Tom DeMarco has an excellent essay on Why Does Software Cost So Much? it is a view from within the software industry, replying not to the question, but saying that it is in fact not costly. I agree with his thoughts. But it is fair enough to look at another scenario where people ask the same question after using the software. Especially when this is asked by everyone from high-ranked corporates to the average Joe trying to build a music library using his PC.
There are various reasons, and I wil try to present them from the user’s end.
ROI of that piece of software
I know, the regulars here will kill me for repeating this for the nth time. But ROI seems to come up whichever aspect of software we discuss. The question to ask here is on what basis do we buy a piece of software?
We buy it because our competitors bought something to work for them. We buy it because the marketing guy said it had tons of features. We buy it because it helped company XYZ save dollars. We buy it because it is the next best glamorous thing after acquisitions. We buy it because we want to show our stakeholders that we invest money in software. We buy it because we want a new toy. We buy it because our friend told us that is the next big thing. We buy it because Steve Ballmer (I know, I know, it can be anyone. But this is so contextual!) said it is the most productive thing.
Unfortunately, none of these come to help you when we try to find out if that piece of software was really useful. What helps is understanding our needs and our requirements, and possibly even our process. And I think we know this. But we still do not do it. Why? Because it is difficult. Like many other metrics, counting features and measuring others’ numbers is easier than trying to find out what you need. More importantly, it is not something that can be shown off as investment in software.
The primary reason, I see, for the question is an attempt to avoid working on the ROI.
What does it do?
Like many other deals, with software, we need someone who can understand software. Not just the jargon, but someone who can tell us what that piece of software exactly does. The software market is inclusive enough to provide you Rs. 1 Lakh ERP as well as one which will ask you for millions of dollars. Which one to pick? Even if we look at the features, they have the exact same count and the same words. To make matters worse, there is even a free one available.
We need someone who can assess a piece of software and tell us what it does. Which includes not only what it functions as, but whether it is suitable to our business and its dynamics. We need to know what to expect from the software, and features do a shoddy job of that. We need to know how it will make a difference to how we work. We need to know not if the software works, but if it works for our business.
We Still Have To Work
A piece of software can hardly replace people. It can, at the best, reduce the number. But it is worthless without people. And it is worthless without people using it right. There are many of us who believe that after spending a certain amount of money on buying a software, you can go home and watch a ball game. On the other hand, initially you might have to work more to understand how to use the software. It is also quite possible that learning software might entail learning standards and learning processes. Inspite of tons of research in making a piece of software usable and intuitive, there is some learning curve in understanding how to use the software and how to use the software for business.
Even if we buy a full-featured PC, we still need to get (buy or steal) the songs to build a music library, or even the software to build the library.
Only after you can train your software to work for you can you delegate your work to it. However, you still have to be on the guard to handle when there are disruptions. Software, to work right, is dependent on many things, from hardware to air coolers to energy. It is important to understand that we can only delegate our work to a piece of software, not make it responsible.
Does this mean that buying software is dangerous? No this means that buying software is not same as buying a shirt. Because cost of the software is not only money. To really gain from it we have to pay in terms of time and effort as well. Only then will the software pay for itself, probably much more than that. If you are not ready to do that, be ready to keep the software just on your shelf and wonder why it is expensive.