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Budgeting Tips when Choosing an Enterprise Software Solution

[ 0 ] Posted by on October 23, 2012

enterprise software

Buying enterprise software isn’t easy. Navigating through piles of feature lists, pricing options, and contract clauses can be confusing, irritating, and very costly if not managed correctly.

To make matters more complicated, the cost of enterprise software is much more than the price of the software itself. Costs may include mandatory maintenance fees, platform fees, hardware fees, installation and setup fees, and integration fees.

If you choose a software solution poorly, you may face termination fees, data migration fees, contract penalties, and the opportunity cost of fumbling the decision. But if you approach the project correctly, budgeting enterprise software can be made manageable.

Form a team

Create a team to compile the demands that your enterprise software solution must meet. This team should consist of those who are directly affected by the enterprise software, including buyers, procurement managers, and IT. These people do not simply document current systems or features, but help determine what your current issues are, what your systems must do, who uses the systems, which systems will have to be integrated with the change, etc. The end product of this correspondence is a comprehensive list of needs that must be met.

Identify solutions

This list of needs can help make sure that you do not choose a software solution that is overkill for the problems of your business. It also acts as direction in compiling a list of software vendors for consideration. These vendors should be principally chosen for their ability to resolve the problems on the list, but should also be referenced against analyst and blogger reviews of the vendor’s performance.

As a final consideration, the team should consider the stability of the vendor, including their ownership structure and profit statements.

Create a cost model, set a goal

Licensing is not the real cost of enterprise software. In order to get an accurate idea of what enterprise software will cost over its expected lifetime, you should build a lifetime ownership cost model. This model should incorporate industry quotes for software you’re considering, including fees, operating costs, training costs, re-training costs, hosting costs, major upgrade costs, etc.

With the costs of implementation in mind, combine the list of needs with the cost model to determine your ultimate desired outcome. What functionality requirements do the solutions available fully or partially support? What is the maximum ownership cost you will pay?

Negotiate

Your cost model and list of needs can act as a blueprint in price negotiations. By knowing what support you require and the maximum you can afford to pay, you’ll end up in a much better position than merely negotiating down the licensing price.

During negotiations, consider the fact that enterprise software vendors are willing to do almost anything to make a sale. What a sales representative calls the “best price” is not usually the best price, and lies may be told about the software functionality. Make sure that you have all significant functionality demonstrated, especially if that functionality was not explicitly advertised.

Needless to say, you should also carefully read the fine print of your contract. Do you lose the right to use the software if you stop paying for maintenance? Are there mandatory upgrades, and whose schedule are they one? Are there any services which you don’t need built into the price?

Getting the best deal on enterprise software solutions is not a simple task, but if you carefully consider these questions and follow the guidelines, you can be assured that your costs will be as low as possible.

Bradley Barks is a published business software and tech blog author – he recommends Soft Resources if you’re looking to select a company to help you navigation the selection process.

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About Jakk: Jakk Ogden is the founder of Technology Blogged. 23, with a love for good writing, you'll find Jakk playing 'Drag Racing' on his Nexus 5 and rocking a pair of Grado headphones. If you love technology, be sure to subscribe to his feed for unique editorials. Find me on . View author profile.

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