Eliminate the hidden costs of business software

Robert van der Linden, CEO Thinkwise: Many organizations make the same mistakes when calculating their software costs as they do when estimating the costs of their car. They primarily consider the purchase price and cost of gas, but things as road tax, insurances, maintenance and depreciation are conveniently forgotten. Traditional business software also involves various hidden costs. I would like to explain here what they are and how you can eliminate them.

Often when budgeting IT projects only the costs for the purchase of the software and external consultancy are taken into account. The actual costs are almost always higher.

The internal hours for the implementation, the annual maintenance costs, depreciation costs and the costs of failure are simply not included in the calculation. This would not be a problem if these additional costs were relatively low. Unfortunately, this is not the case. For example, the maintenance costs for traditional business software are often many times higher than the original purchase cost. And the organization gets very little in return for this expenditure. But this is only the tip of the iceberg.

The risks of package software

Most organizations opt for certainty and security when it concerns business software. They choose standard software packages from well-known vendors, without examining what alternatives are available on the market. They allow themselves to be influenced by the sleek sales pitches given by these vendors, which convince them to buy complex software packages when, in practice, these packages do not fit or support the working methods of their organization. They subsequently get dragged into endless implementation projects of software that ultimately does not do what it is supposed to. Furthermore, these packages lose much of their flexibility after the initial implementation and thereafter require costly maintenance due to the many company-specific configurations, frequently hundreds of peripheral applications and customized software.

Not to mention the subsequent additional software costs that they incur when they want to make changes. Because the inflexible software used by many organizations leads to stagnating innovation, inefficient processes and can ultimately result in the loss of your competitive edge.

How can you eliminate your hidden software costs?

How can you break out of this vicious circle of expensive software maintenance and stagnating innovation? As a start, it is important to look further than the traditional ‘standard’ software solutions. They were never a real alternative. Traditional customized software is not an option and replacing your current package with another package, will most probably lead to the same misery. So make sure that you are well informed and look further than the ‘safe’ option. There are many new developments in the area of enterprise software, and traditional package suppliers are seldom at the forefront of these innovations. They made the choice, 30 years ago, for a technology that they are now stuck with, but in a world where the required functionality is becoming increasingly complex. This makes it extremely difficult to add new functionality and make modifications to the data model. What they deliver to their customers is therefore seldom an optimal solution. So, during a software selection process request all the vendors to demonstrate their added value, and compare all the risks and hidden costs of the various solutions in detail.

In any event, don’t be afraid of the unknown. Have a good look at the content and don’t allow yourself to be influenced by the attractive outer appearance and smooth marketing pitches. In our daily life we regularly experiment with new technology, apps and gadgets, so why are we so conservative on a business level? Most business software is still far too complex and inflexible. This has to change.

The future of enterprise software

What you should try to achieve as a modern organization is to have business software that seamlessly works with the latest technologies and always retains its flexibility. Software that should be modeled rather than programmed, independent from the underlying technology and which allows you to easily add new functionality such as AI. Enterprise low-code development provides the ideal platform for this. An organization can specify all its unique working methods and processes in this platform and then build exactly those business applications that it requires. Without having to adapt to a standard software package and without leaving your intellectual property up for grabs to external consultants.

However, low-code development does require some effort. An organization must invest in this model-driven way of building software, in which the processes and their continuous optimization are central. But in the long run, this investment will pay off. You can eliminate the hidden costs of traditional business software with an enterprise low-code platform. As a result, your IT budget is no longer consumed by the maintenance of outdated and rigid business software, but can finally accommodate optimization and innovation. With low-code, you no longer invest in the past, but in the future of your organization. By making one more capital-deepening investment, you can eliminate your legacy software once and for all and invest in innovation instead of maintenance. I would say: go for it!