Why is Software So Expensive?

“Price Is What You Pay, Value Is What You Get” – Warren Buffett

 Some years back I was living and working in South East Asia surrounded by poverty. While leading a team in charge of a building project for a local charity I was having a discussion with another member of the team. We were discussing the material we were going to use and the difference in price. In that discussion, the other person, a seasoned business man, made the statement, “Only rich people can afford to buy the cheapest goods”. This was a curious statement, so we got side tracked a little as he explained his reasoning that buying budget goods that were of poor quality and would break down was going to cost much more in the long run. It was the more expensive solution so only rich people could afford it.

This analogy can be carried into Software Development. In the short term Software Development will not be the cheapest solution to get your company working and coping with your current workload. It can be an upfront expensive task. The reason for this is that it is time consuming and complicated to understand a business’s needs and then translate these into a user–friendly productive software system. In Nitec our software development rate is the same as all other work that we do but software development often appears more expensive because it includes a lot of time.

So the question of this article is, if software development is not a cheap option, why start a software development project?

Snowballing costs

Consider the following scenario. A business is growing and needs a solution to keep track of relevant data. The cheap solution up front may be to introduce an excel sheet to manage the new data. This ‘data silo’ will then need an administrator to keep it up to date and to shunt the data hidden within it to other relevant systems. Then, as work increases in your company, this excel sheet may become unusable and morph into two excel sheets or more.

This complicated web of excel worksheets can be linked together but overtime become so complicated that only one person in the company can use them. Then that person moves to another position within the company, or worse, another company and before long things start falling apart. It is also time consuming, if possible at all, to get relevant business metrics from this system to allow cost savings and business strategy decisions to be made from real data. This is not to mention the ideas of data integrity, forensic readiness or accountability. In the long run this system, that appeared cheap upfront, ends up costing the business much more.

The value of investment

In contrast a properly written, user–friendly software system designed to your business’s needs keeps important business knowledge locked within your business. The users of the system all process the data as it flows through the company in their relevant domain without re–entering anything. All changes are recorded and stored, allowing accountability and forensic readiness. Information can be reported on in real time so informed business decisions can be made and your business can be more efficient and able to grow without friction.

As your business grows the software can be enhanced to incorporate the new business functions and continue to operate. As staff move from position to position, or leave the company, the business knowledge stays within the software system and another person can continue with that business role. In short, the investment up front keeps on bearing fruit. What you got from a well written software system is much more value than what you paid.

There is an old English proverb that says “the worth of a thing is what it will bring”. If software introduced into your company removes barriers to growth, keeps vital knowledge within the business, helps give employees better work satisfaction and prospers your business, the original question of this article might seem a little redundant.

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