Take a holistic view of software costs

You need to make savings, but remember that the cost of software is not limited to the price of the licence

You need to make savings, but remember that the cost of software is not limited to the price of the licence

With the world teetering on the brink of recession, budgets are tight and many firms are demanding cutbacks. One area where IT departments have been looking to make savings is software costs, writes Ross Bentley.

Of course, software costs have always been a potential issue. "In the past, people have lived with it and have not been so focused on cost because there have been such significant gains to be had," says Chris Purrington, UK managing director of software development tools supplier Borland.

"While the gains are still there, the amount of money available to invest has been severely curtailed of late."

Purrington says it is time companies took a more holistic view of the cost of their software. He says the cost of software is not just limited to the price of the licence. There are a raft of criteria that need to be considered before a firm can pin down the total cost of ownership of its software.

According to Purrington, there are three distinct areas where the main software costs occur:

  • The cost of acquisition.
    This includes licence fees, hardware purchases and the costs of developing and integrating

  • The cost of implementing and deploying applications.
    This encompasses such overheads as the specialists needed to carry out the implementation, the testing of networks and additional hardware costs

  • Maintenance costs.
    This is the price of keeping the system up and running, limiting downtime and preventing the inevitable cost to the business if the application crashes.


"The cost of developing software is an area where companies are always going to look closely," says Purrington. "They must look at the price/performance ratio of using development tools. While there is an up-front cost, you are making the developer more productive, enabling them to work with wizards and drag-and-drop techniques. It may even allow a company to use a less expensive developer - empowering them through tools to raise their skill levels."

Purrington says companies should also have an idea of how their applications will scale up as use of the system increases. This will allow sites to roughly budget for increases.

"If you are growing your application you can predict the cost involved," he explains. "For example, if you are running 10,000 transactions per second on three CPUs, then you should be able to run 60,000 transactions per second on 24 CPUs - you already have a good idea what the ongoing costs are going to be.

"But while the cost of development is an important cost, the potential cost should a system fail or crash is always going to be huge. Once a company begins to rely on an application, it will grind to a halt when that application is no longer available, so ensuring the robustness of an implementation is vital.

"Building software and hardware and management capabilities into the application and including such functionality as load balancing and redundancy may add extra cost but they will pay off over time.

"The risk of having no business continuity plan in place is too high a price for any firm to contemplate."

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