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Why Specific Software Package Costs are Not Monitored ![]() |
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Business software Research trusted by APICS since 2001
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Any research source that attempts to report pricing information on software/solution offerings would absolutely provide inaccurate information. Even if the software pricing information was perfect on the day it was collected, it is always inappropriate because it is subject to immediate change and is not the real number that should be analyzed (more in the next section on TCO and cash flow impact). Total Cost of Ownership (TCO): The total cost of ownership should be understood to differentiate business software/solutions being considered. A TCO analysis should consider the costs for software/solution strategy licenses (intellectual property), training, implementation support, ongoing maintenance/license fees, IT infrastructure, and any other costs known. To be even more accurate it could include the soft costs of the demands on the company’s internal team, which can vary, based on the solution acquired. Historically the cost for just the software/solution strategy licenses has been typically tied to the amount of users, but the following factors may significantly change the actual price paid and terms achieved.
Cash Flow Impact: This factor is broken out of TCO as it may not affect total life-time TCO, but affects how cash is released and there for is important. In the last few years there has been increasing pressure on software/solution providers to spread license fees for software over time and as systems are increasingly used. This is a far more logical and fair approach than a solution provider asking for a ‘big check up front’ for their software that may or may not be used as the buyer originally expected. Buyer’s risk is greatly reduced as this pricing model enables users to largely pay for what they use, when they use it. All software/solutions (intellectual property component) that have any serious competition will be released this way in the future, as the old pricing model will not be competitive. Differences of each solution under review: A solution strategy that better supports a business’s process automation goals is more valuable and therefore a higher TCO could be justified as competitive to other solutions with a lower TCO. For all of these reasons, SoftSelect does not monitor and list software pricing models, ranges, or amounts. Again, reporting software prices would present our customers absolutely inaccurate information. Instead, SoftSelect’s high-level Indicator of suitability (HLIS) data identifies vendors with solution offerings regularly sold to companies of the same type of the company seeking software. The value proposition and related pricing approach/flexibility of these offerings has a high probability to be competitive to other offerings when reviewed by the selecting company.
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