As I sometimes do, today I’m commenting on some of the search terms that bring people to this blog. Today, I’m commenting on the questions regarding the cost of things in the laboratory informatics industry.
Why Do Our Software Products Cost So Much?
In the search terms that bring people to this blog, I’ll see questions such as “why does x cost so much” where “x” is the brand name of a LIMS or ELN.
On one hand, the question is generally “why does software cost so much” and that can be better answered by a classic Tom DeMarco book entitled “Why Does Software Cost so Much?” which, while not a new book, discusses some of the classis issues that cause software to be expensive. If you think about the fact that our informatics (software) projects continue to fail at a high rate, you can imagine that a book that is generally on the software topic is going to address software development issues that apply to all software’s development and cost.
The other part of my reply is this, and I’m talking about licenses, right now: when you purchase laboratory informatics software, especially the larger products, which are the ones people usually seem to ask about, you’re paying for the fact that there are huge teams of programmers sitting someplace writing this software, probably a group of people to test it all, another group of people to run through all the documentation to make sure the company can pass a software audit, and a variety of other staff and activities. Additionally, you’re paying what the market will bear. For example, even if these companies stopped development for awhile, you probably wouldn’t pay any less for the software. After all, in a supply-and-demand market, if a
company can get a certain price for their software, you will probably charge it. That’s the nature of business.
But it’s not just the licenses. If a person wants to know not just why the licenses are so expensive, but the overall project, it’s because there’s so much more that goes into a software project, such as training costs,
implementation costs, long-term maintenance and support, and other factors. Just with regard to implementation, there are many activities, such as project management, business analysis, programming/configuration, and documentation. These add-up quickly and make the entire cost of a project much more than one would think just knowing the license price.
Thus, my advice is always this: the most popular products aren’t necessarily the ones you should purchase. They’re the most expensive and often they’re the most flexible. However, every project can’t necessarily afford these products nor even manage a large-enough staff to implement and support them on a long-term basis. Thus, don’t fret if you can’t afford it – it’s a sign you should pick something else.
Sometimes, I’ll see search phrases with questions such as “lims/eln consultant daily rate” (by “lims/eln” I merely mean that people usually use one or the other). Here are some problems with this search phrase:
1) This is too general. The cost of a consultant for one brand of product won’t be the same as the hourly rate for a consultant who works with a different product.
2) Few people post their consulting rates on-line. You have to directly contact a services group to get those prices. This is no different than with the products, themselves, where few laboratory informatics vendors
post their prices on-line, either.
3) The cost of consultants varies based on where you get them. If you ask your software vendor for an hourly consulting rate it will almost always be higher than if you go out to a non-partner consulting firm, because some software vendors require their partner consulting firms to provide services at the same price as they do. The reason the vendor and their partners have a higher rate is that this subsidizes some of the rest of the cost of the software; or, in pure business terms, their overhead is higher and they must charge more to cover it. Services companies that are not directly tied to a software vendor seldom charge as much as the software vendor for this very reason, and they shouldn’t charge this much as their overhead isn’t as high.
Thus, customers are sometimes confused why they’ll pay more to one company for a junior person who has just taken a class to learn the software but has no experience, and less to another company like mine to get an experienced person with many years working with that same software. It’s a case of apples and oranges. While that junior person the software vendor or their partner sends out might not have the skills to implement the software by themselves, the customer needs to understand that that overhead must be paid-for. Thus, a customer should not look at the cost of one person and expect to get the same level of person for the same price from an entirely different category of people.