Software Cost vs.Value

By Adena Schutzberg

This Week in Cost vs.Value
This week Microsoft unveiled a "new" product: Microsoft MapPoint Fleet Edition 2004.It's not really new; it's the same old MapPoint 2004 product with new licensing.The new licensing was actually announced back in January.(I found this quote from an independent Microsoft magazine interesting: MapPoint "is one of the only revenue generating products to come out of the Web services initiative once known as 'Hailstorm.'")

In short, the reasons behind the "new product" were limitations on how developers and end-users could use the product to track vehicles.There were limitations on the number of vehicles that could be tracked and the time frame (real-time or near-real-time).In the new license, all of those limitations are gone, opening up the options.There's also a price increase: each seat of MapPoint that does tracking costs $750 vs.the roughly $300 retail price.Microsoft is trying to align the cost of the product with the value, among other things.

Also this week, one discussion group tackled the question of the value of maintenance payments.While such payments do generally provide technical support and upgrades, they also pay for continued licensing of the software.Ultimately, the question came back to the value of the software to the user.

The cost/value conundrum of software was explored in a presentation at the IDC Directions05 conference I attended last week.Amy Kontary suggested that there is a fundamental disconnect between the price users pay for software and the value they feel they receive.Users suggest they pay for far more software than they use (or benefit they see).Vendors feel they are often leaving money on the table.So, how can the two sides come together?

Coming Together?
The answer, she suggested, is by defining pricing by experience.And, by that, I realize from the two examples above, she means how successful the user is with the product.Did it "do" what the user needed it to do for as long as was needed? Kontary noted that the digital camera she bought to film her husband's bungee jump, while probably a fine camera, failed her in the key moment.It was returned.On the other hand, some investments "don't owe you anything" after years of service.I was thinking about that as I had my 23 year old clarinet adjusted.While the cost (to my parents) was significant at the time of purchase, the experience with it has been terrific.It did as it was supposed to and hopefully will continue to do so for many years to come.That made the value actually exceed the cost.

Now, software is a different animal than a digital camera or a clarinet, but the issue is the same.How do software developers insure a successful experience, one that makes the user comfortable with the price? The general advice from Kontary was that the developer and user need to be much closer, have more contact, more discussion, more touch points.GIS vendors have been moving steadily away from selling products to selling solutions.Their investments in increasing the number and kind of touch points is evident.

How many online user groups and classes are available for free from vendors? How many vendors host forums for users? How many product specific e-mail lists have popped up? Even smaller vendors have them.(Some are hosted by the vendors, other on free hosting services and still others by online publications like Directions Magazine.) How many vendors host user events? How many vendors support independent user groups with presentations and giveaways for attendees? How many vendors attend trade shows and conferences as much to market their products as to get that "touch time" with users?

Does all of that effort mean all users will necessarily be successful? No, but it certainly does help.Do users take the best possible advantage of those offerings? Based on the discussion on the news list, I suspect not.And, based on the number of sessions at vendor conferences aimed at the topics described as "using the company's resources," sometimes there may simply be too many offerings for users to track.

No Magic Bullet
I have no magic bullet to offer, but I will note some models that I've encountered that seem to work.These processes ensure software buyers are both successful and "happy" to pay the price of the package.Perhaps these can be used as a basis for new methodologies?

I've been using ChoiceMail, a spam filter from DigiPortal, since 2002.The software is not expensive, but to ensure users are successful, the company offers a two week free trial.During that time, if I recall correctly, you have access to the same tech support users do.The idea is to get you up and running with package and to make you feel you couldn't live without it.It worked for me.And, now as I pay maintenance, I actually read the quarterly e-mails from the CEO about the new versions and the company's plans.

Those organizations with large IT needs have the luxury of putting out a request for proposals and calling for a benchmark.Ideally, that benchmark illustrates that the software and often hardware and peripherals do exactly what the customer wants.I like to think that process helps align cost and value.Sometimes large projects force the issue with contracts written such that the bulk of the payment is not delivered until the desired system is installed and actually "works."

Unfortunately, such big benchmarks (which can cost vendors significant amounts of money) are not possible for smaller purchases or low-cost software.Still, I'm not aware of a vendor or reseller who won't allow a potential user to load up some data and perform a few functions.If you do find one that won't, it's likely that business is not really interested in your success.Software rentals may provide another way for users to test software before committing to a significant purchase.

Do readers have any other stories of how to insure cost and value meet in the procurement and use of geospatial software? Perhaps, together, we can give the industry some more ideas, and even "feel good" about giving them our money.Finally, if you want to share your take on how well your software and software provider serve your needs, there are still a few days in which to participate in our survey.It touches on those and other issues.

Published Wednesday, March 30th, 2005

Written by Adena Schutzberg

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