Subscription versus Purchased Software for Construction
by Mark Jensen
What’s the Difference?
Choosing software for your construction company today includes more deployment options than you had in the past. Today, you choose the software that works for your business needs with the best price — and you are all set, right? Not so fast! The choice between purchased licenses installed locally on your own computer (or network) versus web-accessed software subscriptions paid monthly, are disparate decisions with all sorts of options in between. The following are five considerations to take into account when making your decision.
1. Cost of Entry versus Long Term Cost
Software is unlike anything else you ever purchase. When you buy yourself a new car, or equipment for your business, the first day is the BEST day. You get to enjoy the new car smell, or use the new equipment to perform tasks you never could before. It is later on when the newness wears off, that frustrations may surface. With software it is the opposite experience: the first day is the WORST day!
After enduring the setup and training, life begins to get better. One year down the road, (if you made the right software decision and have proper training), life is much, MUCH, better. The longer you use it, the better it gets!
In fact, many construction clients have successfully used the same software for 20 plus years. A survey by an international software vendor found that while retail establishments change software systems every three to five years, construction organizations change software on average every seven to ten years. (Source?)
Why do construction companies change software less frequently? Some reasons may include an expensive upfront investment in the software, drawn-out claim liability cases, or simply the difficulty of training project management and field staff to use automated tools. Once a system is in place constructions companies just don’t change software that often (unless a major business event occurs, or a software supplier goes out of business/or no longer supports your system).
2. Support, updates, training and consulting considerations
The initial cost of acquiring a software solution is only part of the expense you need to consider when choosing an application to be the backbone of your financial system. Implementing the system may run as much or more than the initial software purchase! Beware: even if a software solution costs less, don’t assume the implementation will be easier or cost less.
You may want to consider an advantage of subscription software services — typically ongoing support and updates to the most current version of the software are included in the subscription fee.
Just remember, software providers are in business to make money. The classic software company model generates revenue from three areas: the sale of software, the sale of support services, and the sale of separate consulting services. Does the software supplier you are considering generate enough revenue in each of these areas to meet your service expectations? A lower entry price to the software may create an unsustainable load on support services if the provider has not invested separately in the staffing of those departments.
3. Options for customization or tailoring to specific needs
A major selling point of (purchased) construction software systems in the past was the flexibility to tailor the system to business processes and procedures, and configure the software accordingly. Many of these modifications are also available through subscription software; but many are not. Can you rename fields to track the information that is unique to your organization? What about the integration of data between other software you use at your company?
4. Backups and ownership of data
In a perfect world, you would never worry about restoring a backup of your company information. In reality however, there may be many reasons to need access to backup data. Examples may include construction claims on past projects, system malfunctions, or entry mistakes where it is easier to go back and start over at a point than to correct the errors.
You will never know the effectiveness and quality of your backup of your data until you try to restore it. Questions that should be part of your recovery strategy include: How often is the data backed up? Where are the backups stored? Can you create your own back up on demand? Can you restore your backup to another system or not? What happens if you sever your relationship with the software provider? What happens if you sell your company and need to transition to another system?
Remember as well, that you need to access your past seven years of financial information for the IRS. If a third-party creates backups of your data, do you have a way to access the information? A backup without the program that created it is probably worthless!
5. Making the right “business personality” decision
Ultimately, software system choices often reflect on the business model and philosophy. Are you an early adopter of technology, who appreciates the latest updates and improvements? Are your users younger, fluid, and adaptable to software changes? Is mobility a priority? A web-accessed, subscription-based system may tic your boxes.
Or are you fonder of a long-term, on-site solution with minimum process disruption and resource allocation (a ‘one-and-done’ objective)? Do you prefer that business systems STAY at work for security reasons? You may decide a purchased solution is right for your company.