The majority of people that are purchasing a major software, such as Alinity, have not done so before. Purchasing small software for accounting or book keeping doesn’t really count as major software. Major software costs large amounts of money, often thousands to tens of thousands of dollars, as well as allocating a significant amount of your staff’s time. Where does this money come from? Where in your budget does software come out of? This post is here to help you plan.

Understand Software Costs

Software costs include many different aspects that are necessary to acquire a software that fulfills your College’s needs, has friendly usability, and a great support staff. These costs include licensing, configuration, hosting, conversion, and maintenance. Each of those is described below.

Licensing

Software licensing allows a person or group to use a piece of software. Licensing types and costs can be based on amount of users, amount of computers it needs to be run on. For example, when buying Microsoft Office, you are purchasing the product key to use the software on your personal computer. This is a software license that you can’t use on more than one device.

Configuration

Configuration includes the time and materials to configure software to meet the College’s needs. Configuring a software to meet a client’s needs takes up majority of the software costs, as aligning it with the needs of the college takes the most effort. Implementation takes place after the client has decided to use the software. This step includes making sure it operates correctly in the client’s environment, finding out what the client’s needs are and fitting the software to meet them, customization of look, feel, and language, testing the software’s usability, making any changes, and probably a lot more.

Hosting

A hosting fee is usually monthly and is the fee to put the client’s data in the cloud. This could be higher or lower depending on the quality, location, speed, amount of backups, speed, security, etc. of the cloud. It’s important to ask the vendor about their cloud, as this could affect your business in many ways, as well as the trust of your members.

Maintenance

The maintenance fee includes the support contract. It’s what client’s pay for when they want the ability to reach out to our support desk for assistance or requests. This cost is important because no matter how great software can be, there will always be questions you need to ask, errors that need solutions, instructions on processes, and requests to become more customized to your organization.

Conversion

Data conversion is converting a client’s data from their old vendor’s database to the new database. This fee is based on the amount of data a client has, how organized it is, if anything needs to be taken out, if anything needs to be made consistent, etc. This is a crucial step in purchasing a new software.

Training

Training new users of a software is another cost included in the price of software. Training can include in-person training with one of the software’s specialists. This can take days to weeks depending on complexity or how many staff members need to be trained. It can be delivered in person or over the phone. There is also the creation of educational documents, videos, and online seminars for staff to view and partake in.

How Do I Pay For This?

Big software has a big price, but if it’s the difference between a positive member experience versus dozens of regular complaints, it’s worth the investment it for your college. There are many ways that you can pay the cost of a great software. Below are some common methods we’ve seen when client’s pay for our software. These are best applied when combined:

1. The need to get software or upgrade was identified a long time ago and the organization has been saving up for years. The company can pull the money from their investments and pay a large amount right away. This is a great way to do research and have thorough deliberation on the right software software and not rush into any decisions because the money was saved over a long period of time.
2. The College may increase the membership fee to pay for the software. The increase doesn’t have to be a big one, it can be smaller for a longer term, or higher to pay off the software faster. The members may be understanding of the higher rate due to experiencing a better registration process first hand.
3. The organization can debt finance the software purchase by getting a loan from the bank. Just like anyone can get a loan for a house or car, the College can get a loan for the software. The loan should be a reasonable amount.

There may be requirements during the implementation that are driven by an external party. For instance, Alberta Health and Wellness runs a Provider Directory for all healthcare professionals and some insurance providers, like Blue Cross, may be interested in a feed of data about your members. These enhancements may be partially or fully funded by that external party – check for funding from them!

If a College is attempting to do something new and innovative, they can also request for grants to fund the project. The innovation funding could be recieved by staff that are finding or creating innovative ways to improve the workplace. There are different grants to apply for depending on your College’s industry. Some examples of past or present grants a regulatory body can apply for are:

• The Nova Scotia Health Research Foundation
• The WCB of Manitoba: Research and Workplace Innovation Program
• Grants from the government of Ontario
• Canada Business Ontario: Technology and Innovation: Financial Support
• Health Force Ontario: Funding and Incentives
• The Government of Canada: Settlement Funding and Funding Opportunities

Pay One Time or Over Long Term?

Since the cost of software is high, a customer that is seriously inquiring about purchasing software can talk to the vendor and figure out a payment plan. Sometimes you can pay a certain amount up front, and pay the rest divided over a couple or a few years, whichever you’re comfortable with. There are many options for an organization to acquire their ideal software and vendors are motivated to get your business!

License Management Software

If your organization is considering getting a new software or upgrading, our Software Procurement Checklist would be very helpful. It can be used with any association management software and allows you to compare software with equal criteria, all in one PDF. Check it out below!