and change as you do. With the emergence of ASP (application service providers) there is now a third choice, don’t build or buy – but simply rent it over the Internet.
Many companies pursue the buy option because it will be easier and faster than building custom software. Nevertheless, buying the right software is a project in itself and can be just as time consuming as the installation. When buying software, it is often difficult to determine which packages you want to look at seriously. Marketing literature is often vague and unhelpful and if you’re lucky, you can download or access via the internet an evaluation copy either by paying a nominal sum, or by providing personal information so that their marketing people can contact you. If you’re unlucky, you’ll have to negotiate with them to arrange demonstrations, usually which the vendor will want to lead.
In this paper we explain some of the key components to buying, building or renting software.
Key points to consider when buying “off the shelf (OTS)” software and what to look for after you’ve made your choice.
Our experience has proven that successful IT projects begin with a strong senior management commitment, followed by selection of the right software, implemented well.
There are now many OTS software products that service a magnitude of industries. In these crowded marketplaces, it is important that significant due diligence is done to identify and evaluate the OTS solutions that are available. This can be a very time-consuming and complex task, particularly if you do not know the landscape well. Most software companies provide free evaluations or will visit you to demonstrate the capability of their software, so make sure that you form a good cross section of future end users to test the functionality of the evaluation versions. Do not make the mistake of excluding end users. There is no worse feeling than discovering post deployment of an OTS software application that end users do not find it intuitive and refuse to use it.
Once you’ve settled on a software package, ensure you fully understand the licensing agreements you’re signing up to. If you use a license server, will you be unable to use the software when that server is down? The last thing a serious operation needs is another point of failure. If you’re licensing server-side software, do you need another license for a hot spare? What if you want to do testing on a separate server? What happens if the license is tied to some kind of hardware ID and a disaster forces you to restore from backup onto different hardware? How often to you need to re-purchase the licence?
Buying off-the-shelf software should give you most of the functionality you want at relatively low cost, but there’s always some functionality you wanted that isn’t there. Often there are simple changes that could make the software much more suitable for your task. Measured over the lifetime of the software, such changes might save the users a lot of time & money, a key decision during your selection process is to understand how the software house can deliver these changes to you, whilst maintaining the underlying core system.
It is likely that any major software install is going to be key to your organization for many years to come, it’s important that the software you have purchased and configured for your organization is going to be supported and enhanced by the organization you purchased it from and it has a proven stable road map to ensure you’re not left with obsolescent programs and that changes you may have paid to be made to the core are not discontinued a few months later! People who buy software because they think it will protect them from obsolescence often get a rude surprise. This happens because bought software, if it stops generating enough revenue to support marketing, legal and other departments necessary to run a software company, dies completely. It’s also unlikely that another company will pick it up.
It may make a whole lot of sense in choosing a vendor who is responsive and willing to work as a partner to your business. Ask the right questions at the beginning. It is all part of doing your due diligence.
The decision to build a software application in-house becomes almost a knee-jerk reaction when you have access to your organisation’s development team.
With in-house developments there is a tendency to skip the due diligence phase and many times the analysis phase too! Most times, in-house projects proceed without any formal financial analysis and many view the software developers as already paid for, so their salaries are considered sunk costs. This is a very incorrect assumption as it assumes that you have a team of programmers being paid to sit around and twiddle their thumbs.
Generally the arguments for internal developments are as follows, but these should be seriously challenged:
- We know your company’s processes better than anyone else
- We can develop precisely what we need
- We have direct control over future development and can react quickly with modifications as the business changes
- When we build it, we have a complete understanding of how it works
Build by Outsourcing
If you have access to a development team within your organization, then you should perform an in-house versus outsource analysis to determine which build option is more attractive for your particular business challenge.
The advantage of working with an outsource vendor is that your management does not have to communicate deliverables directly with members of the development team. The communication gap between your management group and the vendor’s development team is bridged by the vendor’s software designers or project managers who are experienced in communicating with management types and they also possess programming experience so they can liaise with both groups fluently. The design and project management layer often times is missing with in-house development projects in organizations that do not develop a lot of software in-house.
Why buy or build software when your company can rent it over the Internet? More recently that’s the question many business owners are asking as they seek ways to cut costs.
If you have high-speed Internet access and you’re in the market to replace software, it’s a great time to consider the renting of software, from simple applications such as email and word processing through to complex transactional processes and document generation.
Renting software allows access to ‘big boy software’ at a fraction of the cost. Many software applications are available as online subscriptions. By renting software applications, businesses can save on buying software and transfer the expense of ongoing maintenance and software updates to a service provider.
Contact us for more information of software as a service and how Orpheus can help with your next software selection project.
Complex software decisions are always difficult to make. Making the wrong choice for your situation could have huge implications on your organization and your career. Do your due diligence so that you are comfortable with your choices. Even if your chosen path turns out to be the incorrect one, you can save your career by showing your executive team that due diligence was performed and that at the time that the decision was made, your organization made the best decision possible given the information.
If your business challenge is fairly generic in nature, you do not foresee a lot of customization to make the product fit your organization, the costing analysis looks attractive and you can identify OTS software products on the market that would fit your bill, it probably makes the most sense to look at a COTS software solution.
There is no silver bullet here. Invest the time necessary to make an informed choice. The key to a sound financial analysis that supports your decision is to make sure you examine all costs for the entire system lifecycle and make reasonable assumptions where concrete figures are not available (see our ROI white paper). Arm yourself with good solid information and analysis as you may find corporate politics playing a big role in determining how you proceed. Other stakeholders may have their own agendas for supporting a different path to yours, so make sure you can back up what you say.
For more information on build, buying or renting software or to see how Orpheus can help with your business challenges please visit us at www.orpheus.net.au