Supporting serious software investment

The language of IT is not only peppered with technical jargon and the eponymous TLAs (three letter acronyms), it also afflicts the purchasing processes. The term ‘big iron’ is not just for the benefit of the ‘tin-shifters’ involved in selling computer hardware, it also helps those ‘server huggers’ and ‘bean counters’ in control of IT budgets understand they are getting something substantial.

Indeed, when open systems burst through the cosy proprietary computer industry in the 1990s, many buyers were a bit put off to be told that their relatively few-year-old IT hardware systems, which were the size of a couple of bulky washing machines, could easily be replaced by a ‘pizza box’ whose performance and capacity would also provide future proofing for up to a decade or so.

Despite the frequently encountered resistance to spending any budget, IT managers generally find getting approval to buy hardware to be easier than software. Those in control of the purse strings as well as the IT department itself want to see something tangible for their large-scale investment. That software covers so many things from the hidden depths of operating systems, through application servers and databases to the applications users recognise does not help make its investment case.

Software may also suffer from being seen not only as a bit ephemeral, but also somewhat simpler than hardware, which after all needs to be fabricated in sheets of silicon, hot dipped in solder, cased in steel and eventually enveloped in plastic (thankfully less often beige than in the past).

Surely, software can be knocked up in someone’s bedroom, as most people outside of the software industry have a young niece or nephew who has been writing programs at home in their spare time. And it is so easy and cheap to copy, so perhaps is not worth that much after all?

This hobbyist view of software dates back to teenage geek owner of early home computers and right up to present day image of casual software developers creating mobile apps at home. In reality the industry is massively more complex and sophisticated, despite never quite living up to the term ‘software engineering’ coined in the 1980s.

Software is complicated and takes time and effort to get right, even with the latest moves towards more rapid application development and shortening the develop/test/deploy cycles through the processes of ‘Dev-Ops’. Despite being a virtual product, good, commercial software with sufficient industrial strength to run a business costs real money.

Software is just as worthy of investment, yet has been viewed differently to hardware, with many companies also finding it difficult to fund through a financial package as often many finance providers will also view software as separate and different.  There is no reason why this should be so, and there are opportunities to spread the cost of software investment through external financing, yet too often companies will try to cut corners in order to keep software costs down. These approaches are mistaken when alternatives allow software investment decisions to be made for business rather than spurious financial reasons.

So what are the potentially harmful software investment avoidance practices that might be dealt with through proper financing?

Delaying software upgrades. While many vendors might rightly be accused of capitalising on maintenance and frequent major re-releases of their software, there comes a time when delays will simply increase long term costs and could expose an organisation to other problems. A recent case in point has been the procrastination by many companies over leaving behind Windows XP, and the other major one is Windows Server 2003. There will always be extra costs incurred and mass upgrades should not be made too early to avoid making mistakes, but leaving it too late is costing more, opening up security risks and making staff less productive because they have to use out of date software.

Delaying hardware upgrades with software dependencies. Often a problem where companies struggle to find a way of financing both the hardware and software elements of a major upgrade programme. Rather than delaying the whole process, which will have been started for good business reasons, there is a need to find a way to finance the whole project.

Bearing down on license numbers. Restricting licenses on some arbitrary basis simply to keep software costs down is a false economy. While some software products may be available through a more flexible software-as-a-service model that allows for incremental users, not all will be. Forcing users to work less efficiently because of restricted access to certain software products, rather than what is best for the business, is false economy. Spend all the way up to the numbers required, look for opportunities where other users could be added to the mix and there may also be ways for the business overall to gain from the economies of scale of enterprise or site licenses.

Good enough? In many areas of software there are products that approximately compete or overlap in certain functionality. They may on the face of it appear comparable, but without meeting the complete set of user or business needs. Those without in-depth knowledge of the requirements   may assume they are good enough, especially if they are cheaper than a more functional alternative, which could end up causing problems for the business or leaving users frustrated and less productive. Good business value is returned from investing in what is needed rather than cheap and cheerful alternatives.

Hardware may appear for many to be the driver for IT investment, but it is software that delivers the business value in the end. Getting the right software to do the job is far more important than reducing the cost of investment. It needs to be fully and appropriately funded, and can be externally financed just like hardware to ensure that the right tools are delivered, at the right time, to get the right business outcomes.

For some thoughts on how to finance the changes required to address an enterprise software strategy as a whole, download this free report.


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