When we think of value, dollar signs often flash in our heads. In business, value typically translates to increased profits. The same can be said when talking about the value of a new piece of software. It is truly the simplest form of the “business value of software."
However, increased profit is not the only way that organizations, or even individuals within an organization, measure a software solution’s value. The CEO, CFO, CIO and the CMO may all be looking at the software from different points of view. Although there could be a laundry list of different perspectives within just one organization, in today’s blog post, we will just focus on three of the more popular views: profit, customer (internal or external) needs and build vs. buy.
With any new piece of software, there is a good chance that it will result in increased profits for an organization. This is often all that the CFO is focused on. Even not-for-profit organizations, such as government agencies that run their operations more like businesses, are looking to new software solutions to positively impact their bottom line.
The second perspective, focusing on the value delivered to the customer, is another view that sometimes can trump profit. Whether the ”customers" are in-house staff or external clients, or both, the cost of adding new features or functionality to a software solution needs to be carefully considered to determine if the intangible benefit outweighs the cost of developing this new feature.
The third view is the build vs. buy consideration. Does it make more sense to develop a piece of software internally or purchase Commercial-Off-The-Shelf (COTS) software? An internally-developed software solution may be more costly and resource intensive, but may fit the needs of the customers more closely. While the COTS software may be the less expensive option, it may require significant customization to provide the desired business value.
These are just three examples of how different organizations or individuals might perceive the business value of software. When a CFO is involved in approving the purchase or development of new software, increased profit is usually the focus. However, we should not always assume the business value of software is increased profit. There are many different interpretations.
DCG President & CEO