Evaluating the Cost of Management Software

Andrea Medina Comments
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Today’s self-storage marketplace is a hot bed of growth. Industry tradeshow attendance has more than doubled in a few short years, and the advent of automated facilities and expanding operations has brought many organizations face-to-face with state-of-the-art technology.

One of the most critical components of a well-run facility is its management software. There are numerous choices in this arena, as more than 20 companies offer what appear to be solutions. How does a business compare the value of a software product when pricing varies so dramatically? The uninformed buyer will assume all software provides the same benefits to every user. While specific package features can increase appeal and, consequently, catch the eye of an owner/decision-maker, they are often relatively useless to the everyday user. Management software that provides more intelligent choices for users brings significant long-term value.

What Comprises Costs?

There are several reasons software is sold for many times the cost of raw materials. Most consumers understand software has an initial development outlay; and monthly advertising, tradeshow exhibitions and direct mailings all add to its selling price. Beyond these fees, there is the additional labor of providing after-sale phone support, “bug” fixes and regular program enhancements. These latter costs can vary dramatically, based on the quality of service and staffing offered by the development company.

The buyer’s costs will ultimately include such things as initial license fees, installation, training, support/maintenance, license upgrade fees, transition (i.e., data transition and/or transitions to upgrades), and any necessary hardware. Beyond these components are less-obvious considerations: Does the software provide critical controls for theft-prevention? Does the program allow for efficient methods of communicating information to and from remote locations? If the answers to these questions are unclear, you may end up spending two to three times the anticipated amount, either in revenue loss or software replacement.

Overheads for training and retraining are another product differentiator. As data for this industry becomes more complex, some benefits of the software alleviate the need for extensive supervision, such as easily transferable information, and doing away with manual calculations or other intricate maneuvers. Simple entry combined with robust functionality is the key.

Shopping on Price

Price is a better indicator of quality for selfstorage management software than it is for general-purpose packages. Some assumptions can be safely made concerning what to expect from low-cost vs. expensive products.

Perhaps the greatest attraction of low-cost software is the price itself. If an inexpensive option did not exist, many small facilities would not be able to enjoy the benefits of entry-level automation. Of course, low-cost software does have drawbacks. Inexpensive packages will generally not include customization, security features, or methods of communicating with a central home office.

Another common disadvantage of less expensive software is a lack of documentation. The creation of a first-class user’s manual, complete with tutorial, subject index and examples, is a major effort. Many low-cost programs come with a manual that covers only the bare essentials to run them. These guides usually have little or no graphic material, and rarely explain how the program calculates results.

More expensive software can be expected to provide advanced capabilities, an attractive user interface and excellent documentation. Sophisticated features almost always mean some complexity; however, quality software has added development time to “hide” it. Power and flexibility in a program do not necessarily indicate a trade-off with simplicity. Surprisingly, expensive software can be more straightforward than low-cost programs. Although the owner/decision-maker may have to spend more time deciding how to use the software, the daily manager should find all functions to be faster and easier.

Final Valuation

As with all purchases, a company wants software that meets as many needs as possible and provides the best overall value. Software valuation is highly individualized, primarily influenced by specific needs and affordability. If a vendor can show a significant number of happy customers have paid a certain price for a program, you can be more confident of your purchase, regardless how high the price may sound initially.

Most important, a buyer has to understand what he expects from his software. In addition to the price tag, a thorough, company specific examination of how the program will be used—by whom and for what purpose— is crucial. These kinds of questions should bring consumers much closer to the “true cost” involved in making one of the most important buying decisions for their self-storage businesses.

Andrea Medina is the vice president of business development for DOMICO, which has provided management and accounting software to the self-storage industry for more than 20 years. For more information, visit www.domico.com.

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