Software package do you need all that’s on offer?
This is the continuation of our previous article on software pricing.
The other thing is that some software packages are designed to be all things to all people and some businesses they maybe purchase functions they will never need. I was talking to an accountant who worked for a small business that had one warehouse with 2 outlets and had deployed one of the top name products but they spent 10% of their turnover on annual maintenance contracts. I questioned whether that was an appropriate fit.
Paying to much for software package can bankrupt companies?
In another example, Monarch, in the manufacturing division was paying 1 million a year for a legacy ERP system. It’s little wonder they went bankrupt. Certainly, at the beginning of the multi-relationship ERP era, there was lot of Rand D work that needed to be recouped, hat a lot of that functionality and business logic is a well-worn path now (a purchase order in SAP does the same thing in Xero) it’s just whether you need any more complexity to the operation than that. If you want to do straightforward accounts for a single domestic company then Xero software package is probably fine. If you need to consolidate accounts for several subsidiary entities, over different jurisdictions and languages, then SAP is probably going to be your thing. Most Manufacturing modules have borrowed ideas from each other to such an extent that they now look and feel very similar.
Some Software vendors guilty of overcharging.
That being the case, can software package vendors charge the amounts they used to? Can they keep generating a cash cow on software that hasn’t been upgraded for years? We were asked by a client to source software that would link to their API program and this vendor wanted to charge.
36k for a program that had not been updated for over 10 years and the user interface looked as old as a Pacman game. We told them what they could do with it and got something that was equally 1 fifth of the price. Now those same established players have new competitors on the block. Changes in technology, especially for cloud computing mean many known brands have been wrong-footed and left behind. (Sage to Xero). The one thing the old guard does have in their favour, as with everything is that once they have a client on their platform, it’s a hassle to try and change. The cost and the disruption of migration may be just too prohibitive. The ERP landscape was very much about a land grab, but is that landscape changing?
See the next of series of “Modular Software“.
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